One Way That General Motors Trails Crosstown Rival Ford Motor Company

America's two largest automakers have come a long way since the depths of the great recession. While Ford (NYSE: F  ) and General Motors (NYSE: GM  ) initially took different routes in their business turnarounds, with the former taking out loans to survive and the latter filing for bankruptcy, both claim surging sales in segments they once left for dead in. In fact, Ford gained more market share last year in the U.S. than any other major automaker. One reason behind Ford's gains is the company's effective consumer marketing of its fuel-efficient engines. Here's an example of how GM has fallen short, why it matters, and what GM is doing to solve the problem.


Graph by author. Source: Automotive News DataCenter

Eco what?
Can you name Ford's line of fuel-efficient engines? If you quickly recited the EcoBoost name, you're right on the money. Can you do the same for General Motors' line of engines? Not nearly as many consumers can recall its family of Ecotec engines, but that is something GM is trying to change.

Consider that Ford's three best-selling vehicles in the U.S. are the F-Series, Fusion, and Escape, and each boast an EcoBoost take rate of 42%, 52%, and a whopping 89%, respectively. Ford's EcoBoost engine options have proved very popular with its consumers in many different models and have played a large role in sending sales of the Fusion and Escape soaring after they remained flat before and during the recession.


Graph by author. Source: Ford's annual sales releases

It's clear that fuel economy is important for car buyers, and General Motors needs to step up its game or it risks losing even more market share to the folks at the Blue Oval.

Ecotec (L to R) 1.4L I-4, 1.5L I-4 and 1.0L I-3 Engines. Source: General Motors

General Motors is unleashing a new generation of Ecotec engines that will bring its portfolio to include 11 engines. America's largest automaker intends the Ecotec engines to be available in its small cars and compact crossovers with the highest sales volume. In fact, as soon as 2017 GM plans to produce 2.5 million new Ecotec engines annually. GM hopes the engines will enable its brands to compete more directly with Ford's EcoBoost offerings, as well as improve sales in Europe and in China.

"Transportation solutions vary around the world and GM is committed to developing engines matched to the needs of the regions where they're sold," said Steve Kiefer, GM vice president, global powertrain engineering, in a press release. "The new engine family is designed to achieve segment-leading refinement and efficiency, and will make its way into five GM brands and 27 models by the 2017 model year."

Foolish takeaway
I own shares of both GM and Ford and I believe both automakers have much potential left as investments. For General Motors to take the next step and become a more valuable investment it must fix its tattered brand image and improve its lineup of fuel-efficient vehicles and engines. Only recently has the U.S. Treasury sold off its remaining stake in GM, and that was one step in the right direction for the company's brand image. But a recent recall of 1.76 million vehicles globally threatens to erase some of the progress the once-troubled automaker has made. For that reason, among others, GM needs to effectively market its new Ecotec engines or risk losing even more market share to its crosstown rival Ford, which already has hit a home run with the EcoBoost. 

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Read/Post Comments (10) | Recommend This Article (9)

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  • Report this Comment On March 20, 2014, at 7:05 PM, AmericanFirst wrote:

    Daniel,

    You did a great job hiding the result of GM's bankruptcy, which has incredibly advantaged GM over F. May, I remind you that the result of the GM bankruptcy was a $80B restructured Balance Sheet ($50B cash/$30B debt relief bondholders) plus $45B corp. income tax benefits, plus $B's saved in interest expense per the defaulted bondholders, all on the backs of taxpayers / bondholders. GM received all of the above for only $7.6B "out of pocket" (GM purchase of $7.6B of their pref./common from gov.).

    Ford, 2006 during the auto crisis borrowed approx. $26B from private institutions, has already paid back plus interest, Dept. of Energy 2009? loaned F $5.9B for "green technology development" the same fund that loans to Nissan, Tesla, Fisker and others were made loans from. This loan is or will be paid back as agreed.

    I welcome your comments.

  • Report this Comment On March 20, 2014, at 10:43 PM, rh33 wrote:

    General Motors did not "turnaround." General Motors did not survive. General Motors was liquidated. Investors including the United States government started a new company that they named General Motors. (Why the U.S. government should participate in such a project is beyond me, but that's another matter.) The new company bought the right to use the name, "General Motors," among other assets. But it is a different company. Of course, the new company may share characteristics with the old company as a result of having so many of the defunct company's assets and employees, but it is a different company, despite the identical name. This may confuse the customers and casual readers, but there's no reason a financial writer should not acknowledge these facts.

  • Report this Comment On March 21, 2014, at 12:30 AM, DukeMontrose wrote:

    Will not intelligent car buyers pick Ford over GM cars,

    remembering how GM hosed American tax-payers by the billions?

    But Ford went the true American way =

    via private enterprise.

  • Report this Comment On March 21, 2014, at 9:06 AM, RandiRN wrote:

    I have read all the stories about Ford wonderful Ecoboost engines. I don't share everyone's high regard for this product. I had some collision damage repaired on my 2012 Terrain and was given a 2013 Escape with a Ecoboost engine. It was horrible!!! The turbo lag was terrible. I had to be very careful pulling out into traffic that I gave the lead sled time for the turbo to spool up. I will try not to own a turbo vehicle, give me a naturally aspirated engine anytime.

  • Report this Comment On March 21, 2014, at 9:26 AM, AcuraT wrote:

    I own an older, 2006 Ecotec engine on my 2006 Saab 9-3, which had GM with turbo charging many years before Ford spent millions promoting its new "Ecoboost" engines that have terrible turbo lag. Saab realized to reduce turbolag, they had to shorten the hoses that run from the turbo as well as change the engine controls to make it more efficent. They developed their own version of the engine, which GM powertrain adopted.

    It has been a great engine/transmission (transmission from Aisen with 5 speeds) for almost 8 years now, and nearly 120,000 miles with zero issues. I get up to 36 mpg on the highway, and average 25 mpg in town. If I lead foot it - I get great acceleration of just under 8 seconds 0-60 mph but gas mileage suffers.

    Ford may have the name recognition, but as far as I am concerned, the car I have is a very good one. When I am ready to replace it - in probably another four or five years, I can look at the Buick Regal turbo which is basically an updated Saab 9-3. I know it has a direct-injection engine but the same 2.0 liter sized engine, and a six speed automatic, and comes with the Saab developed Halidex AWD system if desired. Oh yes, it does not have turbo lag either. For me, it is the better car (and I can always consider other brands like Subaru as well).

  • Report this Comment On March 21, 2014, at 11:44 AM, 1FootIn wrote:

    As a current owner of a 2013 Ford Escape with a 2.0 EcoBoost engine that I've driven for 16000 miles and counting, I can thankfully say that I'm very satisfied with it's performance. Ford has done a very good job marketing the EcoBoost name which is one of the points that Daniel clearly articulates. That said, both Ford and GM have significant opportunities ahead of them. Ford's Lincoln brand is just beginning to get some much needed attention and the opportunities there could be big for Ford.

  • Report this Comment On March 21, 2014, at 1:15 PM, ejazz2095 wrote:

    Shockingly GM is behind it's competitors. Some things never change!

  • Report this Comment On March 22, 2014, at 2:01 PM, MerlWThompson wrote:

    Tom Gardner, Motley Fool One

    I received your e-mail, that I have been approved to

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    I reached my 90th birthday on Feb.19th 2014.

    This makes it difficult to plan for five years.

    Me and my wife have $441,782.32 value in 12 stocks. We have $488,991.12 value in 14 mutual funds.

    Now my questions, Will I sell all or selected stocks?

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    Motley fool? Will it be worth your time an my time.

    I will appreciate you calling me at 405-789-3733 to

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  • Report this Comment On March 23, 2014, at 12:07 AM, colleran wrote:

    Hey Meri,

    I found the One invitation humorous after they talked over and over about the 1% the money managers take. In my case, the cost would be more than 1%, given my portfolio. By the way, the cost is nearly $7000 per year. I am PISSED at MF who I have followed for well over a decade. Anything for money, right Gardners?

  • Report this Comment On April 01, 2014, at 2:24 AM, jackfleming wrote:

    Ford’s debt to equity ratio has subsequently declined to 75.8%, compared to 86.9% in 2011. Meanwhile, the company has also returned $1.3 billion in dividends to investors during the last 12 months, compared to the $763 million paid out in fiscal year 2012. http://bit.ly/1s1gvd3

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