Ford's better-than-expected September sales combined with an 11 percent dip in business last month for General Motors has closed the gap between America's top two automakers. In fact, General Motors outsold Ford by just 2,049 vehicles in the U.S. last month. That's close enough that it raises the question of whether Ford has the ability to catch General Motors and become the best-selling automaker in America.
Kurt McNeil, vice president of U.S. sales for GM, said he isn't worried. "You've got to take a little longer view on it. Some of our competitors were extremely aggressive in the incentive spend," said McNeil. "If you look at the quarter we were up 13 percent. The industry was up 10 percent."
Few in the industry expect Ford to catch General Motors anytime soon, mainly because it doesn't have as much capacity in North America. That said, Ford has been steadily closing the gap with GM and many believe that will continue to be the case in the near future.
Ford gaining on GM
As Ford's sales of the Edge, Fusion and F-Series pickup have gained in recent years, the company has solidified its position as No. 2 in the U.S. for auto sales. It has also gained market share and is now hovering just above 16 percent. Meanwhile, General Motors has seen a steady decrease in market share during the past three years. But the gap between GM and Ford still remains greater than 2 percent. Last year in the U.S., GM sold 352,000 more vehicles than Ford. That's an average of more than 29,000 vehicles a month.
GM's capacity to grow
One reason many in the auto industry do not think Ford can catch General Motors anytime soon is because GM has more capacity to expand production in North America. When the auto industry downsized during the recession and annual sales dropped down to 10 million vehicles, the big three automakers cut their capacity for building new vehicles.
Even at the bottom, GM held more capacity than Ford and Chrysler. Since then, each company has steadily increased production. By the end of this year, more than half of the U.S. auto plants will be running three shifts a day.
Right now, Ford has less wiggle room than General Motors to increase production. That means as Ford continues to boost sales, its growth will be slightly constrained. Meanwhile, General Motors has more room to increase production as sales in the U.S. continue to move higher.
Eventually, both GM and Ford will face a decision on how they can raise their supply of new vehicles in the U.S. But for now, neither automaker is ready to make the commitment to build a new plant or add another assembly line.
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Pursuing profits over market share
There's one other factor to consider when you look at the market share battle between GM and Ford. How aggressive will the companies push sales? So far, they've kept incentives and rebates in check as they've pushed profits. Why? The rebound in auto sales in the U.S. has been so strong that automakers and their dealers have not had to work as hard to boost sales.
But key questions remain. What happens as the pace of sales slows? What happens if the economy starts to stall? Will Ford and GM steer clear of raising incentives at the expense of profitability?
Ford under Alan Mulally has been disciplined when it comes to incentives. Mulally has preached that profits are more important than market share. For his part, GM CEO Dan Akerson has taken the same approach.
As long as GM and Ford keep incentives in check, it's unlikely Ford will make the kind of major push that would be needed to close the sales gap with GM.
Questions? Comments? BehindTheWheel@cnbc.com.