Written by Dan Ferris

Saturday, 31 May 2008

Meanwhile, Ford's only great success of the last few decades – pickup trucks and SUVs – are having a little trouble selling with gas heading for $5 a gallon (in my neighborhood, anyway). And it has abandoned its fantasy of regaining profitability in 2009.

Ford is under all the same burdens as GM [NYSE:GM]....expensive health care, high wages, enormous pension deficit. Last time I checked, Ford's pension obligation was more than $170 billion, and its pension assets totaled less than $130 billion. $40 billion here, $40 billion there, pretty soon you're talking real money.

The other big disappointment is Ford Credit. Ford Credit didn't get into mortgages like GMAC, so it didn't face the big writedowns. And it's paid $16.7 billion in dividends to the parent company from 1998 to 2006. But Ford Credit's delinquencies are climbing, especially on those big trucks.

Repossessions rose 5% in the first quarter. Many borrowers are "upside down," owing more than the value of their vehicle. And Ford lost $2,200 more per vehicle on repossessions in the first quarter. Trucks and credit... Ford's last vestiges of success are melting away... and Kerkorian wants to buy it. He's either crazy or he's gutsy and brilliant.

I wouldn't touch Ford or GM with a thirty-nine-and-a-half foot pole. Why buy crap when so many great companies are on sale? It makes no sense. But Kerkorian is an activist, and he's a billionaire who's had success buying busted domestic car companies.

After all, he actually made money on GM before he gave up on it. Who knows? Maybe he'll make money on Ford, too. He can have it. I'll pass, and you should, too.