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Ford, without rescue, beats ‘Government Motors’ in Obama orders


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Ford, without rescue, beats ‘Government Motors’ in Obama orders

President Barack Obama sits in the driver's seat of a 2011 Ford Explorer in Chicago in August.

Photo credit: Reuters

December 2, 2010 - 2:37 pm ET

DETROIT (Bloomberg) -- Ford Motor Co., which eschewed a 2009 U.S. bailout, sold the most cars and trucks to the federal government this year for the first time since at least 2005, belying concerns the Obama administration would favor its government-owned competitors.

The U.S. bought 21,980 vehicles directly from Ford in fiscal 2010, edging out Detroit-based General Motors Co. by about 540 vehicles, according to data obtained under a Freedom of Information request from the U.S. General Services Administration, which coordinates most federal vehicle purchases. Chrysler Group LLC sold 13,063 vehicles.

Ford’s gain under Obama’s presidency came after the administration engineered bailouts totaling $85 billion of GM and Chrysler and their finance units last year.

“There was a paranoia that the government was going to buy GM and Chrysler models to help them out because they had a foot in the door,” said Rebecca Lindland, an analyst at IHS Automotive in Lexington, Mass. “There was a definite concern for Ford.”

The GSA has accounted for almost a quarter of sales of hybrids by U.S.-based automakers during Obama’s presidency, according to the agency data, helping Ford gain the edge over GM. Ford sold at least 11,066 hybrids to the U.S. in the past two years, compared with 3,316 for GM, which discontinued sales of its highest volume hybrid, the Chevrolet Malibu, last year.

“The GSA alternative-fuel vehicle guidelines emphasize higher fuel efficiency and reduced greenhouse gases,” Mike Moran, a Ford spokesman in Washington, said.

Ford’s surge

Ford has boosted overall sales at twice the industry’s rate so far this calendar year and is on track to gain U.S. market share for a second year in a row -- the first two-year increase since 1993, Moran said. The company yesterday reported a 20 percent gain in November sales, compared with GM’s 11 percent increase and Chrysler’s 17 percent.

Ford also picked up additional government sales of Fusion sedans, Ranger pickups and Explorer sport-utility vehicles in fiscal 2010, which ended Sept. 30. Chrysler’s Dodge Caravan minivan was the most popular government purchase from that automaker.

Ford trailed both GM and Chrysler in government sales as recently as 2006, before achieving a 92 percent increase in 2009. Government sales by all three companies fell in 2010 from the previous year -- Ford’s by 22 percent, GM’s by 46 percent and Chrysler’s by 9 percent. GSA’s total purchases declined by 28 percent from 2009.

Top models

The most popular government-bought model over the past three years is the Chevrolet Impala, the ninth best-selling model among consumers. The Chevy Tahoe SUV, often portrayed in movies with opaque tinted windows in government caravans, is fourth. Ford’s F-150 was the fifth best seller and the F-Series line of trucks had the highest volume for a group, the data show.

“We work through the GSA process to deliver the right vehicles for the right job,” said Greg Martin, a GM spokesman in Washington. “We expect other automakers do the same.”

The U.S. government buys 60,000 to 70,000 automobiles annually through the GSA, said Sara Merriam, a spokeswoman for the agency.

The shift from GM to Ford isn’t part of a specific government initiative, Merriam said.

“Industry response is a component of this,” Merriam said. “They have to bid to be considered and ultimately to be selected. Maybe Ford was the most active and aggressive.”

The GM and Ford automotive purchases in 2010 were among the 406,679 vehicles the GSA purchased in the past six fiscal years, or about $8.59 billion worth of cars, trucks, fire engines and ambulances, according to the data.

GSA vehicle costs

Government purchases during the six-year period were highest in fiscal 2009, as GM and Chrysler emerged from government-backed bankruptcies, totaling 89,380 units for a cost of $1.95 billion, the data show.

The GSA spent an average of $22,672 per vehicle over the past three fiscal years, ranging from $6,800 buses to $937,505 fire-fighting vehicles. The average price consumers paid was $28,508, according to vehicle-pricing website Edmunds.com in Santa Monica, Calif.

Ford Executive Chairman Bill Ford said on April 20, 2009, shortly before Chrysler and GM entered government-backed bankruptcies, that the moves might pose a competitive challenge for Ford. GM is the top-selling automaker in the U.S. and Ford is second this year. In 2008 and 2009, Ford was third behind Toyota.

‘Government Motors’

“We really don’t want to compete with a state-owned enterprise,” Ford said at the time. “Frankly, that’s probably not in anybody’s best interest, including the government’s.”

Outgoing GM Chairman Ed Whitacre said in August he wanted to shake off the stigma of being “government motors” as quickly as possible. GM raised more than $23 billion, mostly for U.S. and Canadian governments and a union health fund, selling common and preferred stock in its initial public offering Nov. 17 and in a second offering from banks last week.

The IPO, 16 months after bankruptcy, cut the U.S. stake to 33 percent from 61 percent.

It would be difficult for the government to show preference for an automaker, even one it owned, because of the structure of the U.S. bureaucracy, said Jeff Green, president of at JA Green & Co. LLC in Washington, who has a background in government contract law.

“The government is so disaggregated that it would be hard to favor one company over another,” he said. “I would have been really surprised if someone were able to game the system.”

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20101202/RETAIL01/101209924/1448#ixzz170NrGsmN

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By Andrew Ganz

Although sales to government agencies only make up a small, low profit portion of overall new car sales, Ford Motor Company has more reason to smile this week than its crosstown rivals.

For the first time since 2005, Ford sold more cars via General Services Administration contracts than either General Motors or Chrysler. The Obama administration ordered 21,980 Ford vehicles, compared to 21,440 General Motors products and 13,063 Chrysler vehicles, for the fiscal year that ended September 30.

Ford is said to have sweetened government deals over concerns that its cross-town rivals, which were bailed out of bankruptcy, might receive preferential treatment.

“There was a paranoia that the government was going to buy GM and Chrysler models to help them out because they had a foot in the door,” said Rebecca Lindland, an analyst at IHS Automotive. “There was a definite concern for Ford.”

The vehicles

As Leftlane has previously reported, the GSA is a particularly large hybrid customer. Its purchases account for an astounding one quarter of all new hybrid sales produced by Detroit automakers.

But hybrids weren’t the only thing the GSA was interested in. The best-selling government vehicle continued to be the Chevrolet Impala, while the Ford Fusion was not far behind.

Despite the hybrid push, the GSA continued to buy vehicles not exactly associated with a “green” image. The Ford Ranger, Ford Explorer, Chevrolet Tahoe and Ford F-Series trucks were all popular with the government.

Still, GSA sales were down compared to the year before, when federal stimulus money was rapidly being spent on replacing outdated vehicles. Government sales dropped 22 percent for Ford, 46 percent for GM and 9 percent for Chrysler; overall vehicle purchases by the GSA were down 28 percent.



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