Wall Street Won’t Buy Ford’s Story Because It’s Average

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The spattering of news out of Ford Motor Co. (NYSE: F) recently includes its plan to temporarily close five plants and its venture with India’s vehicle maker Mahindra and Mahindra. In the first case, Ford’s decision shows once again its vulnerability in the U.S. market. In the other, the number two American car company demonstrates one component of its work toward becoming more of a global car company. Overall, investor sentiment has sided with a focus on Ford’s problems on its home turf. Without a solution to that, all the alliances in the world will not help it. Ford’s advances in other areas critical to the industry have been modest.

Joint ventures have been part of the global car manufacturing business for decades. It is hard to identify many that have borne fruit, with the exception of the joint ventures between Chinese local car companies and large auto companies based outside the world’s largest car market. These ventures have allowed operators like GM and Volkswagen to get a large presence in China. The future of the Mahindra and Mahindra deal shows no evidence that it will be broad enough or well-funded enough to make a large difference of in the future of either company.

Despite the Ford plan to close five plants, it cannot cost-cut its way out of its U.S. market debacle. Ford joins several other companies that did not see the consumer turn toward sport utility vehicles (SUVs) and light trucks fast enough, although its Ford F-150 full-sized pickup is the top-selling vehicle in America. Ford brand car sales dropped 20.4% from January through August to 381,185. The missteps of William Clay Ford Jr., Ford’s executive chairman and chairman of the board, in the United States will cost Ford well into 2018, if not longer.

Ford has yet to convince investors that it can pull away from the pack in several critical areas to regain investor confidence. So far its track record in these areas is average. Ford, like every other large car company in the world, has autonomous vehicle experiments. It is well on the way to a fleet of electric cars. Its position in China, a market essential to success because of its size, is above average, but not at the top of the list of car companies that operate there based on market share. Ford’s trouble is that it is average among the world’s biggest manufacturers across all these measures. It has not demonstrated clear leadership in any critical part of the industry.