DETROIT (AP) — Ford Motor Co., a darling of the auto industry's comeback, is facing its biggest test since CEO Alan Mulally charted its successful course out of the Great Recession.
The company outlined its challenges to Wall Street on Wednesday, telling analysts assembled in New York that profits will slow next year, largely because its North American cash machine is facing intense price competition and higher costs due to new model rollouts.
The admissions sent Ford's stock tumbling 6.3 percent Wednesday, the largest one-day decline since August of 2011. The shares have now dropped 12 percent since late October, partly due to stories about Mulally possibly leaving for Microsoft.
Ford was near collapse in 2006 when it hired Mulally. The company borrowed $23.6 billion to make it through the recession and finance a restructuring. It shed unprofitable brands, closed plants and invested in new cars and trucks that are sold worldwide. Now it's making billions.
The analyst meeting started on a good note — Ford predicted a pretax profit of $8.5 billion for this year, among the largest in company history. But ultimately, the discussion with analysts raised broader questions about whether the U.S. auto industry, which consistently has led the economy after the recession, could be headed for a period of slower growth in sales and profits.
Bob Shanks, Ford's CEO, told the group that pretax profits next year could fall as much as $1.5 billion below 2013. This is because Ford's ability to raise prices will slow, profits will flatten in Asia and South America, and its costs will rise due to an ambitious launch of almost two dozen vehicles worldwide, he said.
The news sent Ford's stock down $1.05 to close at $15.67.
U.S. auto sales have risen by more than 1 million vehicles annually since 2009, but many analysts have said that pace isn't sustainable. Joe Hinrichs, who runs Ford's North and South American operations, has said he expects sales growth to slow next year.
Many analysts expect sales of 15.6 million this year, up around 8 percent from 2012. Growth is expected to slow next year to around 3 percent, or just over 16 million.
The market is just about back to pre-recession levels, so lower growth rates are likely, said Edward Jones industrials analyst Christian Mayes. Yet Mayes said sales can still grow thanks to low interest rates.
Ford is the only major automaker to post a double-digit sales gain in the U.S. this year, 11.7 percent, and its 0.4 percentage point gain in market share is matched only by the much smaller Subaru.