Ford Topping Sales, How Will GM Respond?

When Ford passed General Motors to become #1 in U.S. sales in March, I started getting e-mails from auto industry fans and players in the industry. All included a familiar rhetorical question: Is this a one month blip or is Ford on the verge of passing GM for good to become the country's top automaker?

2011 Ford Fiesta
2011 Ford Fiesta

While it's too early to say for sure, I think we're starting a period where Ford will challenge GM for the top spot month after month, unless we see an incentive war. If that happens, I suspect GM will spend whatever is needed to stay on top while Ford elects to pull back on incentives. When I made this prediction to a friend in the industry he said what a lot of people are waking up to; Ford's product line is primed to win over buyers with gas prices surging higher.

Whether it's the re-designed Focus or the pint-size Fiesta, Ford now has a line-up of cars that not only competes in terms of fit and finish, but also when it comes to fuel economy. Meanwhile, Ford is pushing better fuel economy in the all-new Explorer and with the 6 cylinder F-Series pick-up. There was a time when few thought improved fuel economy in trucks and SUV's would make a huge difference, but not anymore. If we learned anything from the last time gas prices spiked it's the fact people still want and need utility. If they get better mileage in a truck or SUV than what they had in the past, they will buy that new truck or SUV.

You combine Ford's line-up with the momentum it has in the market and the struggles with Japanese automakers, it looks like Ford should continue to pick up share. The question is whether General Motors pushes back with more aggressive incentives, as it did in January and February. If that happens, GM will remain #1 in the U.S. In my opinion, GM will wind up being more aggressive offering deals than it was in March, but not be as rich as it was at the start of the year.

One more thing about being #1 in sales. You'll hear auto executives say all the time that being #1 is not their main goal. Don't believe it. Being the top dog in sales is critically important to them. Talk with dealers, they'll tell you how important it is. Sure, they also want profitable sales, and that's that ultimate goal. But the next time you see an auto industry veteran give the standard line about not worrying who leads the industry in sales, just remember they are selling you the company line.

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