Ford plans to hammer its weaker peers
It is not surprising that the healthier car companies will try to profit from the troubles at GM (GM) and Chrysler. But it is ironic that Ford (F), which was probably considered the weakest American car company three years ago, will likely pick up market share in the second half of the year.
GM and Chrysler must now face the fact that Ford and the big Asian car companies will market their 2010 products to consumers who are confused about what Chapter 11 means at the two struggling American car companies. GM and Chrysler will also lose some customers because they have closed dealers in a number of markets.
According toThe Wall Street Journal, "Ford, the only one of Detroit's Big Three that didn't need a bailout from the federal government, plans to increase production of cars and trucks in the third quarter by about 10 percent from the level of a year ago." With the domestic vehicle market going through a period of weak demand that has not been seen in decades, there is no guarantee that Ford will sell those products even if its two peers are in trouble.
But if Ford and other large car firms with big customer bases in the American market can take significant market share from GM and Chrysler, the two companies may never get it back. They will have much smaller product lines and marketing budgets that are a fraction of what they were just a few quarters ago.
Ford may be making a gamble by raising its production expenses, but if it works, the company could benefit for years.
Douglas A. McIntyre is an editor at 24/7 Wall St.