Automotive companies: Ford versus General Motors

Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) are two of the largest automobile companies in the US. Ford has a market cap of $40 billion while GM’s market valuation stands at $51 billion. Let’s take a look at how these two companies are doing.

Ford

Over the past five quarters, Ford’s revenues have pretty much declined with a slight pickup in the fourth quarter of 2018. For the first quarter of 2019, revenues declined 4% year-over-year. Net income has also seen a downward trend during this period. The company has seen its total vehicle sales decline over the past several months with the cars segment affected the most.

The preference for trucks and SUVs has negatively impacted Ford’s car sales leading to double-digit declines in the segment. This led the company to stop the production of certain models and revamp its facilities to produce more SUVs. For the most recent quarter, car sales dropped nearly 24% while trucks and SUVs delivered sales increases of 4% and 5% respectively.

Even though the shift towards SUVs does provide Ford with a viable revenue opportunity, it does not appear to be adequate to offset the headwinds the company faces. Ford has been investing in electric vehicles but its sales are not yet on par with its competitors. The company also lags behind its rivals in the self-driving vehicles space. Ford needs to focus on bringing itself up to par with its rivals in terms of emerging technologies as well as on driving revenue growth.

Ford’s shares have gained 27% so far this year while over the past three months, it has gained 16%.

General Motors

Looking at the trailing five quarters, GM’s sales have followed a similar downward trend as Ford, barring an increase in the fourth quarter of 2018. Net profits, after seeing growth till the third quarter, have remained unchanged over the past two quarters. In the most recent quarter, sales declined 3.4% from the year-ago period.

During the first quarter of 2019, the combined sales of the company’s first full-size pickups were up 20% year-over-year. GM’s focus on trucks, SUVs and crossovers helped set a new record for its transaction prices.

Like Ford, GM too has been affected by the shifts in consumer tastes towards trucks and SUVs which led the company to undertake a restructuring that involved cutting down the production of some models and closing facilities.

GM has not yet been able to generate profits from its electric vehicles and the company does not expect to reach profitability until the next decade. In terms of self-driving vehicles, the company’s autonomous vehicle division Cruise secured an investment of $1.15 billion, giving it a valuation of $19 billion. In this space, GM seems to be slightly ahead of Ford as it continues to invest in new technologies, providing it with a competitive edge.

GM’s shares have gained 6% so far this year while over the past three months, it has dropped 5%.

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text.