Ford Motor Company (NYSE: F), while suffering through the largest auto industry malaise in generations, won't be closing legions of dealerships like General Motors Corporation (NYSE: GM) or Chrysler. In fact, Ford indicated that it will benefit from the closure of 2,000 auto showrooms from its domestic competitors -- one that has already filed for bankruptcy and another that is expected to shortly.Will Ford really be able to not close dealerships? It will continue its dealer consolidation plan, of course, but they are not nearly as large as GM or Chrysler's planned cuts. There are 3,700 Ford dealers in the U.S. -- can the country support that many? Ford's sales aren't sailing high, either -- so what if Ford's plan to use the bankruptcies from the competition and push more auto customers to the Ford family of brands fails?
That is Ford's poker hand being played here. It stands to gain from both an existing Chrysler bankruptcy and a pending GM one -- but that doesn't mean Americans will buy more cars. Until the economy bubbles back from the millions of job losses over the last 18 months (not entirely likely), auto sales will need to be adjusted for growth numbers moving forward. The good news for Ford is that it will take more and more of that reduced growth moving into the future.
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Reader Comments (Page 1 of 1)
5-27-2009 @ 5:00PM
billdollar said...
Three years ago people said Ford Motor Company was a dead duck headed for the rubbish pile. Getting the right guy to steer the ship was what saved them. He sold off all their fixed assets and had the cash to weather this down turn. Going outside the auto industry to get the right guy as the new CEO was pure genius on Bill Ford's part!