Ford 10-K: https://www.sec.gov/ix?

doc=/Archives/edgar/data/37996/000003799621000012/f-
20201231.htm
General Motors 10-K:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785821000037/gm-
20201231.htm
The two companies I will be comparing are Ford Motor Co. and General Motors Co. The most
recent annual 10-K filings for each company can be found below:
Ford 10-K (fiscal year ended Dec. 31, 2020):
https://www.sec.gov/ix?doc=/Archives/edgar/data/37996/000003799621000012/f-20201231.htm
General Motors 10-K (fiscal year ended Dec. 31, 2020):
https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785821000037/gm-
20201231.htm
1.  For each company, state if sales are increasing or decreasing.  Explain which reason (based
on the reasons provided in chapter three) for sales to increase/decrease for each company.
 
Reviewing the financial statements, it is clear that both Ford and General Motors’ sales are
decreasing. According to the recently filed 10-K report, Ford Motor Co. saw an 18.45%
reduction in sales growth from 2019 to 2020 as sales dropped from $155,900 to $127,144
(values in millions). Likewise, General Motors Co. saw a 10.75% decrease in sales over this
same period as sales decreased from $137,237 in 2019 to $122,485 (in millions). This
reduction seems to be fueled by decreased net wholesale volumes across most vehicle lines as
a result of the COVID-19 pandemic and decreased sale of parts and accessories to the COVID-
19 pandemic. Ford Motor Co. saw a decrease of 22.26% as wholesale unit volumes decreased
from 5,386,000 to 4,187,000 over the 2019-2020 period. General Motors Co. saw a similar
decrease from 4,209,000 to 3,370,000—19.93%—over the same period.

2.  Search through each company’s financial statements and review relevant information related
to the income statement and statement of stockholders’ equity.  Additionally, review mainstream
media reports for events that might help to explain things occurring with each company.  You
can also search through each company’s news releases and media relations pages for
highlights of relevant events.  Using several sources, discuss several reasons for each
company’s increase or decrease in profit margin.

From 2019 to 2020, Ford Motor Co. saw its gross profit margin drop from 8.3% to 4.8%. This
decrease appears to be primarily driven by total factory shutdowns and supply chain disruptions
that stalled production and led to a slowdown in customer sales during quarantine (Howard,
2021). General Motors, conversely, saw an increase from 10.5% in 2019 to 11.8% in 2020.
While not immune to the semiconductor chip shortage plaguing all car manufacturers, GM
appears to be doing a better job of strategically diverting the chips from cars and smaller SUVs
to full-size pickup trucks and big SUVs that have higher margins (Krisher, 2021). This has led to
higher profit, even as inventory is low and prices are high. Additionally, while both General
Motors and Ford are suffering as a result of the global chip shortage, Ford’s exposure to a
recent fire at a Renesas plant, was far higher than GM’s (Walston, 2021).
 
3.  Did the actions or events around one company potentially have an impact on the other? 
Explain your opinion.
The COVID-19 pandemic has hurt both company’s overall sales figures. While this manifested
in plant shutdown and reduced consumer sales due to quarantine, perhaps none was more
impactful for the auto-industry in general than the supply chain disruption of the semiconductor
chip shortage. One area of one company’s impact on the other is perhaps in General Motors’
strategy in diverting chips to high margin vehicles to increase profits. Ford is now wisely
following suit which will likely lead to increased profit margin for Ford this fiscal year (Howard,
2021). Shifting to the future, it appears that Ford’s investments in electric-vehicle product
development is impacting General Motors as well. While Ford is devoting over $30 billion to
develop these technologies through 2025, General Motors is targeting a $27 billion investment
and debuting 30 EV models in that same time period (Walston, 2021). This is a long-term
strategic shift by both companies as they try to position themselves for the consumer market of
the future and out-position one another.

References

Ford Motor Co. (2020, December 31). United State Securities and Exchange Commission, Form
10-K, Retrieved February 1, 2022 from
https://www.sec.gov/ix?doc=/Archives/edgar/data/37996/000003799621000012/f-
20201231.htm

General Motors Co. (2020, December 31). United State Securities and Exchange Commission,
Form 10-K, Retrieved February 1, 2022 from
https://www.sec.gov/ix?doc=/Archives/edgar/data/1467858/000146785821000037/gm-
20201231.htm

Howard, P. W. (2021, February 5). Ford UAW hourly workers earn $3,625 profit-sharing checks
amid 2020 earnings dip. Detroit Free Press. Retrieved February 1, 2022, from
https://www.freep.com/story/money/cars/ford/2021/02/04/ford-reported-2020-earnings-
dipped-profit-sharing-checks/4385369001/

Krisher, T. (2021, May 5). GM profit surges on sales of higher-margin pickups. Transport
Topics. Retrieved February 1, 2022, from https://www.ttnews.com/articles/gm-profit-
surges-sales-higher-margin-pickups

Walston, C. (2021, June 7). Ford Motors vs General Motors: Which is the better buy? (NYSE:F).
SeekingAlpha. Retrieved February 1, 2022, from
https://seekingalpha.com/article/4433470-ford-motors-vs-general-motors-better-buy