Ford gets a spark from Toyota's woes
Ford's shares rise after Toyota says it's halting sales of 8 models to address problems with gas pedals.
By Ted Reed, TheStreet
Ford stock was up 3.2% to $11.55. The shares have risen almost fivefold in the past year. Toyota was down 8.1% to $79.77.
Toyota on Tuesday said it will temporarily stop selling and building eight models for the American market, including the Camry and Corolla, while it seeks to resolve a problem involving accelerator pedals that can stick.
Toyota's problems could have a significant impact on a company with a reputation built on an image of quality, safety and reliability, especially at a time when Ford is gaining ground in building a similar reputation.
"In this highly competitive market, no automaker -- not even Toyota -- can afford to stop selling its cars and trucks for long," said Edmunds.com analyst Jessica Caldwell. "But perhaps Toyota is banking on the idea that customers will appreciate the priority of their safety in this decision."
In November, Toyota recalled about 4.2 million Toyota and Lexus vehicles to fix acceleration problems caused by out-of-place floor mats. "We've gone from floor mats to recalls for wear items to a full shutdown, and I can't help but think that the company's credibility is being called into question," said Edmunds analyst Michelle Krebs. "This could have a long-term impact, but then again, Ford recovered from the rollover debacle."
Meanwhile, Ford has been gaining market share. Its 2009 share was about 15%, a full point higher than in 2008. Ford has improved its retail share 14 times in the past 15 months.
Ford is widely expected to pass GM as the leading U.S. automaker. But the key to continuing stock-price gains would be to capture significant market share from Toyota and other Asian manufacturers.
In October, Consumer Reports ranked Ford as equal to Toyota and Honda (HMC) in terms of quality and reliability for the second straight year.
Analyst John Wolkonowicz of IHS Global Insight said recently that Ford is making inroads with buyers who value safety and reliability over styling and therefore tend not to buy cars made by U.S. manufacturers.
"Never underestimate Consumer Reports and how important it is to the car-buying public, particularly the baby-boom generation," he said. "It played a huge part in the rise of Toyota and Honda. But now, every day, Ford is becoming more and more acceptable to the white-collar crowd."
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