Ford, GM and the 'Efficient' Road Ahead
NEW YORK, January 14, 2013
NEW YORK, January 14, 2013 /PRNewswire/ --
With an aging fleet across the country, consumers are beginning to do the
math. Savings at the pump could quickly outweigh new vehicle costs, especially
as potential buyers begin to factor maintenance and new advances in fuel
A shift in long-term strategy is ahead as Ford Motor Company (NYSE: F) [ Full
Research Report ] ^(1) and General Motors Company (NYSE: GM) [ Free Research
Report ] ^(2) are beginning to realize the importance of fuel economy and
operational efficiency. GM powertrain spokesman Dan Flores confirmed that
General Motors and Ford are signing an MOU (memorandum of understanding) to
"develop a variety of all-new fuel-efficient transmissions." The companies are
still in discussions, and an official press release is expected soon.
Fuel economy isn't the only benefit of a joint venture; "It would (also) have
huge manufacturing cost and volume advantages over all the competition," said
Skip Nydam of ND-Automotive, an industry analyst firm. The combined size of
Ford and GM's supply base would enable deep economies of scale and eliminate
significant traditional overlap, allowing the pair to feasibly pursue
fuel-efficient technologies with reasonable expenditure. "The biggest benefit
in G.M. and Ford working together is it reduces their investment risk," said
David Petrovski, a powertrain analyst at IHS Automotive.
New powertrains are the tip of the iceberg. GM recently contributed $5 million
to the new National Tire Research Center in Halifax, Virginia, which uses
cutting-edge tire performance machinery to recreate real-world driving events.
Tire design can help improve fuel efficiency by up to 7 percent and that's
exactly what GM is hoping to accomplish with its recent investment in the
Ford recently struck gold by offering a turbocharged V6 that gets V8-like
power and far better fuel economy. Half of F-150 sales are now EcoBoost
engines - Ford's name for the process of using turbocharging and
direct-injection on smaller engines to get more power and better fuel economy.
In 2014, Ford aims to come out with a new truck that has a largely aluminum
body and is 700 pounds lighter. It promises to raise the bar on fuel economy
Translating Fuel Economy into Sales
Since 2008, the average age autos on the road has consistently risen and
recently set a record high. The average car on the road today is over 11 years
old. This presents a significant opportunity for car manufacturers to close
the gap between cost-of-new vehicles and cost-savings of a new vehicle. Ford
and GM are effectively trying to bring fuel efficiency into the forefront of
the car-buying equation. Consumers are starting to do the math and realize
their additional savings at the pump from a newer, more fuel efficient vehicle
may very well offset the cost of new vehicle financing or leasing.
It is this large and pent-up market, potentially accounting for all sales
declines since 2008, that could quickly fuel an entirely new wave of car
sales. If car manufacturers can tip the scales in favor of buying-new instead
of maintaining-old, the industry may be in for an efficient road ahead.
^(1) The Full Research Report on Ford Motor Company - including full detailed
breakdown, analyst ratings and price targets - is available to download free
of charge at: [
^(2) ^ The Free Research Report on General Motors Company - including full
detailed breakdown, analyst ratings and price targets - is available to
download free of charge at: [
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