Summary
Global competition is Ford's major concern. GM and Fiat/Chrysler must become competitive and enter Chapter 11 before they can threaten Ford. A slow economic recovery caused by a new lower US stantard of living will keep show room traffic down for the next 18-24 months.
Analysis
While GM and Fiat/Chrysler will become stronger with the government's bailouts, Ford's toughest rivals will be the global competition from Europe and Asia. The "Detroit 3 Minus One" (D2) have struggled mightily against foreign competition with the result that their combined share of market has slipped from 85% in the early 80s to half that in 2008. Add to that the current economic crisis and you have consumers avoiding new vehicle purchases except when they must replace their old model. This double whammy, foreign competition and poor economy, will keep car buyers from returning to the show rooms until consumer confidence returns and the home mortgage crisis is softens. There are signs of a recovery. Remember, the consumer is also a worker, and worker pay and benefits are being cut. With lower incomes and higher costs, discretionary incomes are lower. Therefore, consumer spending will take time to recover while everyone adjusts to the new lower standard of living. The impact of GM and Fiat/Chrysler's new "strength" on Ford is also questionable while the former two are in Chapter 11. Ford has picked up two points of market share while Fiat/Chrysler lost two and GM lost one to the foreign competition. When GM and Fiat/Chrysler begin to compete with the global companies then Ford should be concerned about them.
