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FORD #1 in US?

Ford May End General Motors’ 78-Year Run as Top U.S. Automaker


July 9 -- Ford Motor Co., gaining ground on its distressed domestic rivals, may surpass General Motors Corp. this year to become the top-selling automaker in the U.S. for the first time since 1931.

The new GM will emerge from bankruptcy as soon as today with just four car lines, down from eight, aiming for 18.5 percent of the U.S. auto market. Those four surviving brands, Chevrolet, Cadillac, Buick and GMC, accounted for 16.5 percent of the market in June, according to Autodata Corp. Ford’s share was 17.2 percent, excluding Volvo, which it is selling.

Surpassing GM would validate Ford’s strategy to go it alone and spurn government aid. While GM and Chrysler LLC seek to change themselves through bankruptcy, Ford benefits from its status as the only independent major U.S. automaker as it builds momentum, said John Wolkonowicz, an industry analyst with IHS Global Insight of Lexington, Massachusetts.

“Ford is on a real roll right now,” Wolkonowicz said. “Ford could overtake GM this year.”

To hang on to first place, GM must retain most of the buyers from the Pontiac line it is discontinuing. Wolkonowicz said that will be a challenge.

“A lot of Pontiac buyers, young, blue-collar women, may not like the rest of the GM lineup,” Wolkonowicz said. “They’re certainly not going to buy a Buick.”

GM first overtook Ford in 1927 as Henry Ford halted production to switch from building the Model T to the Model A. Ford recaptured the lead in 1929-30. GM pulled ahead in 1931 and never looked back, until now, said Wolkonowicz.

No ‘Natural Reason’

Defending its 78-year-old U.S. sales supremacy will be challenging, even after Volvo is sold, GM marketing chief Mark LaNeve told reporters in a June 1 conference call.

“We’ll have four brands, they have three,” LaNeve said. “There won’t be any natural reason why we should be that far ahead of them.”

Ford has already overtaken Toyota Motor Corp. in U.S. sales by selling 773,242 cars and trucks while the Japanese automaker sold 770,449 vehicles in the six months through June, according Woodcliff Lake, New Jersey-based Autodata, a research firm that compiles automotive sales data. Toyota has outsold Ford in the U.S. the past two years. Ford continues to trail Toyota this year by 26,953 vehicles when Volvo is excluded.

Geely Holding Group Co., China’s biggest private automaker, is the front-runner to buy the Swedish luxury brand, people familiar with the matter have said. Ford hasn’t set a deadline for a sale.

GM’s four surviving brands sold 804,371 cars and trucks in the first half of this year, according to Autodata, down 38 percent from the same period in 2008. Ford’s U.S. sales, excluding Volvo, are off 33 percent.

Learning from Oldsmobile

GM failed to hold on to many Oldsmobile buyers after it killed that brand in 2004, LaNeve said. This time will be different, he said, because GM will use sophisticated electronic marketing techniques to target Pontiac owners and it is expanding its other model lineups to offer alternatives.

“We didn’t do as well as we would have liked on retaining Oldsmobile customers,” LaNeve said. “We’ve got a better process now because of information technology” to retain Pontiac customers, such as targeted e-mail promotions.

Ford gained U.S. market share among individual car buyers in seven of the last eight months, according to George Pipas, the automaker’s sales analyst. The Dearborn, Michigan-based automaker’s 17.2 percent U.S. market share in June excluding Volvo was up from 14 percent in the same month last year.

Not Taking Aid

Avoiding bankruptcy and staying off federal aid is helping Ford win new customers, Chief Executive Officer Alan Mulally told reporters June 17. GM, which filed Chapter 11 on June 1, is receiving about $65 billion in federal aid. Chrysler, which filed for bankruptcy April 30, has taken $12 billion in U.S. assistance.

“Ford is in a completely different place,” Mulally said. “People also want to know they are with a company that is viable, that will be here long term and that is on a positive track.”

Ford won almost three times as much support as GM and more than six times as much as Chrysler among U.S. consumers asked about their preferences for a new auto, according to researcher AutoPacific Inc. of Tustin, California.

In an online survey of 900 people in June, 43 percent said they were likely to buy or lease a Ford, compared with 15 percent for GM and 7 percent for Chrysler. Ford matched Toyota’s score and beat Honda Motor Co.’s.

Ford will gain more market share on its domestic rivals when it launches two small cars next year, Wolkonowicz said. The automaker will sell 310,000 Fiesta subcompacts and redesigned Focus compacts annually by 2012, Global Insight estimates.

Building Momentum

Capturing the title from GM will build momentum for Ford that will help it sell more cars, Wolkonowicz said.

“It matters a lot because people like to be with a winner,” Wolkonowicz said. “If you think you’re no longer going to be able to say you’re No. 1, then you declare it’s not important.”

LaNeve said the new GM is focused on profitability, rather than sales supremacy.

“If we’re minting money here and running a successful business, I wouldn’t care what the relationship is between Ford and ourselves,” LaNeve said.

Ford also said it’s more interested in returning to profitability than in taking GM’s sales crown. The second- largest U.S. automaker lost a record $14.7 billion last year and Mulally has said it won’t begin making money until 2011.

“We have no interest in sales rankings or market share,” Pipas said in an e-mail. “We have to focus on building a sustainable business model for the future. Most decisions driven by market share are bad decisions.”

LINK:Ford May End General Motors? 78-Year Run as Top U.S. Automaker - Bloomberg.com

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