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Morgan Stanley analyst is impressed by new Ford pickup truck rollout

Apr 18, 2015, 01:58 IST

Morgan Stanley lead auto analyst Adam Jonas published a research note on Friday in which he raised his target price for Ford to $15 a share from $14.

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He also pointed out that Ford's biggest risk since the financial crisis - revamping the bestselling vehicle in the US, the F-150 pickup, by using lightweight aluminum construction - hasn't lead to disaster:

That last bit is important. In the auto industry, it's extremely risky to pioneer new paths. Cars have been around for more than 100 years. Car makers know very well how to build them and how to sell them. So making major changes isn't something that large car companies want to do all that often. Why mess with a (mostly) good thing?

In fact, automakers prefer to have folks like Elon Musk and Tesla out on the leading edge, fighting a daily battle against overwhelming odds.

When it comes to bread-and-butter products like pickups, Ford's competitors are delighted to let Ford go first with a serious lightweighting strategy. Sort of. Jonas' point is that GM and Chrysler (which builds Ram) can now bring their own aluminium-body full-size pickups to market, forcing Ford to defend its position. GM and Chrysler won't be taking on zero risk. But they won't be taking on as much as Ford.

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Ford will, however, have an edge when its comes to the aluminum F-150's purpose, which is to enable Ford to keep the pickup in its fleet as fuel-economy standards are raised by the government.

One expects that Ford will be able to handle the competitive challenge quite well - the F-150 should continue to be America's bestselling vehicle in 2015 and beyond - but now that this construction method has been vindicated both on the factory floor and in the minds of consumers, the Dearborn automaker won't be able to coast.

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