Ford Remains Free To Burn Rubber

04-24-09: We live in interesting times. The drama of the American auto industry has been unfolding for the past few years. Just when we thought things were looking up, another shoe has dropped. It was the new CAFÉ standards in late 2007. In 2008 it was the record gas prices and late in the year the complete collapse of the economy.

2009 has brought a new chapter in the novel with GM and Chrysler going to the trough for government bailouts in the billions. Chrysler has been ordered to get married to Fiat, a partnership that is the only way the Auburn Hills automaker can move forward. Fiat will supply new small car architectures for future Dodge and Chrysler products while Fiat will gain a dealer network in the United States in which to import its cars.

GM on the other hand is being forced to make unprecedented cuts in their product range and brands to stay alive and avoid being cut off from live support. News came today that GM will eliminate the Pontiac brand. This will no doubt be huge rippling news in the enthusiast circles of those who have long held passion for Firebirds, GTO's and Grand Prix models. An era will end much like it did ten years ago when Oldsmobile died.

GM is also planning to eliminate or sell off the Hummer, Saab, and Saturn brands. While these marketing channels had really begun to turn out some attractive metal in the past few years, it was too little too late. The public affection for these brands is not enough to keep them alive and GM has no more money to get them through.

Ford on the other hand has been the underdog American success story so far. They were able to avoid asking Uncle Sam for a bailout last winter. They paid off $9 billion in debt last month which volleyed their stock prices up from the $1.50 range. Other great news this week was the first quarter results that showed a loss of only $1.4 billion. Yes, good news is a smaller loss than expected these days. Ford stock closed at a high of $5.00 today. Happy times.

What really puts Ford at an advantage going forward is that they have a the best product lineup today of new cars that are best in class. Coming in the next year are even more brand new models that have been showing promise in Europe and in the motoring press. Bottom line, is that they started a few years ago to revamp their products and the fruits are blooming just in time for recovery.

Best yet is that Ford has a free hand to build what consumers want. GM and Chrysler are now under the oppressive politically correct oversight of the Federal Government. Chevrolet for example cannot choose to build a new 550hp Camaro Z-28 without a damn good lashing. Both companies are going to have a hard time getting money approved to build anything but gutless greenie-boxes that nobody wants.

We asked Ford CEO Alan Mullaly in an interview last week how he felt about Ford's freedom to build high performance cars competitors may not be able to due to government oversight. He replied, “While we strongly desire to see our fellow American manufacturers survive, we will continue to pursue the kind of products that our customers want”. That was as strong a statement as he would make, but one we saw as positive for Ford performance in the coming years.