Sunday, June 07, 2009

Pundits can't make up their minds about Ford's fate..

It's litterally split down the middle online. Many pundits are saying that Ford Motor Company is picking up market share because they didn't take Federal assistance or enter bankruptcy, but in the same breath they're saying this puts Ford at a long term disadvantage. It's confusing for those of us trying to get a clear picture of what's to come. I'm not an Auto Industry guy or even a journalist, but here's my "regular guy" take on the situation.
While many say that Ford will be at a disadvantage to GM and Chrylser because these bankrupt companies will come back as trimmer and more competative companies, carrying less debt and be able to return to profitable operations quicker. Horseshit! What these pundits seem to be blind to is the American Consumer's ( and to some degree the International Consumer's ) perception of these two floundering companies. Since we the taxpayers are footing the bill for the recovery, with no real chance for a payback, there will be a bad taste left in many folks mouths.
Let's put it simply, many people, for right or wrong, wanted to let GM & Chrysler die last fall. Sure, that was a shortsighted view of the situation, but it will still stick in people's craw. And despite the bailout thousands, tens of thousands of people will loose their jobs and many more will loose their retirement funds ( employess and investors alike ) because of the bankruptcy.
Add onto that world of hurt the closing of over 2,000 dealerships and the bad feelings about that. As many have pointed out, in some smaller rural communities, new car dealerships are major tax revenue sources and genertional members of the communities, who've given to charity and supported everything from Little League to the Elk's Club in some way.
Many of GM & Chrysler's assumptions about a return to profit require that car sales return to pre-crisis levels. But many analysts say that new car sales will never return to the 16 million a year level they were at. I keep reading the new car sales will be closer to 10 million. So, who says GM & Chrysler will be able to regain those sales numbers in a tighter market with all of these bad feelings?
Ford's not out of the woods, but neither is Toyota, Honda, Hyundai or many other manufacturers. Ford has been refreshing models, introducing new models and techonologies and will continue to add more inovations and improvements over the next few years. Ford says they may return to profitable operations by 2011 or 2012. That's because they've got the capital and freedom to invest in the changes they need to make.

Does anybody remember how Chrysler's lineup sucked in 1980? Sure, the K-Cars "saved" the company, but do you remember how stagnant the rest of their lineup was well into the 80's? Their fullsize trucks and vans got minor facelifts and were among the slowest selling for a decade. The Mini Vans are what really helped Chrysler and this time around they don't have that type of inovative product to help them out of this quagmire. Are you counting on Fiat's small cars to do that? Have we all forgoten how bad Fiat cars were? All you have to do is go online and read reviews of the Fiat 500 compared to the Ford Ka, which share platforms and powertrains and are built in the same Polish plant. The Ka is consistantly said to be a better handler and have better reliability. I've read pundits say they think that even with the bailout and buyout by Fiat, Chrysler will be dead in a decade.
I don't expect GM to die in a decade, but other than the Volt and Cruze, I don't expect there'll be much inovation from GM in the near future. They'll be smarting from this for a long while.
I was surprised to read on DrivingEnthusiast.Net ( linked in sidebar ) that Bob Lutz was quoted saying that GM wasn't too sure about the Volt program and that the Camaro was the wrong car at the wrong time. GM thinks that they can't produce the Volt and sell it at a reasonable price and never expect it to earn a profit. It's window dressing for the Government I guess.
What happened to GM's new small car/engine plans? The Cruze looks like it's going to be delayed. And I haven't heard much about their small engine plan. I had heard that Cruze would be powered by a direct injected turbo charged 1.4 cyl.

So, Ford has EcoBoost, new Fiesta and Focus, Hybrid and Electric plans and fresh product. They've also got some measure of freedom that comes from not being on Uncle Sam's payroll.
Do GM & Chrysler believe we the consumers of the world will have such short memories?
Let's see how GM in the US does, let's watch Opel/Vaxhaul/Holden overseas. Don't forget all the Government monies from Canada, Germany, Britain and elsewhere, and the taxpayers who will never see a payback.
Ford has always done fairly well in forgeign markets and they will continue to. I'm not saing Ford will be the number one automaker in the world, I'm saying that I think they'll survive and be competative. I'm saying that my next new car purchase will be a Ford and I think many people who would have thought GM or Chrysler will follow me.
Stop digging Ford's grave. If you want to do a "Deathwatch" start one for Chrysler/Fiat. You can't expect that one mediocre company would buy another damaged company and come away stronger. It just doesn't add up.
Update, two articles that could indicate GM & Chrysler's future;

1 comment:

Anonymous said...

Good observations. I think Ford will be OK, unlike GM and especially Chrysler, they have a full pipeline of product coming.