) derives almost 35% of its stock value from its international
operations (excluding North America) according to our analysis. In
full year 2010, international operations contributed 46% of Ford's
automotive sales, including cars and trucks. Ford mainly competes
with auto manufacturers like BMW (GR:BMW),
(ETR:DAI), Audi (
), Honda (
), and Toyota (
Under pressure from higher raw material costs (particularly
steel) Ford has increased the average price of its vehicles twice
in 2011 so far, by $130 per model in January and by another $117 in
April. A continuing increase in raw material costs as well as new
model launches should further lift Ford's average vehicle
While we anticipate that the average vehicle price for Ford's
international sales (excluding North America) will rise to $21,800
by the end of our forecast period, Trefis members predict greater
upside towards $22,700.
We maintain a
$20.59 price estimate for Ford's stock
, roughly 40% ahead of market price.
Rising Raw Material Costs
Due in large part to massive demand from emerging economies, the
price of major raw materials used in the manufacture of
automobiles have increased considerably over the past several
years. These materials include rubber, plastic, copper, steel, and
aluminum. The prices of these commodities have increased 45%, 20%,
23%, 66%, and 40%, respectively, since the beginning of 2010.
European trade association, Eurofer, predicts that steel prices
will rise faster than raw-material costs in the first half of 2011
due to a hike in iron ore costs. Strong demand from emerging
markets for these commodities continues to increase the price of
Ford's raw materials, and this trend will likely be long-term.
New Product Launches to Boost Vehicle Prices
Ford recently saw improved vehicle pricing, partly reflecting
the success of new products like Ford Fiesta. Ford plans to
launch several new models in Europe, including zero emission
electric vehicles as well as next-generation hybrids, the Kuga and
the C-MAX Energi. These should help Ford drive sales and maintain
one of the newest product line-ups in the industry (see Europe's
Contribution to Ford's Stock Value).
Trefis Community Forecast
Trefis members forecast that Ford vehicles' average price in
international markets the average price of Ford vehicles in
international markets will increase from about $16,000 in 2010 to
nearly $23,000 by the end of our forecast period, compared to the
baseline Trefis estimate of an increase to just under $22,000
during the same period.
See our complete analysis for Ford's stock