Ford Says It Can Survive a Drastic Auto Sales Plunge

Denver Auto Show
DENVER, CO - March 16: A 2016 Ford F150 Platinum 4x4 Truck on display at the Denver Auto Show at the Colorado Convention Center March 16, 2016. The Denver Auto Show, which runs from Wednesday at 5 p.m. and closes Sunday at 6 p.m., features all the latest car and truck models from many of the industries manufacturers. (Photo by Andy Cross/The Denver Post via Getty Images)
Photograph by Andy Cross—Denver Post via Getty Images

Ford has reassured investors that the company would remain profitable even if industry-wide auto sales dropped by about 30%.

The Detroit-based automaker said it would break even financially if annual U.S. auto sales suddenly dropped precipitously to 11 million, a roughly-37% decline from last year’s record sales of 17.5 million, reported Bloomberg.

The U.S. auto industry is seeing unprecedented sales recently on the back of low gasoline prices and a relatively strong economy. However, some analysts have been questioning that the industry is reaching its peak soon, and Ford (F) could be particularly vulnerable given the near-decimated state the company was in seven years ago.

The company, however, sought to temp down investor worries. “We were in such bad shape back then,” chief financial officer Bob Shanks told analysts on Tuesday, as reported by Bloomberg. “We are a much different company now.”

In its presentation, Ford said it would cut cost by $3 billion in the first year of a downturn in its manufacturing operations, and would continue to invest in new products. “We want to have a “forward lean into” situation, whether it’s an upside or a downside scenario,” Shanks said.

Ford, the second biggest automaker in the U.S. by market share, beat analysts’ expectations with revenues of $40.3 billion over the fourth quarter of 2015. Ford’s F-Series pick-up trucks, including the best-selling F-150, has been the biggest selling vehicles in the U.S. for the last 34 years.

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