Ford May Overtake Government Owned GM – 1st Time Since 1931

In an article last week, written by Keith Naughton and published in Bloomberg, Keith shared that Ford Motor Company is gaining ground on our Government owned GM – it has long surpassed Chrysler – this year to become the overall leader in selling autos in the USA.

The new Government owned GM emerged from the remains of bankrupt General Motors Corp. last Friday, aiming for 18.5 percent of U.S. auto sales with four car lines, down from eight.  According to Autodata Corp, the four surviving brands, Chevrolet, Cadillac, Buick and GMC, accounted for 16.5 percent of the market in June, and Ford’s share was 17.2 percent, excluding Volvo, which it is selling.

An industry analyst with IHS Global Insight of Lexington, Massachusetts, John Wolkonowicz said that surpassing GM would validate Ford’s strategy to go it alone and spurn government aid. While GM and Chrysler LLC seek to change themselves through bankruptcy, Ford benefits from its status as the only independent major U.S. automaker as it builds momentum.

Well, it sure looks like Ford is on a hot streak right now but will it last so that Ford overtakes GM?  It’s going to mean that our Government owned GM must keep some customer loyalty with Pontiac customers, which it is discontinuing to create the “NEW” GM.  That is clearly going to be a major challenge.  A lot of Pontiac buyers, young, blue-collar women, really do not like the rest of the GM lineup and they are certainly not going to buy a Buick anytime soon.

As the story goes, GM first overtook Ford in 1927 as Henry Ford halted production to switch from building the Model T to the Model A. Ford recaptured the lead in 1929-30. GM pulled ahead in 1931 and never looked back, until now.  Why did they over take Ford? No ‘Natural Reason’.  As for DM, defending its 78-year-old U.S. sales supremacy will be challenging, even after Volvo is sold.  They will have four brand and Ford will have three and thus, there will be a parsing out of who the winner will be between the two.

It’s interesting that Ford has already overtaken Toyota Motor Corp. in U.S. sales by selling 773,242 cars and trucks while the Japanese automaker sold 770,449 vehicles in the six months through June, according to Woodcliff Lake, New Jersey-based Autodata, a research firm that compiles automotive sales data. Toyota has outsold Ford in the U.S. the past two years. Ford continues to trail Toyota this year by 26,953 vehicles when Volvo is excluded.  GM’s four surviving brands sold 804,371 cars and trucks in the first half of this year, according to Autodata, down 38 percent from the same period in 2008. Ford’s U.S. sales, excluding Volvo, are off 33 percent.

What, if anything, did GM learn from discontinuing Oldsmobile?  GM failed with customer loyalty when they dropped Oldsmobile and did not hold on to many Oldsmobile buyers after it killed that brand in 2004. So now it’s all going to be about sophisticated electronic marketing techniques to target Pontiac owners and GM is expanding its other model lineups to offer alternatives.

Ford gained U.S. market share among individual car buyers in seven of the past eight months, according to George Pipas, the automaker’s sales analyst. The Michigan-based automaker’s 17.2 percent U.S. market share in June excluding Volvo was up from 14 percent in the same month last year.  Basically, the key benefit of Ford Not Taking Aid, (that is avoiding bankruptcy and staying off federal aid,) is helping Ford win new customers.

GM, which had filed for Chapter 11 on June 1, is receiving about $65 billion in federal aid. Chrysler, which filed for bankruptcy April 30, has taken $12 billion in U.S. assistance.  Ford won almost three times as much support as  the Government owned GM and more than six times as much as Chrysler among U.S. consumers asked about their preferences for a new auto, according to researcher AutoPacific Inc. of Tustin, California.

In an online survey of 900 people in June, 43 percent said they were likely to buy or lease a Ford, compared with 15 percent for GM and 7 percent for Chrysler. Ford matched Toyota’s score and beat Honda Motor Co.’s.  Ford will gain more market share on its domestic rivals when it launches two small cars next year. The automaker is estimating that it will sell 310,000 Fiesta subcompacts and redesigned Focus compacts annually by 2012, Global Insight estimates.

It’s certainly going to be an interesting battle and with free enterprise going against Government and Union owned GM, Ford should be a clear winner when it’s all said and done.  One thing that continues to confuse me is with the billions of dollars going into this restructure and government ownership, how will it succeed if the financial markets do not loosen up credit and let car buyers purchase transportation with auto loans?  Hey Mr. President, how about kicking some of these “cautious” banks into helping out the American people!  What do you think?

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