A Wall Street Journal report saying General Motors and Ford will end production of several car models has some investors worried: Are GM and Ford repeating the mistakes that put Detroit on the skids a decade ago?
Back then, Ford, GM, and the company then known as Chrysler had spent years emphasizing high-profit truck-based SUVs and reducing their investments in fuel-efficient cars, only to be caught out when gas prices jumped and consumers suddenly wanted fuel-efficient choices.
That, and the economic crisis that followed in 2008, nearly wrecked the American auto industry. GM and Chrysler were forced into bankruptcy, while Ford ran the financial equivalent of a Hail Mary pass in a last-ditch effort to save itself from the same fate.
A decade later, all three companies — Chrysler now as a part of Fiat Chrysler Automobiles — are healthy and profitable, thanks once more to booming truck and SUV sales.
Are they about to make the same mistake again?
Sometimes, it really is different this time
Investors are always reminded to be wary of the words, “It’s different this time.” But sometimes, it really is different, and this is one of those times. At first glance, it does seem like Ford and GM have failed to learn the lessons of the recent past. But when we look deeper, we find that things aren’t quite what they seem.
Let’s start with GM.