It's a compelling story. The great-grandson of Ford's (NYSE:F) founder struggles against the odds to turn the embattled automaker around by once again focusing on cars after years of neglect. The big question is: Will this tale have a happy ending?
In a recent interview with USA Today, Bill Ford predicted that the company's spiraling market share losses will cease within six months. At the same time, he expects to be able to cut back on rich incentive packages that have been hurting many automakers' profits. The secret formula that Ford will employ to achieve these feats is its all-new lineup of automobiles for 2005.
There's no doubt that Ford's strategy is sound. The rebates and rock-bottom financing deals have been strangling automakers, and Ford's effort to break this vicious cycle clearly puts it ahead of competitor GM (NYSE:GM), which recently announced yet another financing scheme. Further, fresh designs seem to be the best way to entice consumers to pony up top dollar without incentives. DaimlerChrysler's (NYSE:DCX) success with the 300 supports this idea.
But Ford's new stable of vehicles may not have the oomph to reverse the company's fortunes this coming year. Ford plans to offer the Five Hundred sedan, the Freestyle crossover SUV, and the new Mustang without incentives. The Mustang is getting rave reviews and seems likely to be able to stand on its own without giveaways. But the other models aren't generating nearly the same buzz, especially in the styling department. These vehicles seem destined to be rescued with the sort of offers the company wants to avoid.
For Ford, the 2005 model year represents a positive, albeit tentative, first step. Nevertheless, the automaker has miles to go before its auto sales are back on track.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
