Ford pulls ahead as GM, Chrysler get ‘rinse’

It’s a position that’s pushing customers into Ford showrooms by default, as it were, according to Jack Kain, owner of a Ford dealership in Versailles, Ky.

“We’ve had so many people come in who have never come into a Ford dealership before, who have told us they were so happy Ford wasn’t having to borrow money from the government,” said Kain.

These customers are coming from both domestic and foreign nameplates, he noted.

“We’ve never had so many foreign cars on our [used car] lot,” Kain said.

It’s a perspective echoed by Rik Paul, automotive editor for Consumer Reports.

“A lot of people are thinking of buying American because they want to do their bit for the economy, but they are turned off by the problems at GM and Chrysler,” he said.

In fact, 63 percent of consumers surveyed by AutoPacific reported concern about buying from Chrysler, and 54 percent worried about buying from GM, even before the company filed for bankruptcy Monday, according to Ed Kim, director of industry analysis for the consultancy. By contrast, only 13 percent of consumers expressed concern about buying from Ford, he added.

Consumer Reports found an even stronger aversion to insolvent carmakers, with 78 percent of those surveyed saying they were unlikely to buy from a manufacturer in bankruptcy and 64 percent saying they were very unlikely to do so.

Shoppers not only say they are more comfortable buying from a solvent car manufacturer, they are voting with their dollars and driving Ford sales upward while Chrysler and GM shoppers hesitate.

“May will mark the seventh month in the last eight that Ford has increased its retail market share,” said George Pipas, Ford spokesman for sales analysis and reporting. “That hasn’t happened since early ’90s,” when the company’s sales were powered by the twin dynamos of Taurus and Explorer. “At the retail level, last month’s 13 percent share was a point higher than a year ago,” he added.

(Ford and rival carmakers were scheduled to release official sales figures for May Tuesday.)

Ford has significantly curtailed sales to daily rental fleets, a onetime mainstay, and now rental sales account for only about 10 percent of production, a volume that is on par with competitors like Toyota, Pipas said. In the past, fleet sales were substantially less profitable than retail sales, but the profit gap has nearly evaporated under the harsh reality of mountainous incentives on retail sales.

The reduced fleet sales improve residual values, making Ford cars more financially appealing, according to Pipas.

But what about later this year or next, when slimmed-down GM and Chrysler get back in the car game in earnest, and their trips through bankruptcy relieve them of substantial costs? Will Ford be disadvantaged, or will the company take the sales lead from GM and power away on the momentum it is now building?

Most of the advantages still will lie with Ford, even after GM and Chrysler benefit from deeper cost cuts than Ford may be able to achieve without bankruptcy and White House intervention.

Ford enjoys greater consumer confidence, holds esteem for its aversion to government aid, is getting higher ratings for quality and reliability, and has an array of fresh products queued up for introduction in coming months, including a refreshed Taurus family car that is earning praise from those that drive it.

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