FORD AND GENERAL MOTORS ANALYSIS

The automobile industry was, at one time, a driving force in the American economy. Detroit, where the three major American manufacturers were headquartered, was nicknamed "Motor City" and autoworkers remained with their employers for decades and often worked for one company for their entire career. The automobile industry was a large consumer of steel and rubber, and suppliers to the industry included other large companies as well as smaller suppliers. In the latter years of the twentieth century, however, the American auto industry faced challenges that were previously unthinkable. Gas prices began climbing, Asian manufacturers introduced their products and found a ready market among American consumers, and new production processes required innovation that was not always eagerly or easily embraced. This research considers the two leading American car manufacturers-General Motors and Ford-their current positions within the industry, and an analysis of the industry itself in which they compete.

The American car market remains a significant market in the global auto industry, although it is no longer the dominant market. In 2007, total revenues from new cars sold in the United States reached $228.2 billion, with a compound annual growth rate of 3.6 percent for the 2003 through 2007 period. This compares to revenues of $364.8 billion for the European market and $266.1 billion for the Asian market; these mark

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, owns approximately a one-third interest in Mazda. Ford sells the Ford and Lincoln-Mercury brand, and has affiliated brand relationships with Jaguar, Volvo and Land Rover ("United States," 2007). Ford's revenues declined from 2006 to 2007, and it posted losses in both years. The company continues to sell large numbers of automobiles (more than 6.5 million in both 2006 and 2007), but is currently unable to do so at a profit. In 2006, the company lost $12.6 billion on sales of $160 billion, and in 2007, the company lost $2.7 billion on sales of $172.5 billion. This translates to losses of 7.8 percent and 1.6 percent, respectively ("2007 Ford," 2008). Ford is in a better position than General Motors with regard to its current ratio, but it still does not meet the industry-wide ratio. In 2006, the company's current ratio for its automotive operations stood at 1.06:1; that remained steady at 1.08:1 in 2007. Ford's quick ratio was at .87:1 in 2006 and .88:1 in 2007, indicating that the company is marginally more adept at managing its inventory than General Motors, as well ("2007 Ford," 2008). Opportunities Facing the Companies Both Ford and General Motors compete in a global market with produ

Category: Business - F