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Ford Motor Company (F): Can It ‘Muscle’ Higher?

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It’s truly incredible what a good CEO and top-notch innovations can do for a company.

Both Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) seemed destined to go bankrupt during the recession because of a drastic reduction in automobile demand and a rapid deterioration in their finance arms. Amazingly, Ford pulled through without the need for a bailout, while GM was forced to seek $49.5 billion in government aid to help it pull through its reorganization. You might be of the opinion that a reorganized GM would therefore be in better shape than Ford because of the extra help it received from the U.S. government, but Ford still has quite a few tricks up its sleeve that could make it a very compelling buy.

With great CEOs, comes great innovation
Where Ford Motor Company (NYSE:F) and its CEO, Alan Mulally, have really excelled is in the innovation department — giving the customers what they want without actually having the customers tell you what they want. I know this might sound confusing, but if you sat car owners down and asked them what was important to them, you might get a million different answers. Mulally sees things differently. He thinks about the carmaking process as a designer — he did work for The Boeing Company (NYSE:BA) for 37 years — and is looking for ways to add value to the consumers’ lives.

This drive for value has taken multiple forms, from innovative electric vehicles such as the C-Max or Focus, which are friendlier to the environment, to the development and announcement this week of its fifth-generation EcoBoost engine, which allows for a smaller engine to produce greater horsepower despite less fuel usage through the use of turbochargers. The end result is higher miles per gallon for the consumer and less money out of his or her pocket at the pump. The number of vehicles with Ford EcoBoost engines is expected to double by the end of this year alone to 1.2 million.

Ford is crossing bridges
It took Mulally and Ford Motor Company (NYSE:F) quite some time to right the ship, but it’s making a strong impression with consumers in China. Just as the Japanese and South Korean automakers did to the U.S. industry when they introduced reliable and fuel-efficient smaller vehicles in the 1980s, Ford now has a chance to be that disruptive force in rapidly growing China and return the favor, so to speak.

In March, Ford saw its sales leap by 65% from the year-ago period and delivered 54% unit volume growth through the first three months of 2013. The plan has been to introduce 15 new vehicles in China by 2015 with a long-term goal of generating 40% of total sales from China by 2020 — and that’s not a bad idea, considering how weak its European business could be for years to come.

Ford Motor Company (NYSE:F)What Ford is doing is very simple (and stop me if you’ve heard this before): It’s adding value to the consumer! The Ford Focus has been the best-selling car in China for two years in a row, speaking to China’s demand for small but fuel-efficient and affordable automobiles. In contrast to Ford’s 54% first-quarter growth, China’s total auto sales grew by just 17% over the same period. GM’s China sales rose by 11% in March while Honda Motor Co Ltd (ADR) (NYSE:HMC) and Toyota Motor Corporation (ADR) (NYSE:TM) actually saw their unit volumes decline by 7% and 12%, respectively. Japanese brands will continue to suffer in China where poor sentiment still exists between the two countries, paving the way for Ford to drive over its competitors.

Ford has the muscle
I don’t know about you, but when I think about muscle cars, I think about Ford Motor Company (NYSE:F). There are plenty of other makes and models to choose from when looking back into the past, but the Americana associated with the Ford Mustang had led a revival in muscle-car interest and purchases. Make no mistake about it; I’m brutally biased and champing at the bit to purchase a newer model Ford Shelby GT 500 when I get the chance.


Source: IFCAR, commons.wikimedia.

But Ford also made it easy for consumers to find incredible value and power in the Mustang series, because it’s been produced for nearly 50 years now. Sure, the Mustang may have skipped a few generations when it comes to packing the horsepower punch that we were used to seeing during the muscle-car era, but there’s hardly a car out there capable of kicking out 662 horsepower for an MSRP of just $55,445. Ford is showing the world that better fuel mileage doesn’t necessarily mean a compromise under the hood. Ford has car enthusiasts excited to get behind the wheel and look under the hood once again.

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