Car Wars: Is Ford Better Than GM?

Is Ford better than GM?
Is Ford better than GM?

Things are getting ugly at the Ford (F) assembly line. The automaker is currently shelling out an average of $58 an hour in pay and benefits to its stateside workers -- reportedly the highest in the industry -- and the Dearborn, Mich.-based company is trying to shave that down.

The timing could be better: In neighboring Detroit, union workers at General Motors (GM) ratified a collective bargaining agreement Wednesday morning.

When there's peace at one company and the potential for labor unrest at the one with higher costs, the easy decision would be to go with GM.

I can't. I won't.

Ford Flex and Fiscal Restraint

Maybe I'm biased. I traded in my GM car for a Ford Flex earlier this year. And I was so impressed with the turnaround job by Ford CEO Alan Mulally that I also became a Ford shareholder.

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First, the car: I'm more of a tech nerd than a gearhead, so I confess that my springtime car search found me circling back to Ford because of its superior dashboard toys. I was paying GM's OnStar a $19 monthly ransom for telematics features that I can now largely duplicate for free with Ford Sync and my Bluetooth-enabled smartphone. The MyFord Touch technology that's being incorporated into some of Ford's lines is even more impressive.

As for the stock, well, my car has treated me better than my investment, but there's more to it than just that. While a panhandling Chrysler and GM accepted their government bailouts, Ford was the lone holdout. If you don't think consumers are grateful that Ford didn't bring taxpayers in to clean up its mess, think again.

Is Ford just making better cars, or are consumers turning to Ford as the more fiscally responsible auto manufacturer?

A Tale of Two Cheapies

Both stocks are cheap on a P/E basis. Ford and GM trade for just 5 times this year's projected profitability. GM's government bailout and eventual bankruptcy cleaned up its balance sheet, but Ford has the benefit of not being under the same kind of public scrutiny as your Uncle Walt who hit you up for a big loan a few years ago.

The future will continue to reward Ford for its relative prudence. That's why I'll stick with Ford.

Longtime Motley Fool contributor Rick Munarriz owns no shares in any of the stocks in this article, except for Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors.

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