Is Ford (F) The One American Automaker that Can Survive?
Three different plans — from three different domestic automakers — have now been presented to Congress. Each plan calls for something a little different for itself, including a couple of CEOs who say they will work for an annual salary of $1. The idea is to show penitence and humility. But they still are asking for billions in loans. But the way Ford (F) is going about it makes it abundantly clear that the company thinks that it is likely to survive this economic downturn.
All Ford asks for is a line of credit
While the other 2/3 of the “Big 3″ were asking for immediate loans (GM was adamant that if it does not receive $4 billion by the end of the year — it’s total request amounts to $18 billion, it will have to cease operations), Ford is just asking for a line of credit. True, it is a $9 billion line of credit, but still something that Ford says it is unlikely to need to tap. Provided Congress acts quickly to save its domestic competitors.
There is still talk of a merger between Chrysler and GM. And it may not be a bad idea. Neither of these companies is an as good a place as Ford (F is the only of the Big 3 that is seeing an increase in stock price right now), and combined they may stand a better chance than they would apart. Ford still makes the #1 selling truck, and with gas prices falling, it might come back into vogue. Additionally, Ford is laying out ambitious plans to offer better fuel-efficiency and green cars so that an increase in oil prices down the road doesn’t cause the same issues that contributed to the current problems for automakers.
All of this means a hopeful future for Ford. And the stock price is hard to beat right now — less than $3.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
December 12th, 2008 at 10:59 am
[…] point, it is likely that, even with help from TARP, it is possible that GM and Chrysler will fail. Ford is likely the only auto company in a position to make a transition to a profitable company and survive. After all, Ford was only […]