Ford Built Tough… Like A Rock
Ford’s (NYSE : F) ability to continue to do business without accepting government funds is really awe-inspiring. Ford knows that by rejecting all the federal governments money it appears very strong to consumers. Ford ( F ) wants to appear done, and be done, with the government’s game. The federal government is great at attacking public companies and telling them how to run their businesses… nobody is every going to forget the three major American auto company’s CEOs getting grilled by congress over flying their corporate jets. The auto companies were playing politics against the masters of spin themselves.
It is arguable the government’s fault that the American auto manufacturers ran away from the little cars to produce “gas hogs”. Surprise. In 1997 the government decided to give up to a $25,000 write off for vehicles over 6,000 pounds, traditionally service vehicles. No auto company tried to lower the weight of SUV’s and Vans to below this amount to increase fuel efficiency, as it would not be beneficial for businesses. In 2003 this “tax loophole” was expanded in order to provide lots of fuel (pun intended) to the U.S. Economy, write offs where now allowed up to $100,000. Hence, the creation of the Hummer H2, and the Lincoln Navigator. Auto companies did not have to lower costs on their products, they could just create products with greater profit margins. This very much did boost the economy, until the gas prices continued to climb and all of a sudden GM (NYSE: GM) and Ford were no match for the mighty Honda (NYSE:HMC) that never had changed it’s ways.
The American consumers are likely not to buy a vehicle from a company they think is going bankrupt, i.e. GM ( NYSE:GM )and Chrysler . Ford (NYSE:F) has done the exactly right thing, and will continue to do so as long as they can. If the car market actually does turn around this year, Ford will be leading the charge while GM and Chrysler are still trying to figure things out. GM’s Volt is, at this point, still just a publicity stunt. GM’s best new product, the Chevrolet Camaro will be coming out at exactly the wrong time for the company as they will still be trying to convince congress that they are becoming green. I personally still cannot wait to drive one.
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*The writer at the time of writing this has no shares in Ford and drives 1998 Chevrolet Camaro.
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