Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Is Ford About to Pass GM?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Last year, when Ford (NYSE: F  ) was surging while General Motors (NYSE: GM  ) was still staggering out of bankruptcy, some industry watchers thought it possible that Ford's U.S. sales could permanently surge past GM's. Such a turn of events would have upended the decades-old Detroit pecking order and marked a historic shift in fortunes for both firms.

But as we know now, it didn't quite work out that way. Although Ford did manage to outsell GM in February of last year for its first one-month triumph since 1998, GM has since reasserted its position as the U.S. sales leader, comfortably outselling both Ford and fading challenger Toyota (NYSE: TM  ) over the last year, with Chrysler and Honda (NYSE: HMC  ) well behind.

But if projections from the industry-watchers at Edmunds bear out, we could be seeing the start of an intriguing horse race.

A fluke? Or a shift?
A few days ago, Edmunds predicted -- not without caveats, which we'll get to in a moment -- that Ford could outsell GM in the U.S. in March. Again, this wouldn't be unprecedented, and it wouldn't mark a change in the global pecking order. GM still outsells Ford by a huge margin around the world, and that isn't likely to change anytime soon.

But given that GM's U.S. sales have led the market by solid margins in recent months, it's worth taking a look at a few unfolding themes:

  • GM's incentives down. The General's incentive spending, the money put into those "zero percent financing" or "cash back" offers, has been the highest in the industry, but it's coming down. Edmunds estimates GM's incentives, which were close to $4,000 per vehicle in February, will be down by $700 in March. A drop in sales is thus predictable, but that's not all bad: Average per-sale margins should be up. Even with lower sales totals, higher margins are a good thing.
  • Ford has some aggressive discounts. Ford just launched its all-new Focus, and is working hard to sell down its inventories of the outgoing model. That effort is apparently going very well, according to Edmunds, as a willingness to discount combined with rising gas prices has led to a surge in demand for fuel-efficient cars.
  • Hotter models in favored categories. While GM's Chevy Cruze compact is selling quite well, Ford's new Focus may outclass it. And Ford's midsize Fusion has won praise and sales, eclipsing Chevy's aging Malibu. Likewise, Ford's just-refreshed pickups are the hot ticket in that category at the moment, and the all-new Explorer is starting to steal some of the thunder from the Chevy Equinox and GM's other hit kid-haulers.

As I said, Edmunds' prediction comes with caveats: It's based on partial-month data, and much can change in the last week. We won't really know what's happening until the manufacturers release real numbers on Friday. But if this sales shakeup turns out to be a trend, rather than a blip, that last bullet point may be the most significant.

It's the product, stupid
Incentives go up and down, of course, but the larger story is (and has been) GM's lag in bringing new products to market. The company's financial decline and forced delays in several key product-development programs, and reports have suggested that more recent management shuffles have led to a number of rethinks and setbacks. Meanwhile, Ford has streamlined its global product portfolio and committed to an aggressive new-product cadence, with the Focus and Explorer just the latest in an ongoing series of critical (and so far, very successful) launches.

 GM is getting its act together, though. The Cruze, introduced last fall, is probably GM's best-ever U.S.-market compact, and sales have been strong. An all-new Malibu, which GM describes as its first true "global" midsize sedan, will be unveiled in mid-April in both New York and Shanghai. And more new products are on the way, including two new Cadillac sedans and a major overhaul of the company's full-size truck lineup.

A recent Polk report suggests that GM is still doing a pretty good job of retaining its customers, with loyalty rates hovering around 60%, close to the industry lead. Will that be enough to preserve the General's sales lead while it rushes fresh product to market? We'll find out.

Want to stay up to date on the ongoing global auto shakeout? Just click here to add all of the automakers mentioned in this article to My Watchlist.

Fool contributor John Rosevear owns shares of Ford and General Motors. You can follow his auto-related musings on Twitter at @jrosevear. General Motors is a Motley Fool Inside Value recommendation. Ford is a Motley Fool Stock Advisor pick. The Fool owns shares of Ford. You can try any of our Foolish newsletter services free for 30 days with no obligation.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (9) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 31, 2011, at 8:45 PM, allmusl70 wrote:

    I'll add another point....Mulally. Ford's got him and GM wishes they had him!

  • Report this Comment On March 31, 2011, at 9:09 PM, TMFMarlowe wrote:

    Yeah, it remains to be seen exactly what GM has. I think the jury is still out on Dan Akerson.

    Thanks for reading.

    John Rosevear

  • Report this Comment On March 31, 2011, at 10:31 PM, sstidham2011 wrote:

    You guys haven't seen anything yet. Mr. Mulally and the upper management staff aren't remotely close to being content with their position in the auto industry. They strive for excellence and anything short...well, just won't work. All I can tell you their products. Have you really driven a Ford lately? You have no idea how nice they are.

  • Report this Comment On March 31, 2011, at 10:54 PM, baldheadeddork wrote:

    I wouldn't put Ford's discounts on the outgoing Focus in the same class as GM's incentive spree. Getting rid of old models before new ones arrive prevent much greater discounts later. GM is just buying market share. (And Toyota is just trying to stem their losses.)

    Also, be skeptical of GM's debuts this year. The new Malibu will be unveiled in April 2011, but it won't appear in dealers until at least a year later. GM doesn't have any actual new product to sell this year so they are doing the show circuit with 2013-2014 products. It will keep them relevant this year, but it's going to drive down customer interest in the current models and it will dilute the impact of the actual debut next year. (I love Jeep's new policy of debuting products no more than thirty days before they're available for sale.) If I were a Chevy dealer I'd be furious about GM showing off the Malibu a year before I can sell it.

  • Report this Comment On March 31, 2011, at 11:44 PM, Toadhil wrote:

    Lest we forget that the Fords are running up front on the Track as well. Winner's Circle on Sunday,...selling in the Showroom on Monday...

  • Report this Comment On April 01, 2011, at 8:53 AM, TMFMarlowe wrote:

    @baldheadeddork: I'm not putting Ford's Focus blowout in the same category, just noting it as a factor in the sales trends we're likely (maybe) to see later today.

    As for the product (or not), I have an article coming that takes a closer look at GM's issues next week, probably Monday or Tuesday.


  • Report this Comment On April 01, 2011, at 12:39 PM, TMFMarlowe wrote:

    And sure enough, Ford outsold GM by about 6,000 vehicles in the US in March. New article on the way...

    John Rosevear

  • Report this Comment On April 01, 2011, at 1:16 PM, FREEHIKER wrote:

    only a fool would connect NASCAR with the auto industry. I think the last factory part on the track was the hoods. Even the blocks are cast & heat treated especially for the builders.

  • Report this Comment On April 11, 2011, at 1:15 PM, WhiteHatBobby wrote:

    One thing important to know is Ford has virtually put the kibosh on development. Almost every new Ford on the road has been another automaker's vehicle. The new Focus is actually a Mazda3, and the Fusion has long been a Mazda6. Ford's "Geely Four" of the Taurus, Flex, Edge, and New Explorer are the same sedan from Chinese automaker Geely.

    If that's the way to go, it's bad news for America, as we see that the Ford model of producing other's cars be the way to go. The two automakers agreed to one automatic gearbox.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1468165, ~/Articles/ArticleHandler.aspx, 10/25/2016 5:35:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 4:01 PM
F $11.85 Down -0.19 -1.58%
Ford CAPS Rating: ****
GM $31.60 Down -1.38 -4.18%
General Motors CAPS Rating: ***
HMC $29.92 Up +0.23 +0.77%
Honda Motor CAPS Rating: ****
TM $115.25 Down -0.20 -0.17%
Toyota Motor CAPS Rating: ***