Ford Bandwagon Rolling But It's Too Soon to Hop On

(MoneyWatch)  Ford and its president and CEO, Alan Mulally, are already collecting pats on the back for achieving breakeven or potentially a profit for the quarter just ended, but I can't shake the feeling that Ford isn't out of the woods yet.

It's also ironic that everybody agrees that taking a quarter-to-quarter mentality is too short-sighted, yet everybody does it.

The news, as reported today in The Wall Street Journal and many others, is that Ford has gained share since Chrysler and General Motors went bankrupt, and that Ford is signaling its third-quarter results will be better than expected.

So far so good in my opinion, but where I continue to be skeptical is whether Ford can keep it up, unless overall demand recovers more than it has.

Plus, I'm skeptical because I keep reading that consumers are supposedly rewarding Ford for not going bankrupt and taking a government bailout, or conversely that consumers are avoiding Chrysler and GM for the opposite reason.

No doubt there are politically and financially aware consumers who are doing just that, but I doubt it's enough to move the market. There are other reasons why Ford is enjoying an uptick in market share that are not directly tied to bankruptcies or bailouts, especially a run of new Ford products such as the Ford Focus, and well-executed features like Ford Sync voice control.

It's a serious question whether bankruptcy is an unfair advantage that gave Chrysler and General Motors a leg up on Ford, or whether Ford is in the catbird seat.

Steve Girsky, a former Wall Street auto industry analyst who's now a GM board member, said the acid test might be whether Ford hypothetically would trade places with either of its domestic rivals.

"I suspect if you asked (Ford), 'Would you trade places?' The answer is no," Girsky said in an auto industry panel discussion in New York hosted earlier this month by the Columbia University School of Business.

Some people talk about bankruptcy like it's a big advantage, especially since Chrysler and GM were able to repudiate a lot of debt that Ford is still forced to carry.

Another panelist, Tim Leuliette, chairman, CEO and president of auto supplier Dura Automotive Systems, Inc., noted the debt burden Ford is carrying, but he also said, "The American consumer is responding to Ford in a different way than GM or Chrysler."

He also went on to say, "School is out," whether Ford's current advantage is sufficient to sustain it.

Photo: Ford