Ford Pulls Further Ahead of Domestic Rivals

Okay, maybe that's not saying too much, especially when it's based on things like Ford notching a net loss of "only" $1.4 billion in the first quarter. But keep in mind that that's about a billion dollars better than the "experts" were predicting. And FoMoCo got to this point by making some nearly Obama-worthy cost cuts, the kind that reflect positive changes in how it does business, not just by cannibalizing itself.

For example, Ford saved close to a billion by improving the efficiency of its manufacturing and engineering operations and sliced $500 million or so from labor costs thanks to union negotiations. The Blue Oval was also able to appreciably reduce its spending on incentives -- not an easy thing to pull off with sales continuing to fall. Then there was the refinancing deal that lowered Ford debt by nearly $10 billion. Cash-wise, Ford is sitting on $21.3 billion, nearly $8 billion more than at the same time last year.

Based on results like these, Goldman Sachs upgraded Ford stock to "buy," and people are listening. The change in rating and today's news have pushed the stock up by more than 10 percent as I write this. (Insert snarky comment about banks and automakers teaming up to save each other here.)

Of course, we should be clear about what we're seeing: namely, the impressive ability of Ford execs to manage the company during the crisis – not any kind of actual increase in sales or anything like. After all, the fact of the matter is that Ford sales were down 43 percent through the first three months of 2009, and its "impressive" results are actually based on the company's worst first-quarter showing in more than 15 years. Overall production was essentially cut in half.

But on the other other hand, slowly but surely, more and more people are jumping on the recovery bandwagon. Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates, said in a press release today that, "In spite of continued supply corrections, we remain optimistic that coming months will exhibit stability with a modest increase in the second half of the year, which is in line with our 8.5 million-unit retail and 10.4 million-unit total light-vehicle forecast for 2009."

The Power folks are also looking for an incremental increase in demand for new vehicles of about 20 million cars and trucks, spread out over the next five years.

And Ford should be in a great position to benefit from that increase. By 2010, some of those great European models we've been hearing so much about should be making an impact on the U.S. market. People here are already test driving the new Ford Fiesta, the 2010 global Ford Focus looks to be a winner and the Transit Connect should be able to gain traction with small businesses as the overall economy comes back.

Toss in U.S.-born products like the 2010 Ford Mustang, the revised Ford Fusion/Mercury Milan/Lincoln MKZ (and their fuel-sipping Hybrid counterparts), the Lincoln MKS (which will soon be benefiting from Ford's TwinForce engine technology) and the always strong Ford F-150 (hey, the full-size pickup market won't go away entirely), and you're looking at a very customer-friendly portfolio.