Chevrolet by GMC and Ford by Ford Motors Company, are the two biggest brands when it comes to light-duty pickup trucks in the United States. Both General Motors and Ford are the leaders in the industry and both are fierce contenders in the automobile industry with excellent models and brands that can compete in different market segments both in the United States and outside the country.
Ford’s most prominent brand is its namesake, while General Motors’ biggest brand is Chevrolet or better known as “Chevy.” The United States’ biggest car makers look like they have the same business models for casual observers, but most possible investors who dive into details will know the similarities as well as the key difference between the two competing companies. Listed below are some comparison between Ford and General Motors’ possible business models, which are significant factors for future investors.
Market Share Comparison with the United States
GM remains the most significant market shareholders in the U.S with more or less 16% of the automotive industry’s total car sales as of 2018. The next company with the most market share is Toyota with at least 14.7% and followed by Ford with 14.4%.
Market Share Comparison outside the United States
When it comes to global market share, Both GMC and Ford Motors failed to dominate the global market successfully. As of 2018, Toyota holds the most significant market share globally with 9.2%, followed closely by the Volkswagen company with 7.2%. FMC (Ford Motors Company) comes in at third with 6.5%.
The global automotive market is very competitive and very diversified. Countries with a large population and emerging economies like China, Brazil, and India are starting to develop and establish as an essential presence in the automotive industry and is very critical in the growth of both FMC and GMC.
Recent performance and company size
GM is a bigger company compared to FMC. GM’s total revenue before the third quarter of 2018 alone amounts to $144.20 billion, it was down 3.08% from the previous year. If you compare it to FMC’s sales of $158.66 billion, which increased 3.3% from last year, both companies have reached major revenue development since the economic depression of 2008, but neither go back to its previous sales. Each company experienced a tremendous financial letdown in the past decade.
FMC’s products fell behind its competitors at the start of the 2000s, and it has been going down year after year. In 2006, 2007, and 2008, a substantial operating loss has been recorded, downing their sales to the brink of bankruptcy. During these periods, FMC began a move to consolidate their operations an create excellent models under the supervision of CEO Alan Mulally.
If you want to know more about the depression of 2008, visit https://money.cnn.com/2014/08/27/news/economy/ben-bernanke-great-depression/index.html.
The plan is to become more innovative and efficient despite the economic recession in 2008. Although there’s a minimized demand for automobiles during these times, and it hurt Ford financially, the company rejected to be bailed out by the government, avoided the dreaded bankruptcy, and survived the recession stronger than ever.
General Motors on the hand became bankrupt during the recession in 2008. Because of the downturn, GMC required a bailout from the government to keep the company running. The company fully paid its loan and returned above bankruptcy line since then. General Motors is making a lot of tactical investments to produce an efficient, technologically savvy, and innovative vehicles, that can push them to company growth in the future. They are also investing a lot in emerging markets like China, India, or Brazil.
One of the main distinctions between the two companies is their number of brands that they own and marketed. FMC’s “One Ford” plan, which was executed during the difficult years leading to the recession of 2008. It includes reducing the number of brands they operate and own globally. FMC’s only noteworthy brands on the market outside the United States are Lincoln and Ford. The following brands that were discontinued includes:
Aston Martin that was sold in 2007
Jaguar and Land Rover were sold in 2008
Volvo in 2010
Mazda (minority stake) was sold in 2010
Mercury in 2011
FMC believes that by minimizing the number of models or brands and integrate their total number of automobile platforms where various car models are made, they can be more logical and experimental. In 2007, FMC had at least 20 different vehicle platforms all over the world. In 2015, they had 12 and this year, and they announced that they would reduce the number of platforms to five.
Want to know more about the “One Ford” master plan? Click here.
GMC operates and owns a lot of car brands all over the world. These brands include Buick, Chevy, Cadillac, GMC, Holden, Baojun, Jiefang, Isuzu, Wuling, Opel, and Vauxhall. General Motors has some minority stakes in different Chinese joint ventures. While they may have a big array of brands, General Motors has discontinued some brands like what Ford did. It includes:
Oldsmobile in 2004
Pontiac, Hummer, Saab, and Saturn in 2010,
Daewoo in 2011
GM believes that their various brands are essential in serving different market segments. They created and purchased a lot of brands to compete with other companies in the international market, rather than promote and market their existing brands in the new markets.
A lot of the terminated car brands were shut down because of poor performance and low sales, not because of strategic planning. In the middle of 2017, after 16 straight years of losses in Europe, GM sold its European division to French automobile maker PSA Groupe.
Profit and revenue production through vehicle leasing and financing arrangement are very important to all automobile companies like GMC and FMC’s business model. FMC operates their financing arrangement, Ford Credit, while GMC owns the General Motors Financial Company. Both financing branch provide leasing and purchase financing to both company’s respective consumers or buyers.
Visit this site to know more about on General Motors Financial Company
New technologies and fuel efficiency
Both companies acknowledge the significance of utilizing technology and improving the fuel efficiency of their vehicles to keep their product lines appealing to their customers. A lot of countries that includes the United States have stringent laws when it comes to fuel efficiency as well as environmental pollution generated by vehicles. Both companies significantly reduced their vehicle’s fuel consumption to align with most country’s environmental laws.