Filed under: Ford Motor (F), General Motors (GM)
I know, I know: forecasting the imminent demise of America’s car companies is nothing new, but recent events have highlighted the kind of shortsighted planning that has plagued Ford Motor Company (NYSE: F) and General Motors Corporation (NYSE: GM) for years. While the gas crisis has exacerbated the shortcomings of the automakers, the companies’ failures to understand their core audience, invest in R&D, and ensure the quality of their finished product are long-term, endemic problems that make them a very questionable bet.
Recently, for example, General Motors’ decided to offer incentives, extended protection plans, and employee pricing to draw buyers to the line; these innovations, however, have had the added impact of massively undercutting revenues. As Williams-Sonoma could now point out, slashing your profit margin is not really the best way to make a profit. While their decision to get rid of Hummer should help GM shed a pricey and currently unpopular line, by the time the sale is finished, gas prices will be back down and everybody will be driving hydrogen-powered cars.
Ford, meanwhile, has decided to focus its attention on cars, a long-term plan that doesn’t seem very well thought out. While the Mustang is, perhaps, Ford’s most famous model, their trucks have long been an iconic symbol of the company. Rather than invest in making their strongest sellers more fuel-efficient and thus more attractive to consumers, Ford seems to be placing its eggs in a somewhat unreliable basket.
Continue reading Going down in flames: Ford and GM
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