For several years now, unloved, reviled, castigated, the automakers languished, were bailed out (save one) and largely shoved out of portfolios. The past year has signaled recovery for some, and a concerted attack on their serious problems. One stands out as a soon to be loved, well managed and led, money-making machine. It is actually getting its elephant (gargantuan business) to dance!
Most problems remaining get focus
After a struggle to survive, the big three are beyond immediate danger, two General Motors Company (NYSE:GM) and Chrysler by government intervention, and Ford Motor Company (NYSE:F) by its own good management. General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) have made dramatic improvements in finance, product selection, and quality.
Ford Motor Company (NYSE:F) continues to work aggressively on its pension liability problems and its European losses as it bootstraps itself out of the abyss and generates earnings to pay for repairs. General Motors Company (NYSE:GM) is making progress at a less rapid rate on these same problems with perhaps less of a mountain to climb following its bailout forgiveness. Ford Motor Company (NYSE:F) looks to have trained the elephant to dance with its One Ford Motor Company (NYSE:F) product concept and now just needs to keep playing the music – execute. General Motors Company (NYSE:GM) seems to be on the same track, less surely, and its elephant still kicks some customers.
|As of Q2 2013||Ford||General Motors|
|Pension Liability 12/12||$18.7 Billion||$ 27.8 Billion|
|Q2 Contribution to Pension Liability||$ 1 Billion||$ 100 Million|
|Europe Losses||($348 Million)||($100 Million)|
|Market Cap||$66.9 Billion||$50.4 Billion|
|Q2 EPS||$ 0.45||$ 0.84|
Nursing a grudge – a problem General Motors Company (NYSE:GM) hasn’t touched yet and may not repair
General Motors Company (NYSE:GM) has one more critical problem than Ford: grudges.
There are a large number of potential customers and investors who won’t touch GM products or shares as long as the balance sheet reads: GM +$16 billion, Taxpayer -$16 billion, yours truly included. You may argue if its right or wrong, fair or unfair, deserved or not, it exists and GM will need to do something about it to stay No. 1 in the US – if they still are No. 1. By some measures, Ford is the number one automaker in North America right now, just nobody knows it.
Grudges are very hard to measure, prove, or judge the effects of.
To know they are real, however, is a simple matter: just read the commentary on Fool John Rosevear’s recent articles on GM, particularly Why GM Hasn’t Repaid Taxpayers. The venom and number of potential investors/customers willing to express themselves on the GM bailout and why GM hasn’t (and may never) repaid the taxpayers is impressive. It ought to alarm GM and GM shareholders.