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.