Troubled car maker Ford Motor (NYSE: F) today saw its stock fall to lows not seen since way back in 1986, as traders continue to express concerns over the company's ability to compete with its rival Toyota Motor (NYSE: TM).Yesterday, Wall Street got the bad news that many of us had been expecting but hoped never to hear: for the first time since 1931, Ford lost its grip on the number two ranking for U.S. auto sales in 2007. The company showed a massive 12 percent drop for the year, and has been replaced by Toyota as the second best-selling auto maker in the United States. Shares have tumbled, hitting an intraday low of $6.00 a share, which is the lowest the stock has traded in more than 20 years.
Just how hard has the company's market value degraded over the past decade? Consider this... in 1998 the company boasted a $68 billion market value, compared with its current value of "only" $13 billion. This is definitely a tough time for the car maker which less than a decade ago was responsible for 25 percent of all new cars sold in the nation.
Ford, which has historically relied on the strength of its truck division, is definitely struggling to get back on top as even its truck sales seem to be in free fall. During 2007 alone, sales of its top line of trucks, the F-Series pickups fell by 13 percent as tougher competition in the car niche continues to mount.
The struggling Detroit auto maker is still looking to return to profitability in 2009, but you really have to wonder just how feasible this goal is considering the difficulty the once strong auto company has keeping up with the rest of the pack.
While it is definitely shocking to see a foreign car maker surpassing the American Ford Motor, it really should not be too surprising. It seemed like only a matter of time before this became the inevitable event we have all been waiting for. If you look at worldwide auto sales, Toyota has held the number two position since back in 2003.
If you ask me, America's other major auto maker, General Motors (NYSE: GM) had better keep a close eye on Toyota. Toyota is definitely a force to be reckoned with, and if GM is not careful, it could be giving up its coveted top spot before long.
During 2007, GM still was able to outsell Toyota by over a million vehicles, but its share was down six percent. GM sold 3.82 million vehicles, to Toyota's 2.62 million (48,226 more than Ford). Worldwide, General Motors is in danger of falling to number two during 2007, but we will not get Toyota's worldwide figures until later in the month.
What do you think? Is GM in danger of falling victim to Toyota? If you were in the car market today, what dealer lot would you visit first? Ford, GM, Toyota? Let us hear what you think.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer
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Reader Comments (Page 1 of 1)
1-04-2008 @ 7:04PM
mathew said...
At this current time, I believe most Gm and some of Ford's autos are as good and in a lot of cases better than Toyota's autos are; e.g. Saturn Aura or a Ford Edge and now the new Malibu. I rent autos 8-10 times per month, receiving various makes and models. I may be somewhat partial given my age, however, I will stand by my statement.
1-12-2008 @ 3:28AM
JASON said...
REMEMBER PEAL HARBOR? IT'S HAPPENING AGAIN! PEOPLE NEED TO REALIZE TO BUY FROM US!...BUILT HERE, FOR US, BY US! PEOPLE WONDER WHY WAGES ARE GOING DOWN? COST OF LIVING IS GOING UP? THAT IS WHY!!!!!!! CHEAPER LABOR OVERSEAS IN SWEATSHOPS! AS A FORMER UNION WORKER AND CURRENT MANAGER, I THINK THE AMERICAN PUBLIC IS SELLING ITS SELF OUT WITHOUT EVEN KNOWING IT!......I SAID IT BEFORE AND AGAIN....NAFTA/SHAFTA!
1-15-2008 @ 5:46PM
Gene Kozlowski said...
I bought a new Chevie Cobalt in 2005. It was the worst brand new car I ever bought. It was literally 2-3 weeks old when it lost power on a busy street. It's been back to the dealer for various repairs since. Other than a toyota twin built in California I wouldn't consider another Gm vehicle.
After contacting the company about this flawed car their response was that their responsibility begins and ends at fixing the car as it breaks and that I should get lost, I will take their advice. I want to buy American and would consider a Ford but after that it's Toyota. If Gm goes down the drain they have nobody to blame but themselves.