How Ford Placed the Right Bets, but GM Is Eating Their Lunch
While it may be tough for some, if not most, rewinding back to the midst of the 2008 and 2009 economic depression sometimes is necessary to realize just how far Ford has come. How far we’ve all come.
Around this time of year seven years go, the words depression, job loss, bail outs and Wall Street, were heard on the daily news as much as we hear Trump and Obama nowadays. It was overwhelming, and as you may know, the country’s largest auto manufacturers played two very different recovery strategies.
In one hand, GM chose to accept the federal bailout package. Say what you want, but it was necessary to do so, and regardless of how you feel about it, saving the company and the people was the right call. An even better and more honorable move though, was Ford’s strategy, which involved shedding unnecessary baggage, improving processes, maximizing profits where possible, and oh, taking out a massive 25 billion dollar loan the old-fashioned way.
In order to pay that loan back, Ford had to design vehicles that would sell quickly and would turn a profit. With gas at over $4 dollars per gallon back then, the answer was a simple one. EcoBoost technology was born, smaller, nimbler and fun to drive cars came to market, and perhaps the most important move was made – making the F-150 the lightest and most fuel-efficient pickup truck in the business.
All of that sounds good, no? It does, as Ford delivered on just about every objective it set out to conquer. So that begs to ask the question: Why is GM taking Ford to the cleaners on specific segment sales?
The answer is a simple one. Long term strategy. Ford focused on addressing the global economy and high fuel prices, and forgot about medium and full-size SUVs. They also forgot about midsize trucks for some reason. As 20017 looms in the horizon, we realize that such strategy might have been near-sighted.
Or is it? Sure, GM may be selling boat loads of Tahoes, Suburbans and Escalades now that gasoline is cheap, but just how long will this last? The truth is that we’re moving into a nearly fuel-free future where alternative fuel and energy sources will rule, and Ford’s near-sighted strategy may actually evolve into an extremely long-term strategy. Whether they knew that at the time or know this now, who knows, but I believe for it to be true.
Balance sheets may suffer now, as people want bigger SUVs and trucks, but the future environmental laws and unavoidable economic depressions will neglect some GM vehicles any success. In the end, GM may be taking Ford’s lunch right now, but Ford will eat the whole damn cake by 2020 and on.
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Story via: [Forbes]