Please ensure Javascript is enabled for purposes of website accessibility

Why Ford Motor Stock Closed Higher on Friday

By John Rosevear - May 8, 2020 at 5:07PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Factories will restart on May 18, but there's a big question lingering.

What happened

Shares of Ford Motor Company (F 2.14%) closed higher on Friday, after the company confirmed that it will begin reopening its factories in the U.S. and Canada on May 18.

Ford's shares ended the day at $5.24, up 7.6% from Thursday's closing price. 

So what

Ford confirmed on Thursday that it will join Detroit rivals General Motors (GM 1.79%) and Fiat Chrysler Automobiles (FCAU) in resuming production in North America on May 18. 

Ford's plan is to restart production in North America in several phases.

  • Parts depots will reopen next Monday, May 11.
  • On May 18, all but two of Ford's vehicle assembly plants in the region will reopen, but will run at less than full speed. Factories that had been operating on three shifts before the shutdown will reopen with two shifts; most two-shift factories will reopen with a single shift; most one-shift plants will continue to run on one full shift.
  • The two exceptions, in Flat Rock, Michigan, and Oakville, Ontario, will resume production on May 25 with a single shift. Those plants make the Ford Mustang and Lincoln Continental (Flat Rock), and the Ford Edge and Nautilus SUVs (Oakville). 
A reminder to stay 6 feet away from others is on the floor near a stairway at Ford's Dearborn Truck Plant in Dearborn, Michigan.

Ford has already begun preparing its factories to resume production on May 18. Image source: Ford Motor Company.

All of Ford's factories will operate under strict protocols to keep workers and visitors safe and (whenever possible) socially distanced. Among other changes, Ford will allow extra time between shifts to limit interactions between arriving and departing employees, and will require masks for anyone entering a Ford facility. 

Now what

I expect that Ford (and GM, FCA, and other automakers) will be able to restart production with some routine snags, but no huge disruptions. That's great news for investors, as Ford (and most other automakers) record revenue when vehicles ship to dealers. Ford's revenue will rise sharply (and its cash-burn rate should fall) as its factories get back up to speed. 

The bigger question is this: What will demand for new vehicles be like as America (and Canada and Mexico) reopen? Pickup trucks sold relatively well in April, but overall U.S. sales were down sharply. Will buyers return? Automakers and dealers (and auto investors) will all be watching closely. 

John Rosevear owns shares of Ford and General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
$15.83 (2.14%) $0.33
General Motors Company Stock Quote
General Motors Company
$38.63 (1.79%) $0.68
Fiat Chrysler Automobiles N.V. Stock Quote
Fiat Chrysler Automobiles N.V.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.