Why Ford is more profitable than GM
November 6, 2012
by Mike Colias
It has been more than three years since General Motors emerged from bankruptcy liberated from much of its bloated cost structure. So why is GM still far less profitable than archrival Ford Motor Co. in the bread-and-butter North American market?
Chuck Stevens, GM's CFO for North America, laid out a few key reasons why GM's pretax profit margin of 7.8 percent in North America lagged Ford's 11.9 percent.
1. Product cycle
GM's most profitable vehicle lines are also its oldest.
GM's answer: It will go from having "the oldest portfolio in North America to the freshest" over the next two years, Stevens says, with redesigns or freshenings of vehicles that account for about 70 percent of GM's U.S. volume.
2. Global platforms
Stevens says Ford is about two years ahead of GM on its move to global platforms, which cuts engineering and purchasing costs, thus boosting profitability.
GM's answer: By 2018, it expects to get 90 percent of its sales volume globally from vehicles made on about 14 "core" vehicle platforms.
3. Fixed costs
GM still hasn't done enough to whack away at its cost structure.
But the real key to erasing the profit gap with its archrival, GM execs know, returns to a truism of the auto industry: It's all about the product.
Full article at link.