Ford Finally Outsold GM. Now What?

I said yesterday that it was a possibility, and now it's official: For only the second time this century, Ford (NYSE: F  ) sold more cars and trucks in the U.S. in March than General Motors (NYSE: GM  ) .

That's a noteworthy milestone for Ford's ongoing resurgence -- or is it a setback for a General Motors team that's still struggling to get traction?

Truth is, it's probably a little bit of both.

Good and bad news for the General
Looked at out of context for a moment, GM actually had a decent month in March. Fleet sales were down a little, incentives were down a lot, and overall sales were still up 11% over an impressive effort in March of 2010. Retail sales of passenger cars were up a hearty 34%, fueled by strong demand for the compact Chevy Cruze and new Buick Regal.

The Cruze has turned out to be a nice story for GM. Based on a platform developed by GM's Korean unit, the Cruze has demonstrated that GM can build a well-equipped small car that deserves its somewhat premium pricing. For those who remember GM's dubious past compact-car efforts like the Chevy Cavalier, the Cruze might as well be from a different planet. At a moment when Americans are looking for fuel-efficient cars, GM -- for once -- has a solid entry to show.

But the Cruze, by being exceptional, also nicely illustrates GM's problem. The Cruze is a new product that shows well against the competition. GM doesn't have a lot of those, and it'll be awhile before that really changes. That in turn is going to make it hard for the General to develop sales momentum, at least without going back to the incentives well.

And Ford, meanwhile, is going to be eating GM's lunch.

Ford just keeps rolling
I doubt that Ford CEO Alan Mulally and his hyperfocused team will spend much time celebrating their one-month sales advantage over their ancient cross-town rival. Ford still has plenty to do, but so far, recent efforts are paying off handsomely:

  • Fiesta sales are finally taking off. The littlest of Fords saw its sales increase 56% over February, thanks to rising oil prices and the Japanese crisis. A nice little car that is doing particularly well in southern California, the Fiesta is likely to continue to benefit from the production disruptions affecting supplies of the Honda (NYSE: HMC  ) Fit, its key rival.
  • Other passenger cars also did well: The popular midsize Fusion saw its sales increase 21%. The Fusion is another model that could see big benefits if supplies of its key rivals (in this case, the Toyota (NYSE: TM  ) Camry and Honda Accord) are disrupted for any length of time. The Mustang also saw a solid increase in sales, up 47%.
  • The Explorer. The completely redesigned kid-hauler has been a hot seller since it arrived in January, and is turning out to be a big story for the Blue Oval Crew. Ford claims it has been its "fastest-turning vehicle" for the last three months, meaning that Explorers spend less time sitting on dealer lots than any other Ford. Ford also says that the Explorer's "conquest rate," a measure of how well a vehicle lures owners of other makes, is an impressive 43%.

The Japanese crisis and rising oil prices could play right into Ford's hands. With the Fiesta, the Fusion, and the just-introduced Focus, Ford now has three fuel-efficient cars that can compete with anybody. If supplies of the Japanese class leaders turn out to be constrained for any length of time, Ford is particularly well-positioned to see major gains.

Short takes: The other guys
How about the rest of the field? Not all automakers had reported as of early Friday afternoon, but early results showed a strong month across the board:

  • Nissan say sales jump 27%. The company says that March was its best month in company history, at least in the U.S.
  • Chrysler continued its improbable resurgence. Sales were up 31% for the automaker's best month since May of 2008, as redesigned products continue to make their way to showrooms.
  • Toyota's figures weren't yet available at press time, but the company was expected to post strong results -- helped in no small part by panic-buying of popular models like the Prius that were expected to be in short supply in coming months.

From GM's perspective, it's bad enough that they got beat by Ford in March. The larger concern is that most of their rivals saw bigger percentage gains than theirs -- and the magic bullets in GM's product pipeline are still a long way off. Can the company make hay while its Japanese rivals struggle to recoup? The next few months will be telling.

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.

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  • Report this Comment On April 01, 2011, at 4:11 PM, tomwittmann wrote:

    Are you really so shortsighted that you do not se the facts??

    In February, GM had a huge spike, due to special factors, Ford a relatively modest result.

    This now compensated itself, even if the balance iof both months is still favorable to GM

    So, your comments are obviously directed to attract ignorant persons and incidentally, irrational GM haters.

  • Report this Comment On April 01, 2011, at 4:18 PM, TMFMarlowe wrote:

    @tomwittmann, your comment mystifies me.

    Ford outsold GM by about 6000 units. Never mind last month, the last time that happened it was the 20th century. What exactly is ignorant or shortsighted about pointing that out and looking at the underlying trends?

    John Rosevear (who owns both F and GM stock, incidentally)

  • Report this Comment On April 02, 2011, at 6:40 AM, baldheadeddork wrote:

    Toyota reported late, and when you look at the numbers it's clear why they weren't in a hurry to release them.

    Sales were down 7% compared with March 2010. That didn't catch me off guard because Toyota went on an incentive spree last March in response to the unintended acceleration debacle. This year Toyota took a lot of that cash off the hood, incentives were down 27% compared to last year. Toyota also missed their Edward's projections by 5,000 units and market share slipped to 14.1% - a 15% drop in a year.

    Drilling down into Toyota's numbers - Prius sales were up 58% from a year ago. But that's where the good news stops. Camry sales were down 13% even though the Accord, Fusion, Altima and Sonata were all up 19-31%. There was an even bigger gulf between Toyota and the rest of the field in compact SUV's. The RAV4 was down 38% while the ancient Escape was up 21% and the CR-V was up 48%. Toyota's only other vehicle in the top 20, the Corolla, was up 2%. But it also lagged far behind gains for the Civic, Cruze and Sentra.

    If there was any lingering doubts, this is the new normal for Toyota. They can tell buyers they're number one for a reason, but those buyers have decided that reason is cash on the hood. When Toyota pulls back incentives, they lose sales to almost everyone else in every category, just like every other struggling automaker in the market.

    A couple of things that caught my eye this week. First is a chart from Zero Hedge showing GM dealers are carrying more inventory than in the last two years. March inventory was at 574,000 units. That's a 150K increase over March 2010, but even with the boom in incentives from December through February dealer inventories remained above 500,000. Rumors of channel stuffing have surrounded GM since the lead up to the IPO last fall and this is another piece of evidence that GM really is overproducing.

    http://www.zerohedge.com/article/channel-stuffing-gm-hits-re...

    The other story that surprised me this week was an Edmund's Auto Observer piece on Ford's social media marketing. The story about the new campaign around a puppet character wasn't anything special, but buried inside was this jaw dropper: Ford is now spending 25% of their advertising budget on social media.

    Most of the effort is aimed at Gen-Y, but they've also used social media to target Gen X and Boomers in the pre-launch of the Explorer. It seems to be working. According to Ford's research, half of Gen-Y'ers knew about the upcoming Fiesta before the first TV ad aired. That's an amazing penetration without using conventional media.

    It's too soon to be certain, but if Ford has cracked the code on using social media for marketing it is going to give them a massive advantage over the next decade.

    http://www.autoobserver.com/2011/03/doug-keeps-ford-in-socia...

  • Report this Comment On April 03, 2011, at 1:31 PM, TMFMarlowe wrote:

    @baldheadeddork: F's move into social media is very interesting, and I should probably take a closer look at that. Did you see that GM is trying to do the same with the Malibu reveal? They won't have actual product shipping anytime soon, but neither did Ford when they started the Fiesta hype via social media in the U.S.

    Gonna be fun to watch.

    John.

  • Report this Comment On April 04, 2011, at 10:36 AM, baldheadeddork wrote:

    But the difference between the Malibu and the Fiesta/Explorer is that the current Malibu is still one of GM's best selling cars. Ford didn't have to worry about gutting current sales with the Fiesta because they didn't have a B segment car and Explorer sales had been dead for years.

    Notice that Ford didn't do a long social media rollout for the new Focus. They announced the Focus Rally last fall, but didn't start the campaign until five weeks before the launch at dealers.

    I know I'm usually critical of GM, but I am scratching my head a lot over the new Malibu. Hyundai showed some genius to bring the styling of the Mercedes CLS down to the mass market midsize class, but are styling cues from the Camaro and Corvette going to bring in anyone other than diehard Chevy fans? My gut reaction is that retro muscle car cues will alienate most midsize buyers, but we'll have to see how the finished car looks.

    I'm also not sure how well social media marketing is going to work in this category. It was one thing to use it when Gen Y is your target demographic (Fiesta, Focus), and using Facebook to reach demos likely to have warm memories of the 90's Explorer was a deft touch. But midsize sedan buyers are older, this is an insanely competitive class, and does anyone have nostalgia for any Malibu made in the last 40 years?

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