Lack of Lifeline May Give Ford a Boost
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Wednesday, February 25, 2009
As General Motors and Chrysler seek another infusion of government funds, Ford is standing apart for now -- and may be benefiting.
Ford's staggering 40 percent plunge in U.S. light-vehicle sales last month was actually a victory of sorts. GM's sales declined by an even steeper 49 percent, and Chrysler's fell 55 percent from January 2008, according to Ward's Automotive Group, which tracks the industry.
Part of the explanation may be that car buyers believe Ford is more likely to survive the recession, industry analysts said.
Unlike its domestic rivals, Ford didn't seek a federal bailout late last year, and it didn't turn to the government again last week begging for a second big infusion of taxpayer funds to avoid bankruptcy.
"One of the factors is that Ford's not asking for money in Washington, so consumers may be less concerned about Ford," said John A. Casesa, automotive analyst and managing partner of the consulting firm Casesa Shapiro Group.
"They see Ford as being in a different position," said Ford sales analysis manager George Pipas.
If that interpretation is correct, it illustrates the risks for GM, Chrysler -- and even Ford, which may ultimately face a similar predicament, some analysts say.
The mere specter of bankruptcy can cast a shadow over the showroom, contributing to an automaker's decline. Consumers may think twice about buying a particular make of car if the manufacturer's future is in doubt. Questions naturally arise: Who will stand behind the warranty? Will my neighborhood dealer still be around to service the car? Will I be able to get replacement parts? And what will happen to the car's resale value?
Auto executives have invoked such concerns to argue that the government should use taxpayer money to keep GM and Chrysler out of bankruptcy. But all the talk about how desperately GM and Chrysler need the loans can be a bit of a self-fulfilling prophecy.
Chrysler spokesman Rick Deneau said that, anecdotally, Chrysler dealers estimate that concern about "that B-word" has reduced their sales by 20 to 25 percent. "Clearly that has an impact," Deneau said.
Analysts say it's hard to know exactly why GM and Chrysler sales have fallen more sharply than Ford's, and there may be other explanations. For example, at a time when car loans and leases like all manner of credit have become harder to obtain, Ford has been able to provide more financing, said John Sousanis of WardsAuto.com.
Though Ford has predicted that it can survive this year on its own, it has also said it would like a $9 billion line of credit from the government to fall back on, if necessary.
