Jump to content

Build Theme!

Photo

Today's GM and Ford: Worlds apart


No replies to this topic

#1

NINETY EIGHT REGENCY

    Ransom E. Olds Reincarnated

  • Editor/Reporter
  • PipPipPipPipPipPipPipPipPip
  • 15,143 posts

Posted 03 May 2010 - 06:32 AM

Today's GM and Ford: Worlds apart

Automotive News -- May 3, 2010 - 12:01 am ET

General Motors announced last month that it is paying off government loans. A few days later, Ford reported profits of more than $2 billion for the first quarter.

What a study in contrasts.

Ford never borrowed money from the government, so today the company still owes more than $30 billion to lenders. Ford needs to pay it back and service the debt. This is not an insignificant challenge.

GM went bankrupt, which wiped out all its debt. GM's bondholders lost billions. Then the new GM borrowed $6.7 billion from the U.S. government and $1.4 billion from the Canadian government -- on top of $50 billion in aid from the U.S. government, for which GM swapped 61 percent of its equity.

GM didn't need the $8.1 billion in loans, so the automaker gave it back early in three payments. This is a significant achievement.

GM could have taken the Ford route and mortgaged the company a few years ago but chose not to do it.

GM is seeing small improvements in North America after eliminating four brands along with much of its dealer network.

For GM, China is booming.

Ford has sold more vehicles, increased market share and is introducing models that the public seems to want in large volumes.

Ford seems to be repeating the success of a couple of decades ago, when the company cut costs like crazy, introduced the Taurus and watched profits skyrocket for several years.

Ford appears ready to enjoy that same kind of success in the second decade of this century.

GM, particularly in North America, seems to understand its mission: Design, engineer and build cars and trucks that customers want to buy. It won't happen overnight.

GM must be patient if it expects to do an initial public offering and raise anywhere near enough money to repay the U.S. government's $50 billion.

The two companies are a study in contrasts and style.

Ford seems on the right track with only the normal challenges of an extremely volatile economy.

GM will need far more patience to understand a complex business. Mark Reuss is the right guy for the spot.

Meanwhile, Chrysler is becoming more intertwined with Fiat -- for better or worse.

The domestic market has never been more complicated. It will be fascinating to watch the winners and the losers -- today and tomorrow.

Read more: http://www.autonews....1#ixzz0mrwg4NW0
  • 0



Reply to this topic



  


0 user(s) are reading this topic

0 members, 0 guests, 0 anonymous users