Sacramento, California – With the Los Angeles Auto Show’s Dec. 4-13 run just days away from commencing, I’m recalling a little history from auto shows past.
Three years ago, General Motors chief Rick Wagoner mesmerized me and hundreds of other automotive journalists in attendance at the L.A. show’s Media Days. He looked strong and confident, laying out a bold GM future that would include cars fueled with gas-ethanol blends, advance gas-electric hybrid systems, plug-in hybrids and a mainstream electric car.
Just one year later, it was Ford Chief Executive Alan Mulally’s turn to address media gathered for the L.A. show. He seemed marginally confident. And when he said the struggling automaker was on target to return to consistent profitability by 2009, there were audible chuckles from the throng of assembled motor media.
In short, it seemed two years ago that GM was doing things right, and Ford was trying to put a good face on a hobbled ship.
Before the first eggs-and-bacon media breakfast has been served this year at the Los Angeles Convention Center, this much is apparent: Ford is looking really good, and GM is the one looking hobbled … or perhaps crippled, depending on your perspective.
Wagoner is gone, although I suppose there’s some good karma in essentially being fired by the president of the United States.
As for Mulally, he was justifiably beaming when Ford Motor Co. recently announced quarterly earnings of nearly a billion bucks.
GM has been taking heat for raising prices and shedding brands, all the while taking a big public relations hit for taking government bailout money … while archrival Ford put up its big quarter sans bailout dough.
Welcome to the cyclical nature of the car business. A decade back, when GM was holding off Toyota as the world’s top automaker and making promising investments in the growing auto industry in China, the future seemed paved with gold. Now, the future seems paved with money to pay back.
There’s a lesson to be learned here.
Back when GM and Toyota were battling hard to claim the No. 1 automaker in the world label, serious auto people on the sidelines were wondering just what GM was doing. Did it really matter if Toyota passed GM? Did GM really need to preserve a large fleet of large sport-utility vehicles getting lousy gas mileage? Did GM really need to save some of its poor-performing divisions, just for the sake of boosting annual sales numbers?
Or to sum it up in one question: Didn’t GM realize it was sinking deeper into the money pit?
The company must have known the train was coming, with all its destructive force. The massive sums GM was paying out from past “what-were-you-thinking” contracts signed with the United Auto Workers were sobering enough. And when auto sales tanked, GM’s fortunes plunged like a bowling ball through whipped cream.
Ford seems to have it figured out now: V-6 engines, practical-size SUVs (see Ford Escape) and passenger cars (see Fusion and Focus, and the upcoming Fiesta) and the occasional attention-grabber (Mustang derivatives and the hot-performing Taurus SHO).
And yet, it could all turn around again within a few years. Maybe GM’s upcoming Volt will take off among gas pump-weary Americans looking for a daily no-gas commute. China’s auto market likely will rebound, if for no other reason than the Chinese economy is a force of nature. GM could benefit from that alone.
Ford mortgaged a lot assets to set its financial feet firmly on concrete. Will enough U.S. buyers stay away from those fuel-sipping Toyota, Honda, Nissan and Hyundai brands to enable Ford to keep up its pace? Time will tell.
For now, Ford has the bragging rights among America’s Big Three automakers. And given the numbers, you have to admit that it’s more like the Big Two, with Chrysler lagging far behind and swamped with a sea of troubles.
It’s Ford’s time to crow. Three years from now, who knows?
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