Wednesday, August 9, 2017

The Market And Energy Page, T+201; Ford Has Pricing Power To Increase Prices On Its Top-Selling Vehicle -- Compare With Tesla -- August 9, 2017

Ford, apparently has the pricing power to raise prices -- significantly  -- on its top-selling vehicle, despite intense pressure from RAM, Toyota, GMC (and they will all raise prices, too) and, yet, Tesla lowered their prices on the Model X -- a crossover vehicle. That speaks volumes.

I found it "ludicrous" that the media seemed to buy into Musk Melon's story that he could lower prices on the Model X because margins were increasing due to better efficiencies. LOL. Whatever.

But what irony: Ford is able to increase prices on its huge gas guzzler while Tesla lowers prices on its Model X just when it needs cash most.

From a contributor over at SeekingAlpha:
The shift from cars to SUVs and trucks is a continued positive trend for Ford largely due to the success of the F-Series trucks and increasing popularity of SUVs—Edge, Flex and Explorer.
They are continuing to sell the right mix of vehicles in the U.S. which further pushed up average transaction price up 2.4% compared to the industry average of only 1.7%.
This shows that Ford isn’t just taking advantage of cars being loaded with more safety features and connectivity options, but they are perfectly positioned to take advantage of the consumer shift away from cars to larger vehicles.
The largest contributor to this was the Ford F-Series Super Duty pickup which represented 53% of the mix and contributed a $55,000 per truck price tag, which was a $4,600 increase from July 2016. Additionally, the Ford Explorer and Escape continued to fuel a year-to-date through July record for the Ford brand SUV segment.
To repeat: Ford is perfectly positioned to take advantage of the consumer shift away from cars to larger vehicles. And Tesla is positioning itself to take the lead in low-margin (probably loss-leading) sedans.

Plains All American Shares "Tank"

From investorvillage:
Investors in master limited partnerships don't like distribution cuts.
Case in point: With profits evaporating in its "supply and logistics" business, Plains All American Pipeline (PAA) lowered its forward guidance and indicated it would reduce its distribution.
The shares were down about $4, or 16%, to $21.20 as of 1 p.m. ET Tuesday.
Its general partner, Plains GP Holdings (PAGP), was down a similar amount. While the company didn't cut its payout, it indicated it is changing the way it calculates distributions since one division is drastically underperforming.
Stifel analyst Selman Akyol has changed his model to reflect a $1.80 annual distribution, down from $2.20, an 18% cut. the shares currently yield over 10%, which would be expected to drop to 8.4% if the cut is as big as Akyol expects.
A yield of 10% going to 8.4% -- two comments:
  • who actually thought a 10% payout could be sustained in this environment; and, 
  • the reaction of shareholders seems to be a bit overdone. 

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