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General Motors (GM), Ford (F) Hit by Supply Constraints

Ford Motor Company

Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) were forced to lose as much as $144 per vehicle in operating income last year due to troubled relationships with their suppliers, according to data from an annual survey.

General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) had some of the lowest scores in the annual supplier relations poll conducted by independent industry consultant Planning Perspectives Inc. The survey highlighted how strained relationships with their parts makers financially stung both these car majors.  Traditionally, suppliers have been known to offer their latest technologies to automakers that they share the most comfortable working relationships with so the results of the poll offer very troubling signals to Ford and GM.

Ford and GM

Here’s how bad it is… General Motors Company (NYSE:GM) scored an abysmally low 224 out of a possible 500, costing it around $144 for every vehicle it produced.  Ford Motor Company (NYSE:F) did a little bit better scoring 261, which resulted in a loss of $166 per vehicle. Both auto makers could have bumped their operating income by $750 million and $354 million, respectively.

Toyota Motor Corp (ADR) (NYSE:TM) and Honda Motor Co Ltd (ADR) (NYSE:HMC) scored the highest in the poll that collected data from 435 participating suppliers.

GM’s Fortunes in Europe and South America Reverse

General Motors Company (NYSE:GM) missed on the top-line and bottom-line in the most recent quarter. Weaker than expected volumes in Russia and Brazil hurt sales.  Troubles were compounded by the strength in the U.S. dollar against most major currencies.  The company had announced in March that it would close a factory in Russia and take down its Opel brand there due to low demand.

North America proved to be the lone bright spot for the company.  Unit sales there rose to 790,000 from 745,000 in the year ago quarter.  U.S. market share was more or less flat at 16.9%, versus the 17% a year ago.  Global sales fell from 2.416 million last year to 2.399 million in the most recent quarter that translated to a market-share of 11%.

Ford Selling Fewer Vehicles in North America

Ford Motor Company (NYSE:F) recorded quarterly earnings and revenue that fell short of Wall Street expectations.  The country’s second-largest automaker’s 6.7 percent operating profit margin would have jumped to 10 percent if its two highly profitable models, the F-150 and Edge, now being re-launched with brand new designs, had matched year-ago sales.

Due to this recent weakness in North America, Ford Motor Company (NYSE:F)’s stock has underperformed rival General Motors Company (NYSE:GM) in the past three months.

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