Ford’s Turnaround Edging Ahead of GM’s

Commentary

Ever since Bob Lutz landed at General Motors I’ve been watching the auto maker make great progress with the products it sells.

Today GM’s design, engineering and manufacturing operations are humming in coordinated unison like they never have before. Even more impressively, they’re doing it on a global basis.

Meanwhile, across town, Ford is trying to do the same. But it got started much later and still hasn’t turned out products that are as impressive as GM’s. This led me to think that GM was at least one design cycle, about three years, ahead of Ford as they both struggle to turn themselves around.

But now I believe that in the last six months or so Ford has edged ahead of GM. Here’s why:

Last year, Ford grew its revenue by a staggering $14 billion. At GM, income actually dropped. In fact, in total revenue, Ford at $174 billion is catching up to GM at $181 billion. And it’s catching up fast. One more repeat of last year, and Ford actually will be bigger than GM on a revenue basis, though admittedly this is partly due to GM selling half of General Motors Acceptance Corp.

Even more impressively, once you get out of North America, Ford is a solidly profitable company. Last year, it earned nearly $1 billion in Europe; made more than $1 billion in South America; turned a profit in Asia/Pacific; put its Premium Automotive Group in the black; and while down, its financial operations still made more than $1 billion in profit.

The icing on the cake is Mazda now is making good money and Ford gets part of those earnings, as well.

All those profits will greatly help Ford fix its North American operations. No small task, but it is making progress every quarter. This is especially true in quality, where both Consumer Reports magazine and J.D. Power are showing a significant surge for the company – far better than GM.

Meanwhile, in addition to watching its revenue fall, GM lost money in Europe. Watch for more cuts to come at that troubled operation. Interestingly, GM made more profit in Brazil last year than it did in China, even though all the company’s propaganda has been touting how well it’s doing in the Middle Kingdom.

On the finance side, GMAC pulled the company deep into the red. What this all shows is that even when GM fixes its North American automotive operations, it still has a lot of other work to do.

Personally, I believe GM’s design and products are more attractive than Ford’s. And I believe GM is solidly in front when it comes to product technology.

But when I stand back and look at how well each auto maker is doing from a business standpoint, there’s no question Ford has edged ahead of GM. Six months ago, I couldn’t say that.

John McElroy is editorial director of Blue Sky Productions and producer of “Autoline Detroit” for WTVS-Channel 56, Detroit, and Speed Channel.