By on March 13, 2009

TTAC reader John writes:

I was perusing MSNBC a short while ago, and noticed something that I thought TTAC might like to post. Ford now has a market cap four times that of GM’s. (Ford’s is 4.9 billion, GM’s is down to just over 1 billion). Ford’s stock is also now worth more than GM’s, which isn’t surprising, but hasn’t really happened before.

As Ken Elias pointed out a while back, the beginning of the end will come when GM is de-listed from the Dow and then the stock exchange. As far as life-sustaining bailouts are concerned, March 31st is the drop-dead date. A pre-pack would take longer, so . . . I bet Ken a steak dinner GM will get their/your/our money. I don’t think I’ll be picking up the tab. For the dinner.

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19 Comments on “Ford Market Cap 4X GM’s...”


  • avatar
    OldandSlow

    Don’t open that cap. You’ll probably only find some remnant fumes and hot air.

  • avatar
    superbadd75

    Wow. Starting to wonder if I need to befriend a nice Ford dealership. This GM shit is getting downright scary.

  • avatar
    BuckD

    Well Rick, it appears Ford is kicking your ass. What’s your excuse?

  • avatar
    gslippy

    This has been the case since the Fall of 2008, at least.

    VW’s market cap is about 60x that of GM.

  • avatar
    MBella

    Wait a minute. I thought nobody could have predicted the current situation. So a aircraft engineer from Boeing is kicking the ass of GM’s automotive dream team. Mullaly must be the next Nostradamus. We need to ask him when the end of days are coming.

  • avatar
    akear

    Ford may seem healthier than GM, but an inferior product line will eventually catch up with them. Just ask GM about this!

    Get your act together Ford!!!

    Even the Malibu beat the Fusion in a recent TTAC comparison. Ford needs decent cars like the CTS, Corvette, and Malibu.

  • avatar
    Stein X Leikanger

    Mulally put Ford on the right track.

    Wrote about what I hoped he would bring to Ford back in 2006, and pleased to see that he managed to fight the Grand Poobahs of Ford, who initially tried to sabotage him.

    https://www.thetruthaboutcars.com/toyota-the-weakness/

    “Arguably in every parameter that you can look at, the Toyota Production System is the finest product system in the world for designing and manufacturing products. They make products that people want and they do it with less resources and less time than anybody in the world. They’re a magical machine.” Not my words, but those of Alan Mulally, now charged with pulling a carmaker out of the swamp marshes of Fordor. Like Alan, I admire Toyota’s manufacturing processes, quality control and after-sales. But I also know their weakness…

    First, to those of you who are tired of hearing what a great company Toyota is, Toyota is the world’s foremost manufacturer. Bar none. Other manufacturers must study, learn, apply and improve. That’s the only way they’ll build the war chest they need to fight back from a position of strength. Until they do, they’ll be playing a hopeless game of catch-up.

    Back to Alan for a moment. Every day a 737 pumps out of the hangar at Boeing, and after a 35 minute flight it’s in revenue service. Of course, they told Mulally it couldn’t be done – ”You can’t build planes the same way you build cars!” Yes you can, and doesn’t Airbus wish they were? This was Mulally’s gift to Boeing, and in a strange game of hopscotch it could become Toyota’s gift to Ford channeled through a disciple. Bill Ford only wishes he’d thought of it sooner.

    Reaching parity with Toyota– and adding a few bells and whistles of their own– is the best Ford can hope for. It’s a long shot, as ToMoCo isn’t standing still. But Mulally is a self-professed disciple of The Way and if Ford’s resources don’t run out first, he’s the man who can give it the best shot. Who would you rather have making the effort: Wagoner and Lutz in their constant states of denial, or someone who’s actually hit the bullseye already?

    Mulally is already applying his knowledge to the task at hand. For example, he knows that Ford must align itself more closely with its suppliers’ best interest. FoMoCo’s suppliers are wobbling with fatigue, having been squeezed dry by their overlords. They’re so fed up they’ve started to squeeze back, exploiting the weakness of the rulers up at the Castle. Hopefully both sides will see the light before they force one another off the field of battle. Ford’s already seeking a more constructive relationship with its key suppliers, so don’t think Mr. Mulally is simply holding Thursday chat sessions.

    Mulally’s also begun realigning his forces in the field, making the various divisions understand they’re answerable to High Command and that the brandmash has got to stop. That’s going to be the tough one. There are hundreds of stakeholders who will be resisting any transfer of power back to the corporate mothership. I suspect this is why Mulally insisted on being co-director along with Bill Ford. A fly on the wall would have heard this: ”I’ll do it, but only if you’re willing to rain hell on the holdouts that will be fighting my changes. You and me Bill, we’re in this together.”

  • avatar
    rtx

    Both of these companies will be lucky to survive.
    Todays quotes are shown below. Toyota now has a market cap of 70 times the value of GM. If their shares fluctuate buy even one dollar the entire value represented by GM would be made or lost.
    Keep in mind that Toyota shares are trading at $60 ……down from its yearly high of $108, so they are not immune to the crisis in the industry. Just better prepared to survive it.

    TOYOTA:
    Price Change % Change Volume Day High/Low 52 Week High/Low
    59.77 +0.15 +0.25% 894,971 60./57.8 108.02/55.41
    Last Traded:
    3/12/09 16:06 EST Transaction Volume
    8,300
    Open
    58.39 Prev. Close
    59.62
    Bid
    59.6 Ask
    61.11

    Market Cap (Mil)
    93,729.52
    Shares Out (mil)
    1,568.17

    FORD:
    Price Change % Change Volume Day High/Low 52 Week High/Low
    2.18 +0.32 +17.20% 26,455,110 2.19/1.83 24.24/1.27

    Last Traded:
    3/12/09 16:01 EST Transaction Volume
    420,900

    Open
    1.9 Prev. Close
    1.86

    Bid
    2.37 Ask
    2.4

    Market Cap (Mil)
    1,330.81 Shares Out (mil)
    610.46

  • avatar

    Stein X – Thanks for a thoughtful analysis. Several of my friends have been parroting the line “Who could have known?” and I ask them why it is that a Boeing guy figured it out while the GM management team were wandering in the wilderness, convinced once again that Plan XXVII from Outer Space was going to once again bring them a 40% market share. I can only hope there are those in Congress making the same point.

    Any funds provided to GM must include a clean sweep of the Executive House, starting with Wagoner and Lutz.

  • avatar
    dkulmacz

    @rtx

    Hasn’t letting ‘the market’ determine the true worth of something been discredited? It’s done a piss-poor job lately, it seems.

  • avatar
    geeber

    If I recall correctly, Ford’s stock was worth more than GM’s stock in the late 1980s, when Ford was powered by strong sales of the F-150, the Panther-platform cars and the Taurus, while GM was flailing about under Roger Smith.

  • avatar
    200k-min

    Ford needs decent cars like the CTS, Corvette, and Malibu.

    Again, comparing GM vehicles to Ford vehicles will get neither company anywhere in this market. Ford and GM need decent cars like the Camry, Civic, Prius, Highlander, Fit, etc.

    While the CTS and Corvette are fine vehicles, neither is going to return GM to profitability, and the Malibu is at best on par with the Camcord. With a new Fusion to compete with in a short while the Malibu’s window is closing quickly. And I have yet to see GM have anything in the small car class to compete with the likes of the Civic or Fit.

    Ford’s portfolio isn’t perfect but GM has no bragging rights so far as I can see.

  • avatar
    rtx

    dkulmacz :
    March 13th, 2009 at 8:37 am

    @rtx

    Hasn’t letting ‘the market’ determine the true worth of something been discredited? It’s done a piss-poor job lately, it seems.

    dkulmacz:
    You obviously have no concept of economics and how things work.
    I’ll try and simplify it for you.
    A company has a valuation based on it’s debt load, sales, profit margin on those sales, and orders on the books or future sales.
    There is also a valuation placed on companies by investors which has no basis other then momentum…..up or down. A stock can be both undersold or oversold based on this.
    Today investors are looking at hard numbers.
    If a company can’t produce favorable numbers it will be avoided like the plague.
    This correction was long overdue and was brought on by the extension of easy credit to those who should have never been able to borrow themselves into a hole.
    Those who saw it coming got out of the market some time ago.
    Those who didn’t see it coming (most of our financial “advisors”) have taken a 40 to 50% hit on their valuations and its not over yet.
    Hope this clears it up for you dkulmacz.
    BTW…..how would YOU determine the value of a company??

  • avatar
    wsn

    dkulmacz :
    March 13th, 2009 at 8:37 am

    Hasn’t letting ‘the market’ determine the true worth of something been discredited? It’s done a piss-poor job lately, it seems.

    “The market” is doing a fine job. How else would subprime blow up? How else would Madoff be caught?

    People that resist the truth that “the market” brings are the real problem. Such as Wagoner, Bernanke, Paulson, etc.

  • avatar
    P71_CrownVic

    As of this post, GM stock is $2.59 while Ford is dwindling at $2.19.

    GM most certainly has the product…moreso than Ford and Chrysler. From trucks to cars, a lot of them are world class.

    The problem is the “fat” that they sell. All of the redundancy is killing them product wise.

  • avatar
    don1967

    If he weren’t so busy right now, Warren Buffett might add to this discussion that share prices are a reasonable measurement of a company’s value when averaged over time, but in the short-term they are a popularity contest.

    Microsoft didn’t suddenly lose 50% of its assets or future earnings power just because its shares declined by that amount. What changed was the short-term outlook, multiplied by fear, greed and impatience.

    GM stock is currently priced around $2.50 a share, but don’t go looking for $2.50 worth of assets or earnings. This price is purely a matter of speculation… a lottery ticket in the unlikely event that GM survives.

    Short-term stock prices are like ink blots. You can see whatever you want in them, but it doesn’t make it real.

  • avatar
    Droid800

    @P71

    When I emailed this to Robert, Ford was trading at $2.05, while GM was hovering right around $2.00.

    Still, though, this is a big change from even a few weeks ago when GM was staying right around double Ford’s stock price.

  • avatar
    jamie1

    An earlier correspondant was right. Ford is no longer interested in competing with GM and Chrysler – they are ever-decreasing dots in the rear-view mirror for Ford. The competition is Honda and Toyota and they seem to be making great inroads there – more 5* safety ratings than either Toyota, Honda or anyone else, cars and trucks that either equal or better everything that Honda and Toyota has in terms of fuel economy and quality that is on a par with both Honda and Toyota, and all of these elements are verified by independent groups (EPA, Consumer Reports and NHTSA).
    All this and no Government money to date – I know where I would rather be, and the market capitalization reflects that fact. Wall Street does not deal in emotions – it deals in facts.


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