General Motors Inc. (NYSE: GM) stock has outperformed that of Ford Motor Co. (NYSE: F) over the past year. Neither company has anything to brag about. GM’s shares are down 11%, and Ford’s are down 19%. Among the headlines that have hurt Ford is that it ranked third behind Tesla and GM in electric vehicle (EV) sales in the first quarter. Ford had been in second place before. However, that is not enough to account for the stock price performance difference, because the EV sales of both GM and Ford were in the thousands for the period, while Tesla’s were over 400,000. (The best- and worst-built cars in America.)
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What hurts Ford is the widely held perception that it is poorly managed. Its vehicle quality is below the industry average, which it admitted. Ford recently had to close down one of its assembly lines because of problems with components. Ford management said it could take two years to close the gap. In the ultra-competitive auto industry, that is an eternity.
Ford also has trouble managing expenses. It was over its estimates in 2022. That means compressed margins. And that is a threat to earnings, which is a threat to share price.
Ford has bungled the handling of its supply chain. All car companies have suffered from supply chain challenges. Ford’s have translated into mispricing of its EV flagship F-150 Lightning, among other things. Pickup sales are essential to Ford’s future. Customers who have ordered or might want to buy a Lightning have watched its price rise four times. The base model started at about $40,000 last year and that swelled to $60,000 more recently. It prices the Lightning out of the market for some pickup owners.
Ford has done cost-cutting of the same magnitude as at GM. This should help margins, but layoffs are not what Wall Street is looking for. It represents a one-time solution to much larger problems.
Ford’s most significant problem is its management. Ford’s recent troubles have happened with CEO Jim Farley at the helm. He got his job because he is a “car guy” whose grandfather worked at Ford. Who cares? The Ford family, which has eaten through chief executives, must eat through another.
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