Name : Shreeya Salunke

Roll no. : 2K181-162

Subject: SM Assignment
Date: 07-10-2019

The American Auto-Market Leaders in Comparison: A study of Strategies and Business Models
of Ford Motor Company and General Motors Company - Write a comparative review of
strategies of both the companies.

 FORD VS. GENERAL MOTORS: AN OVERVIEW

Ford Motor Company (NSE: F) and Chevrolet, which is owned by General Motors Company (NSE: GM),
are the two largest automobile brands in the United States. Both Ford and GM are leaders and fierce
competitors in the global automobile industry. Ford’s largest brand is its namesake, Ford, while GM’s
largest brand is Chevrolet.

At first glance, the two large car makers may appear to have similar business models. However, potential
investors who dive deeper will find key differences as well as many similarities between the two
companies. The following is a comparison of Ford and GM’s business models, which describes critical
factors for potential investors.

 KEY TAKEAWAYS

 Ford and General Motors are the two biggest automakers in the United States and are also big
players on the world stage. General Motors leads in market share.
 Both companies were hit by the credit crisis of 2008. GM took a government bailout, while Ford
declined; both companies have recovered in the years since.
 Ford's brand strategy has been to scale back; Ford and Lincoln are the automaker's only
significant brands globally. GM owns a variety of brands of automobiles.

 GM LEADS U.S. MARKET SHARE

GM remains the largest market shareholder in the United States, with 17% of the industry’s total sales as
of early 2019. Next, is Toyota, with 14.7%, followed closely by Ford at 14.4%.

In terms of the worldwide market, neither Ford nor GM leads the way. As of 2019, Toyota held the
largest global market share at 9.5%, followed by Volkswagen Group at 7.4%. Ford was third with 5.8%.

The global market is highly competitive and diversified. As emerging economies with large populations
such as India, China, and Brazil continue to develop, establishing a significant presence in these areas is
critical for the future growth of both Ford and GM.
  GM vs. FORD: RECENT PERFORMANCES

GM is a larger company than Ford. GM’s total revenue for 2018 was $147 billion, a 1% increase from the
previous year. Ford’s total revenue was $160.3 billion, a 2.3% increase from the previous year. Both
companies have achieved significant revenue growth since the economic crisis of 2008 and 2009, but
neither has returned to its previous total sales volume. Each company has experienced serious financial
difficulties in the past 10 years.

Ford’s product line fell behind its competition in the early 2000s, and it began losing market share. It
reported substantial net operating losses in 2006, 2007, and 2008. During this period, under the leadership
of CEO Alan Mulally, Ford began initiatives to consolidate operations and create more appealing car
models. These plans to become more efficient and innovative were already in process when the economic
recession hit in 2008. Although the decreased demand for cars during the recession hurt Ford, the
company refused a government bailout offer, avoided bankruptcy, and emerged from the recession a
stronger company.

Revenue and profit generation through vehicle financing and leasing arrangements are critical to both
Ford and GM's business models. Ford runs Ford Credit and GM wholly owns the General Motors
Financial Company.

 FORD vs. GENERAL MOTORS: BRAND STRATEGY

One of the main differences between these two competitors is the number of brands owned and marketed
by each company. Ford’s “One Ford” plan, which was implemented during difficult years for the
company leading up to the economic crisis of 2008, included reducing the total number of brands it owns
and operates worldwide.

Ford’s only significant brands on the global market are Ford and Lincoln. Recent divestitures or
discontinuations of brands include the following:

 Aston Martin (sold in 2007)

 Jaguar (sold in 2008)
 Land Rover (sold in 2008)
 Volvo (sold in 2010)
 Mazda (controlling interest sold in 2010 (minority interest remains)
 Mercury (discontinued in 2011)

Ford’s belief is that by reducing the number of brands and consolidating the number of vehicle platforms
upon which various models are built, it can become more efficient and more innovative. In 2007, Ford
had 27 different vehicle platforms across the world; in 2015, it had 12, and in 2018, it announced plans to
reduce them to five.

General Motors owns and operates a plethora of automobile brands across the globe. These brands
include Chevrolet, Buick, GMC, Cadillac, Baojun, Holden, Isuzu, Jiefang, Opel, Vauxhall, and Wuling.
GM also has equity stakes in various Chinese joint ventures. While this may seem like a huge brand
lineup, GM, similar to Ford, has divested or discontinued several brands, including the following:
  Oldsmobile (discontinued in 2004)
 Pontiac (discontinued in 2010)
 Daewo (discontinued in 2011)
 Saturn (discontinued in 2010)
 Hummer (discontinued in 2010)
 Saab (sold in 2010)

GM’s belief is that its different brands are essential to serving different market segments. It has created or
purchased brands to compete in certain international markets rather than attempting to market its existing
brands in those new markets.

Many of its discontinued brands were shut down due to poor performance rather than strategic planning.
In mid-2017, after 16 consecutive yearly losses in Europe, GM sold its European division to French
automaker PSA Groups.

 SPECIAL CONSIDERATIONS: FUEL EFFICIENCY AND NEW TECHNOLOGIES

Both Ford and GM recognize the importance of improving fuel efficiency and leveraging technology to
keep their product lines popular among customers. Many countries, including the United States, have
strict laws requiring improvements in fuel efficiency and the amount of environmental pollution created
by vehicles. Both companies have significantly reduced the fuel consumption of their overall fleets.

GM embraced the hybrid electric vehicle trend and produced the Chevrolet Volt, which won awards
for efficiency and innovation. Ford has also produced hybrid models of several of its vehicles, such as the
Escape and Focus. Both companies have also found additional efficiencies in their gas-powered cars
through the use of different engine technologies, lighter materials, and reduced overall size of cars.