General Motors Co. (NYSE: GM) is supposed to be among the most well-run large car companies in the world. Ford Motor Co. (NYSE: F) is supposed to be one of the worst. However, the stock prices of both manufacturers are down 20% in the past three months, a sign the markets are skeptical about the health of the broader industry and GM’s position in it.
The primary knock against Ford is that its chief executive officer, Jim Hackett, has failed to articulate the company’s plans to turn faltering operations around. Hackett has had months to do so. He was made CEO in May 2017. He has made broad statements about restructuring costs and aligning Ford’s spending with programs to drive the company further into self-driving and electric car sectors. However, the absence of detail has caused some observers to question whether he will keep his job.
GM’s CEO Mary Barra has held the job since January 2014. She steered the company through a huge scandal about faulty ignition switches and cover-ups of the problem. She has maneuvered GM into good positions in the race toward market share in the electric and autonomous vehicle markets. Or has she?
GM suffers from some of the same problems Ford does, and Barra has not created ideal solutions. GM’s market share in the United States has remained flat for several years. It has suffered from a drop in sales of sedans and coupes as buyers move to pickups, sport utility vehicles and crossovers. GM is in a much better position than Ford, or almost any other car company, in China which is the world’s largest car market. The market share held by GM and its local partners make it one of the biggest car companies in the country. However, growth in the Chinese market has slowed overall. That makes sales there a less attractive way for car manufacturers to offset slow sales in developed countries.
And, GM may be no better off in the area of emerging vehicle technology. The sector is dominated by Tesla and a number of high-tech firms and software startups. Among these leaders is Waymo. Additionally, both Europe’s and Asia’s largest car companies are as aggressive as GM as they try to grab a leadership position in the electronic and self-driving markets
At face value, GM is better off than Ford in China and future vehicle product development. Investors, however, have started to doubt that.