Ford vs. General Motors: What’s the Difference?

Ford vs. General Motors: An Overview

Ford Motor Company (NYSE: F) and Chevrolet, which is owned by General Motors Company (NYSE: GM), are the two largest automobile brands in the United States. Both Ford and GM are leaders and fierce competitors in the global automobile industry. Ford’s largest brand is its namesake, Ford, while GM’s largest brand is Chevrolet.

At first glance, the two large car makers may appear to have similar business models. However, potential investors who dive deeper will find key differences as well as many similarities between the two companies. The following is a comparison of Ford and GM’s business models, which describes critical factors for potential investors.

GM Leads U.S. Market Share

GM remains the largest market shareholder in the United States, with 17% of the industry’s total sales as of 2020.

In terms of the worldwide market, neither Ford nor GM lead the way. As of 2019, Toyota held the largest global market share at 10.24%, followed by Volkswagen Group at 7.59%. Ford was third with 5.59%.

The global market is highly competitive and diversified. As emerging economies with large populations such as India, China, and Brazil continue to develop, establishing a significant presence in these areas is critical for the future growth of both Ford and GM.

GM vs. Ford: Recent Performances

GM is a smaller company than Ford. GM’s total revenue for 2020 was $122 billion, a 10.75% decrease from the previous year. Ford’s total revenue was $127 billion, a 18.45% decrease from the previous year. Both companies have achieved significant revenue growth since the economic crisis of 2008 and 2009, but neither has returned to its previous total sales volume. Each company has experienced serious financial difficulties in the past 10 years.

Ford’s product line fell behind its competition in the early 2000s, and it began losing market share. It reported substantial net operating losses in 2006, 2007, and 2008. During this period, under the leadership of CEO Alan Mulally, Ford began initiatives to consolidate operations and create more appealing car models. These plans to become more efficient and innovative were already in process when the economic recession hit in 2008. Although the decreased demand for cars during the recession hurt Ford, the company refused a government bailout offer, avoided bankruptcy, and emerged from the recession a stronger company.

GM became insolvent in 2008 and required government bailout assistance and a Chapter 11 bankruptcy reorganization in 2009 to keep the company operational. The company has since fully repaid its bailout loan and returned positive net income to shareholders since then. GM is making strategic investments to produce more innovative, efficient, and technologically savvy vehicles, which it believes drive future growth. It is also investing significantly in emerging markets such as China.

Ford vs. General Motors: Brand Strategy

One of the main differences between these two competitors is the number of brands owned and marketed by each company. Ford’s “One Ford” plan, which was implemented during difficult years for the company leading up to the economic crisis of 2008, included reducing the total number of brands it owns and operates worldwide.

Ford’s only significant brands on the global market are Ford and Lincoln. Recent divestitures or discontinuations of brands include the following:

• Aston Martin (sold in 2007)
• Jaguar (sold in 2008)
• Land Rover (sold in 2008)
• Volvo (sold in 2010)
• Mazda (controlling interest sold in 2010 (minority interest remains)
• Mercury (discontinued in 2011)

Ford’s belief is that by reducing the number of brands and consolidating the number of vehicle platforms upon which various models are built, it can become more efficient and more innovative. In 2007, Ford had 27 different vehicle platforms across the world; in 2015, it had 12, and in 2018, it announced plans to reduce them to five.

General Motors owns and operates a plethora of automobile brands across the globe. These brands include Chevrolet, Buick, GMC, Cadillac, Baojun, Holden, Isuzu, Jiefang, Opel, Vauxhall, and Wuling. GM also has equity stakes in various Chinese joint ventures. While this may seem like a huge brand lineup, GM, similar to Ford, has divested or discontinued several brands, including the following:

• Oldsmobile (discontinued in 2004)
• Pontiac (discontinued in 2010)
• Daewo (discontinued in 2011)
• Saturn (discontinued in 2010)
• Hummer (discontinued in 2010)
• Saab (sold in 2010)

GM’s belief is that its different brands are essential to serving different market segments. It has created or purchased brands to compete in certain international markets rather than attempting to market its existing brands in those new markets.

Many of its discontinued brands were shut down due to poor performance rather than strategic planning. In mid-2017, after 16 consecutive yearly losses in Europe, GM sold its European division to French automaker PSA Groupe.

Special Considerations: Fuel Efficiency and New Technologies

Both Ford and GM recognize the importance of improving fuel efficiency and leveraging technology to keep their product lines popular among customers. Many countries, including the United States, have strict laws requiring improvements in fuel efficiency and the amount of environmental pollution created by vehicles. Both companies have significantly reduced the fuel consumption of their overall fleets.

GM embraced the hybrid electric vehicle trend and produced the Chevrolet Volt, which won awards for efficiency and innovation. Ford has also produced hybrid models of several of its vehicles, such as the Escape and Focus. Both companies have also found additional efficiencies in their gas-powered cars through the use of different engine technologies, lighter materials, and reduced overall size of cars.

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