"I would call our approach realism. Not optimism, not pessimism; it's realism," Ford CEO Mark Fields said on a conference call with analysts last week. "We don't see a recession on the horizon, but we do see a marketplace that, from a cycle standpoint, it's matured."
GM's third-quarter results, including record revenue for any quarter since its 2009 bankruptcy and net income that more than doubled from a year ago, are validation of the company's retail-focused strategy in the U.S., where essentially all of its profits were generated. GM's retail sales were flat from July through September, while fleet deliveries dropped 15 per cent. In contrast, the bulk of Ford's 6 per cent decline in third-quarter sales volume was at retail.
"We're running a different play, and it's generating different results," GM CFO Chuck Stevens told analysts on the company's earnings call. "We're very focused on retail in a very disciplined way. Our retail market share is up; we're less reliant on less profitable daily rental, and that's showing up in our results."
Stevens said GM is confident that, even as U.S. sales flatten out after six consecutive years of steady growth, "we can continue to sustain strong margins in North America like we have done over the past couple of years."
Fiat Chrysler Automobiles also is on an upward trajectory. It posted a 29 per cent gain in third-quarter net income and raised its full-year operating profit forecast to at least US$6.3 billion (Cdn $8.45 billion).
Meanwhile, Ford's outlook has taken on a more negative tone since midyear. Its third-quarter net income fell 56 per cent, a drop that executives attributed to a costly recall, ramping up production of the redesigned Super Duty pickup and the plateau in U.S. sales. Ford also cited "normalization" of F-150 sales compared with a year ago, when early buyers of the redesigned model were loading them up with expensive options.
Ford's full-year guidance implies a 23 per cent drop in its fourth-quarter adjusted pretax profit, while GM's forecast suggests a decline of at least 16 per cent in the quarter.