It is no surprise that Chrysler, GM and Ford (F, Financial) – the former Big 3, now the “Barely Surviving 3”, keep reporting abysmal sales month after month, while mounting their losses into the billions. Their stocks are at levels not seen since the 1970’s, and speculation about their survival occupies many headlines across the media spectrum. If one were to bet on one of these three to make it out of this crisis alive, I would put my money on Ford. Here is why:
So, if you were to make a speculative bet on one of the three automakers, I would bet on Ford over GM. It has some momentum behind it, and their post 2010 line-up of cars look strong.
Full Disclosure: I do not own any of the stocks mentioned here but my position can change anytime without notice.
Faisal Laljee
www.stocksandblogs.com
Alan Mulally is a respected and successful CEO, who took over the helm at Ford only a few years ago. Before that, he was at Boeing. He tends to lead from the front. His recent voluntary pay cut to $1 for all of 2009 is a testament to his commitment and leadership. On the other hand, Rick Nardelli has earned the reputation of being greedy from his days at Home Depot. He followed Mulally’s lead on not taking a salary in 2009, but I don’t think he had a choice, considering the golden parachute he got from Home Depot and the stir it caused. Rick Wagner has been the CEO of GM for a long time and during his tenure, things have gotten progressively worse. Kirk Kerkorian, the famous activist investor took his losses in GM and left because he didn’t see a bright future for GM. If the leadership of a company is strong, investors like Kirk Kerkorian stick around for a while.
Ford opted out (for now) of federal aid, while the others begged for it. This self-reliant attitude, while obviously a good PR move, is also one that does indeed demonstrate their commitment to get their house in order. While this may result in GM emerging from this crisis with a stronger balance sheet and Ford with more debt than ever, it also indicates that Ford is opting to distance itself from Detroit’s stereotype.
Ford is installing innovative, out of the box technology that makes it stand apart from its peers. For instance, they are rolling out a Ford Fusion hybrid, that has better fuel economy than others in its class. Additionally, features like computerized keys would prevent teens from breaking traffic laws.
Among the 6 top auto manufacturers, Ford was the only American car manufacturer that gained market share in Q4 of 2008. While the quarter was less than stellar with losses rising across the board, a gain in market share shows Ford getting one over its Detroit rivals.
So, if you were to make a speculative bet on one of the three automakers, I would bet on Ford over GM. It has some momentum behind it, and their post 2010 line-up of cars look strong.
Full Disclosure: I do not own any of the stocks mentioned here but my position can change anytime without notice.
Faisal Laljee
www.stocksandblogs.com
