Ford — Not GM — the King of Detroit

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Ford GMAmericans can be fierce defenders of their cars, downright refusing to drive one brand and claiming that another can do no wrong. And after the 2009 automaker bailouts for Chrysler and General Motors (NYSE:GM) and an industry-wide push into fuel efficient cars and electric vehicles, that brand war might be more heated than ever before.

But when you take emotions out of the equation and stack up Detroit auto icons GM and Ford (NYSE:F), it’s easy to see that one automaker is head and shoulders above the other.

Here’s why, from a business perspective, Ford is just plain better than GM:

No bailout, no strings attached: Ford CEO Alan Mulally started restructuring Ford before the financial crisis, and as a result managed to keep the company’s autonomy and long-term vision intact. Conversely, Uncle Sam’s $80 billion bailout of Chrysler and GM had a material impact on the company — from reports that the government made GM close dealerships too fast to a focus on fuel-efficient cars that many industry insiders thought was more part of a political agenda than a business plan. The U.S. government still owns a 27% stake in GM, and the Canadian government also owns a 12% stake in the company. In a perfect world that ownership doesn’t equate to influence, but let’s be realistic — the U.S. government gets a say in GM.

Growing market share, not just growing sales: Ford grabbed customers from GM, Toyota (NYSE:TM) and Honda (NYSE:HMC) across 2010, seeing its total market share of all auto sales rise from 16.1% to 16.9% for the full year. That’s an impressive feat in such a mature market. While GM loves to cite year-over-year gains in its monthly sales totals, the fact is the bar isn’t set very high. Auto sales in general are pacing an 11% gain over 2010 numbers, and at this time last year the company still was dealing with the fresh wounds of Chapter 11 and bailout. GM stock hadn’t even held its post-bankruptcy IPO yet at this point in 2010, so it’s hard to imagine General Motors not improving year over year. GM might be improving, but has a lot of lost ground to make up.

Better vehicles. OK, Chevy lovers and Ford haters, hear me out, because I have some data: Of the top 10 vehicles by sales in September, Ford had three — the Ford F-Series pickup at No. 1, the Escape at No. 6 and the Fusion at No. 8. That’s a truck, an SUV and a sedan. GM’s only brand in the top 10 was the Chevrolet Silverado at No. 2. Lest you think that was a one-month fluke, the numbers are almost exactly the same in August — though the Fusion and Escape were both pushed down a little bit in the top 10 list. Granted there is an ebb and flow across the year, but the diversity of Ford’s product line shows. Remember, this is a company that won both the car and truck of the year awards at the Detroit Auto Show in 2009, then the truck of the year again in 2010.

Fleet sales. For the first time in years, Ford outsold GM in the number of automobiles purchased by the U.S. government in 2010. That, even though Uncle Sam had a major interest in General Motors! Not a good sign. With consumer spending still anemic and the auto market down significantly from its pre-recession levels — a forecast of about 12.6 million vehicles sold vs. a peak of 17.3 million — fleet sales are crucial to an automaker’s success these days.

The X-factor in the years ahead will be the electric vehicle market. Chevy seems to have the most appealing EV out there with the Volt, but it’s hardly alone. Ford has an electric version of its Focus, Nissan has the Leaf and others such as Tesla Motors (NASDAQ:TSLA) are ready to compete in this budding market. As of yet, the market is pretty much nonexistent, with Nissan just tallying its 10,000th Leaf sold globally — but it has been available in limited distribution since December 2010. Not exactly a red-hot pace.

General Motors certainly is looking better than it was a few years ago and could indeed see big gains if the auto market generally continues to improve. But if you’re looking for a winner in the Ford-vs.-GM battle, from a business and investment perspective, it looks like it’s Ford.

Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, https://investorplace.com/2011/10/ford-not-gm-the-king-of-detroit/.

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