Should Ford Be Worried About General Motors?

According to The Wall Street Journal, Ford (NYSE: F  ) grew its U.S. light-vehicle sales 25% in April, putting 167,283 new cars and light trucks on American roads. In contrast, beleaguered automaker GM posted only 7% sales growth on an annual basis.



































So ... does this mean that stubbornly independent Ford is doing nearly four times better than its "Government Motors" rival?

In a word: No. It doesn't.

Turns out, GM included in its sales total the numbers of vehicles (not) sold under its discarded Pontiac, Saturn, Hummer, and Saab brands whose brands collectively dropped 95% year over year. Had GM elected to take the aggressive road more often traveled in corporate PR circles, and report just the retail numbers (not including fleet sales) from its remaining brands -- Chevy, Buick, Cadillac, and GMC -- its sales growth would have been 33%, an astounding 26 percentage points higher!

Foolish takeaway
Between its surprising sales strength (given the stigma attached to its wholly owned-subsidiary-of-the-U.S.-Department-of-Treasury status), and its attention-getting debt repayment of last month, GM appears to have true momentum as it rolls on to the IPO stage, which could come as soon as this year.

With its debt burden greatly reduced by last year's bankruptcy, don't be surprised if a newly public GM turns the tables on Ford. This IPO is one to watch.

Fool contributor Rich Smith does not own shares of any company named above. Rich is not a licensed economist, but he plays one on the Web. Check out his latest stock picks in Motley Fool CAPS. Ford is a Motley Fool Stock Advisor pick. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (8)

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  • Report this Comment On May 05, 2010, at 4:40 PM, wigginsrl wrote:

    Maybe GM was feeling a little sheepish after being outed for "taking the aggressive road more often traveled in corporate PR circles" with its outrageous claim of having paid back its government loan 'with interest'! Never mind the millions of stockholders that just got left with nothing, and the creditors that were stiffed, and that GM saddled the taxpayers with billions more in bailout. Is that what you mean by doing about as well as Ford?

  • Report this Comment On May 05, 2010, at 4:57 PM, sg64 wrote:

    Oranges to oranges please, you are implying a comparison between GM retail sales v. Ford total sales. Why?

    GM's Core (a.k.a "surviving") brands grew, counting retail and fleet sales, 20%. A respectable growth but still beyond the industry average of 25% and still beyond Ford's total of 25%, let alone Hyundai, Toyota and even Chrysler.

    If you want to talk retail v. retail then you need to quote Ford's retail sales growth 32% and Ford accumulated growth in the first 4 months of the year of 34%.

    GM may arguably have not taken the aggressive road more often traveled in corporate PR circles, but you certainly did it for them with this outrageous and misleading article.

  • Report this Comment On May 05, 2010, at 5:18 PM, SMOKEN42 wrote:

    MR. SMITH MUST NEED TO GET AN ARTICLE PUBLISHED !!!!!!!!!! KEEP THROWING IT ON THE WALL !!!!!!!!!!!!!!!!!!!!

  • Report this Comment On May 05, 2010, at 5:40 PM, bossbill wrote:

    G.M. would apparently have the advantage over Ford going into a public offering. It would have been allowed to shed billions in debt and have operational costs mitigated. The bankruptcy and our government bailout seemingly ensured this. Returning to the public forum and having the ability to sustain however will greatly depend on the consumer's acceptance of G.M.'s products. In addition to producing quality and relevant products, sustainability will depend on the reality of the company's direction, leadership, stability and good will. Ford may not be as disadvantaged as one might think.

  • Report this Comment On May 05, 2010, at 11:32 PM, loki2009 wrote:

    Wow - when are you guys going to give up? It's hilarious. Instead of trying to figure out the new Ford reality you continually try to rationalize your lame and blind refusal to accept that Ford is the star of the future of auto manufacturing in North America and Grossly Mismanaged is still the same old thing with a CEO who didn't want the job in the first place. What - are you trying to console yourself for missing the boat on the 15 month move from $1.00 to $12.00 for Ford?

    Wow - so amazing insight that when you take out the sales of GM's defunct brands their other sales of retained brands was not 7% but an "astounding" 33% higher? Einstein Smith - where did you think those diehard dead brand GM buyers were going to go (and why they are diehard after GM stiffed the world is beyond me)? They are still up only 7% from a pretty dreadful year.

    And did the new Grossly Mismanaged make money in that 6-month period after they unfairly shed their debt and got tons of government money? Hell no - they lost $4.4 billion versus Ford making $2.8 billion (granted Ford has Ford Credit to help out with about 40% of that profit).

    So let's stack up your pet GM with Ford.

    Ford 6 month revenue July to December: $66.3 B

    GM's 6 month revenue July 10 - Dec 31: $57.3 B

    Hmmm - that's strange - doesn't GM have more market share?

    Well lookee there Ford unit sales 2.67 million. GM's sales - well they really don't want to tell you, but using a rough pro rata allotment based on revenues - about 4 million vehicles. Holy bat crap batman!!! That's about 40% more vehicles to grab 13.6% less revenue. How are you feeling now Mr. Smith?

    Let's warm it up a bit more. Ford's total liabilities $98.5 billion - the new GM $107.3 billion. Wait a minute - another holy bat crap moment!!! How can that be - they stiffed investors for over 100 billion in debt that magically disappeared from the balance sheet. And still that problem? What's going on here? Getting still more uncomfortable Mr. Smith?

    I am not done yet.

    GM must have more cash - right? Nope - GM $22B Ford $25B. Yes - $13 million of restricted cah for GM but that's earmarked for gone.

    Well - what about at least GM has a positive S/H Equity of $21.5 billion - right? Ford is negative $14 billion. Well darn it to hell - look at that. GM had to create $30+ billion in Goodwill on its balance sheet and another $14+ billion in intangible assets. That's $46 billion in smoke and mirrors. Without that - GM would have negative shareholder's equity of $24 billion. Hey - isn't that worse than Ford?

    Mr. Smith - I could go on for a few more paragraphs here but I assume you get the drift.

    You must have been in desperate need to post something and came up with crap. Try doing some useful analysis and data collection and show the truth. You and many of the Motley Fools have been caught with your pants down over the last year and a half regarding Ford and all the rationalizing in the world (particulrly when it's full of holes) isn't going to make up for the missed profits for anyone who paid attention to the constant negative beating of the Ford drums on the Motley Fool.

    Wake up - otherwise you're also going to miss possibly the most spectacular new car launch in a long, long, time. That's right - the Fiesta. Another Ford game changer. It's going to sweep North America by storm. Get with the program or just step aside.

  • Report this Comment On May 05, 2010, at 11:52 PM, baldheadeddork wrote:

    Five relevant numbers left out of Rich's article:

    GM's market share with eight brands in April 2009 - in the middle of the anti-bailout backlash and the worst market collapse in 70 years: 20.9%

    GM's market share with four brands in April 2010, when Rich Smith tells us that GM's has the momentum because their "core brands" were up sharply: 18.7%

    That's right - Chevy, GMC, Buick and Cadillac sales were up 32%, yet GM still lost 10% of their market share compared against the worst period for car sales and their biggest PR sh*tstorm in over a half-century. That's some special kind of momentum.

    The gulf between GM's total sales and their core brand results means one thing: They're not retaining those old Pontiac, Hummer, Saab and Saturn customers. Polish that t*rd any way you want it, but GM is going to be a substantially smaller car company for the foreseeable future. And that's just in the US. We haven't counted what they've sold off (China) or screwed up (Europe).

    I promised five numbers. Here are the last three.

    Ford market share, April 2009: 15.8%

    Ford market share, April 2010: 16.6%

    Ford 2010 YTD sales vs 2009 YTD: +34.1%

    Those increases in market share and YTD sales are the largest of any automaker in the US market through April. Larger than Hyundai, larger than Nissan or Subaru, larger than anyone.

    That's scoreboard, and that's momentum.

  • Report this Comment On May 12, 2010, at 10:34 AM, loki2009 wrote:

    By the way. Good luck with the GM IPO. First of all it ain't coming as early as was expected (because no one can figure out how the turds are still losing money and they need to stop that little bitty problem) and, if you choose to buy it - bless your black little hearts for buying this IPO when you could have bought shares in Ford for $1.00, $2.00, $3.00 .... $10.00, $11.00, $12.00 etc in the past 18 months.

    If there is a Grossly Mismanaged IPO - I submit to you that once again, Wall Street is girding its loins to rape and pillage Main Street for a few billion bucks. And you know what - if you buy this IPO (the one to watch as Mr. Smith put it - I think he is the Dr. Smith from "Lost in Space": Danger Will Robinson, Danger - but they took away his letters) - you deserve the shaft that Wall Street is ready to serve up on this pig.

  • Report this Comment On May 17, 2010, at 8:13 PM, loki2009 wrote:

    By the way - check your facts better. GM is not wholly owned by the US government. Perhaps after checking and confirming you can print a retraction here with the actual percentage ownership numbers. (I am not going to do any more fact checking for you Mr. Smith).

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