Ford's Big Sell Off

Ford Motor (NYSE: F) stock is down more than 23% during the last three months, which is significantly more than Toyota Motor (NYSE: TM) or Honda Motor (NYSE: HMC). At first glance, the comparisons don’t make sense. Ford is arguably the best run of the three. It has some of the hottest selling cars, and has gained domestic market share in 2010.

Ford is also the only one of The Big Three that did not take a government investment and go though Chapter 11. That is, in some ways, a negative. Ford is burdened by debt that was not scrubbed away in a bankruptcy and investors are concerned about a repayment.Ford’s issues are more complex than its balance sheet. It does not have the large Asian presence, particularly in China, that GM and VW have. Toyota and Honda clearly dominate the industry in Japan. There are a dozen car companies in Europe which are viable competitors, among them Opel, Fiat, Peugeot, Daimler, and BMW. The large Japanese car companies also do well in that region.

Ford has convinced investors that it can be a powerful brand in the US. Now, it has to show it can do the same in Asia and Europe.

Douglas A. McIntyre

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