No Follow-Through Rally For Ford After Leadership Change

The market optimism about the new Ford Motor Company F CEO Jim Hackett was short-lived. Ford shares initially jumped 1.3 percent on news last week that Hackett would be taking over the top leadership position from former CEO Mark Fields. However, since the day of the announcement, Ford shares have drifted mostly sideways and remain down 8.3 percent year to date.

Ford and the rest of the U.S. auto industry are having a rough go of it so far in 2017. Ford reported a 35-percent drop in net income in the first quarter of the year, and conditions in the auto market don’t seem to be getting any better.

In April, auto dealers were offering record-high incentives for buyers, but new vehicles were still taking longer to sell than at any point since July 2009, according to a report by CNBC’s Phil LeBeau. Even with an average dealer incentive of $3,499 as of April 16, J.D. Power reported new vehicles were sitting on lots for an average of 70 days before being sold.

Related Link: Analysts Continue To Beat The Drum On The Threat Of Subprime Auto Loans

According to AutoNation, Inc. AN, dealers have even been offering incentives of around 10.5 percent of manufacturer’s suggested retail price (MSRP).

To make matters worse for legacy auto makers Ford and General Motors Company GM, a new wave of competition in the auto industry is coming from Silicon Valley. Tesla Inc TSLA is expected to begin shipping its Model 3 this summer, while Alphabet Inc GOOG GOOGL recently announced a partnership with Lyft to develop fully driverless cars.

Ford investors are looking forward to a change of direction under Hackett, but the reality may be sinking in that even the most ambitious turnaround plan will be facing some strong headwinds in the coming years.

Joel Elconin contributed to this article.