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Ford Vs. GM: New Leaders, Big Dreams

Ford Vs. GM: New Leaders, Big Dreams

A few weeks ago, two of Detroit’s Big Three automakers — General Motors Company (NYSE: GM) and Ford Motor Company (NYSE: F) — released forecasts for the end of the year and the next few years.

The forecasts come at an interesting juncture for both automakers, as each has recently experienced changes in upper management. Since taking the lead executive role in January, GM CEO Mary Barra has spent much of her tenure focusing on the recalls. senior analyst Michelle Krebs told Benzinga that GM presented a very ambitious plan, especially in terms of the industry.

Related Link: Why Tesla Motors Inc Isn't A Car Company

"Now the challenge will be for CEO Mary Barra and her lieutenants to stay the course and hold everyone accountable for meeting those goals," Krebs said. "That's how now-retired Ford CEO Alan Mulally turned Ford around – with consistency, continuity, focus and accountability."

Krebs said that Barra's ascension to chief executive was very natural, much like Ford Motor Company CEO Mark Fields taking over the position from Mulally in July.

"Everybody expected Mark Fields to get that job, so he’s really continuing the course that Alan Mullaly set," she said.

With new leadership at both companies, the automakers presented outlooks that included increased global presence and luxury brands. 

Long-Term Growth

Looking ahead, Ford presented a longer-range vision for the company than GM did, but GM’s forecast might be slightly more aggressive.

Ford plans to continue implementing the One Ford plan originally developed by former CEO Mullaly, according to Automotive News Europe. The automaker anticipates increased global sales will increase at least 45 percent by the end of the decade to roughly $9.4 million.

Related Link: Market Overreacted To Ford Motor Company's Decreased Profit Outlook, Analysts Say

Long-term, Ford is aiming for an automotive operating margin between 8 and 9 percent. It hopes to reach 8 percent as early as 2020, according to its growth forecast.

On the other hand, GM’s looking to reach an operating margin of 9 to 10 percent shortly after 2020. Despite these lofty, long-term goals, much of GM's focus in this recent plan is on increased volume in the nearer future.

Next year, the automaker expects 27 percent of its global sales volume to come from new or refreshed products, GM said, with that number increasing to 47 percent in 2019.

Focus On Luxury Brands

Both automakers emphasized growing their respective luxury brands.

GM recently announced that it plans to separate Cadillac into its own business headquartered in New York. Many analysts were unsure of the benefits of this kind of move. 

Related Link: 3 Problems With General Motors Company Moving Cadillac To New York

The company also plans to release four new vehicles in North America alone next year. That includes the new model GM announced last month called the CT6, which is aimed at joining the elite club of large luxury cars.

GM will also focus on further infiltrating the luxury car market and is expecting to offer the most expansive lux sub-market of the decade.

Over the next five years, GM plans to come out with nine new vehicles in China.

Ford is also focusing on revitalization of its luxury brand and increasing its market share in China.

The automaker is forecasting tripled vehicle sales for Lincoln by 2020. Its MKZ and MKC models are both bringing in new customers and helping reinvent the brand, the company said.

Although Ford initially announced that it would be bringing Lincoln to China more than two years ago, Reuters reported earlier this year that the company will finally start opening retail stores in Shanghai and Beijing this month.

The majority of the luxury brand’s growth will come from China, the automaker believes.

GM and Ford might have their eyes on the right target. A recent report from Pricewaterhouse Coopers (PwC) says that the Chinese market has seen impressive growth in the luxury industry over the past several years and expects the trend to continue.

“Autofacts is forecasting that the Chinese market will surpass the average luxury penetration rate of 10 percent of mature markets like the U.S. to reach just over three million units by 2020,” according to PwC.

Technology And Product Innovation

Even non-automotive companies like Google Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) are working on self-driving vehicles. Therefore, it comes as no surprise that both Ford and GM outlined the technological innovations each has in the works.

Ford said it will remain focused on research in car connectivity and automated driving technologies through its Palo Alto Research and Innovation Center.

GM will introduce its own “highly automated” technology called Super Cruise, a setting that is supposed to support hands-free highway driving.

In addition, GM said it is working on vehicle-to-vehicle communication technology with plans to deploy 4G LTE high-speed mobile broadband.


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