Ford Motor Added

F- $2

A Better Idea

New York, BizBlog100@blogspot.com The tasks confronting Ford management are awesome. Their current product mix is overwhelmingly heavy vehicles and they are fully exposed to consumer retrenchment. Current unit volumes are so low that it is difficult to absorb engineering and tooling costs. But I don’t think their survival is at issue.


I have seen F successfully restructure and resuscitate. In the 1980’s, the Company turned Europe from loss to big profit. The same happened domestically in the 1990’s, powered by Ford’s leadership position in SUV and light truck.


I don’t know the product equation that will drive the next cycle; I’m skeptical that Fiesta imports can be a meaningful profit contributor. But I am confident there will be a recovery in volumes --- perhaps even with big cars Americans have always loved!


But the upside is the real prospect of a GM bankruptcy! The opportunity is in light truck market share. F & GM each have about 20% share, Chrysler has about 10%. It is critical to their domestic profitability. I think the prototypical truck buyer will have several reasons to favor F over a “re-structured” GM. I foresee a meaningful shift in market share in the most attractive segment of the auto market (by profit contribution). Each 1% shift in light truck market share represents $1-2 billion in annual sales.


To date, Ford is taking the high road in public comment. But they have clearly differentiated their business strategy from their bailout-seeking competitors. I suspect the dialogue will sharpen considerably as GM’s fortunes become hostage to bureaucracy. And I think it will make a difference.


Disclosure: I drive an Explorer, my second; preceded by a beloved T-Bird.


BizProf100