Why Ford is more profitable than GM

[ne_one]

Why Ford is more profitable than GM
Automotive News
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.

[Yarddawg1987]

Irrelevant, giving the fact that so many NEW models are coming for 2013. after 2013-2014, then lets see the numbers.

[hydrogen]

I was hoping to read something a little more informative.

[Extreme4x4]

Because Ford is doing nothing in the next couple of years.

Ford is leaner. That is the big difference.

[FanOfDurant]

I'll sum it up quickly. The Ford F-150 (and 250) is better looking and better built than the Chevrolet Silverado. It's also more luxurious, has a higher brand status and has serious off road variants in the Raptor and Super Duty. And since it's the most profitable vehicle FoMoCo builds, you have more profit with the massive sales it brings in. And truck sales lead to car sales of the same brand.... Ford trucks sell Ford cars. Chevrolet (by GM's hand) has literally screwed themselves by not building the best trucks in the world.


You take away trucks from Ford and they really have no ground to stand upon. You give Ford style, quality, luxury and variants to Chevrolet, Chevrolet (and thus GM) will come out on top time after time.

[megeebee]

Ford doesn't spend huge amounts of time and money chasing after RWD.

[DirtyMoney]

My response is out of my simple view. I do not think Ford's products are any better than GM's (Lincoln/Mercury). I think that Ford invested more wisely (purchase and selling of different brands at the right time). Ford has the benefit of being Ford everywhere vs Buick, Chevrolet, Opel and Vauxhall. Ford doesn't have to dumb down its vehicles so they won't overlap sales of their other brands (F-150 vs Chevrolet/GMC). GM was burdened with the selling of non-attractive brands such as Hummer, SAAB and Saturn (I still think GMC should have been pushed in Hummer's direction of GM's tough brand). Ford also had the benefit of great platform sharing (Jaguar, Lincoln, Volvo, Mazda, Rover). What else??

[civilzues]

and all this time I thought it had to do with the F-150 basically being older than a decade! Guess not.

[akbar]

My response is out of my simple view. I do not think Ford's products are any better than GM's (Lincoln/Mercury). I think that Ford invested more wisely (purchase and selling of different brands at the right time). Ford has the benefit of being Ford everywhere vs Buick, Chevrolet, Opel and Vauxhall. Ford doesn't have to dumb down its vehicles so they won't overlap sales of their other brands (F-150 vs Chevrolet/GMC). GM was burdened with the selling of non-attractive brands such as Hummer, SAAB and Saturn (I still think GMC should have been pushed in Hummer's direction of GM's tough brand). Ford also had the benefit of great platform sharing (Jaguar, Lincoln, Volvo, Mazda, Rover). What else??

With having just one main brand to focus on Ford may be reaping benefits now, but sustainable long term profits will only come thru nich products pedalled thru specialized brands, IMO. All manufacturere mass brands are now bringing out solid products, so I dont think Ford has anything exclusive going on.

To sustain higher ATP over time you need niche brands. IMO, a prime motivation for people (non enthusiasts) to pay premium for a car comes from the satisfaction of owning something whose name is not very common. That is where GM's flexibilty with multi-brands (Buick, GMC in US) will win out in the long term. In fact it would be a good idea to resurrect Pontiac in 3 years from now once they have their foundation fixed.

GM has to make sure that they dont dumb down any brand just to strengthen another. Let each play its role in a given price segment/product class unhindered.

[ausrutherford]

A Super Duty tops out at nearly $75K. I doubt a Silvy HD comes anywhere near that.

[FUTURE_OF_GM]

You take away trucks from Ford and they really have no ground to stand upon. You give Ford style, quality, luxury and variants to Chevrolet, Chevrolet (and thus GM) will come out on top time after time.

LOL. You can't be serious with that comment...

The Focus and Fusion SLAY the Cruze and Malibu. Mustang has lost nothing to Camaro. And the new Escape is setting the world on fire, just to name a few.

[Travesty]

Well you might say better looking.. That can be controversial, I do agree it looks nice.. But saying it's better built I don't think so.. The GM HD's has stiffer and stronger frame.. I remember when the first came out after ford's power bump, they still couldn't beat them... They did a test over in the Rockies and the silverado hd 3500 beat the other two by several minutes, and said they felt more comfortable... But I'm just saying ford super duty's will always be a big seller but doesn't always mean its the better truck all around..

[CrunkedRL]

Ford only has one brand in most markets where it does business which helps to curtail marketing and/or development costs significantly as well as create more brand awareness. GM has Opel, Vauxhall, Holden, Baojun, Wuling, Jiefang, Faw, in addition to Cadillac, Chevrolet, GMC, and Buick. GM Global Brands Some of these brands compete for the same marketshare in the same markets which have created slight redunacies IMHO. Is it necessary to have Chevy and Opel competing for turf in some of the same European markets...is one brand differentiated enough from the other to make a strong business case for both? I dunno.

[Pisswilly]

Looks are a matter of opinion, I for one don't think the F-150 looks better then the Silverado. Granted, the F-150 has a better interior but what do you expect for a truck that is 7 years old? As far as the mechanicals, how is it better then the Silvy?

[vanshmack]

LOL. You can't be serious with that comment...

The Focus and Fusion SLAY the Cruze and Malibu. Mustang has lost nothing to Camaro. And the new Escape is setting the world on fire, just to name a few.

Are you talking sales or is this just simply your opinion? Focus lags Cruze by several thousands pretty much 10 months out of every 12 while the Camaro does more or less the same with Mustang.

While you do have a valid point on the Fusion v. Malibu comparison, the Equinox has done well in its own right, while Escape should continue to lead the segment, given that it is no longer an ancient box dating back to Clinton's second term.

So, the GM vs. Ford comparison is hardly the whitewash you portray.