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Back in May I recommended that readers should buy shares in Ford Motor Co. (NYSE: F) on the grounds that the U.S. carmaker would gain market share from the bankrupt General Motors Corp. (OTC: MTLQQ) and Chrysler Group LLC. Ford’s third-quarter profit and healthy October sales growth show I called that one right. One doesn’t like to blow one’s own trumpet excessively, but if you’d followed my advice in May, you would today be sitting on a profit of nearly 50%.
However, while I admire Ford for its brilliant strategic decision not to cave in and accept government-sponsored bankruptcy, and wish it well in its future battles with GM and Chrysler, I’m not sure the company that Henry founded represents the future for the global automobile industry.
More likely – while Chrysler will become a money-pit that is closed only by political means, and GM will limp on as a smaller and marginally profitable U.S. and European producer – Ford will slim down to become a specialty producer of cars tailored to the tastes and needs of the U.S. market. It’s well known that the auto preferences of U.S. consumers differ greatly from those of their European counterparts.
“…Ford will slim down to become a specialty producer of cars tailored to the tastes and needs of the U.S. market.”
And this is where you lost me.
1. With development costs sky-rocketing for each model, can an automobile manufacturer break-even with localized markets? Aren't most companies now forced to make brands for the global market, to get the required numbers to break-even?
2. Why will Ford find it easy in the US with Toyota and other manufacturers breathing down their neck? US is still the biggest and a very attractive market…. In fact, Toyota would be in a position to kill Ford with economies of scale…
"…Ford will slim down to become a specialty producer of cars tailored to the tastes and needs of the U.S. market."
And this is where you lost me.
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