Ford Motor Company (F) and General Motors Company (GM) Not the Best Car Role Models

The automotive industry has been hit by a series of unpleasant events. Bloomberg’s Betty Liu reported that Ford Motor Company (NYSE:F) will be garbage collecting among its sold cars and General Motors Company (NYSE:GM) told dealers to halt the sales of 2015 Chevrolet Corvette.

“Ford is recalling more than 200,000 cars and among them the Escape and the Focus. In the meantime, GM’s put a hold on deliveries of its hot selling Chevy Corvettes,” said Betty Liu.

General Motors Company (NYSE:GM) is selling at almost $33.2, showing a decrease close to 1.3%. This value might further fall on the back of the news that its renewed sports car is not ready for the road. Hopefully none of the models in use carry defects within them that could put at risk human safety and that this is a one-time production deficiency. Otherwise all General Motors Company (NYSE:GM)’s current and future vehicles will suffer drops in sales, which will affect the company that is already showing some hints of weak performance.

Selling at little above $16.5, Ford Motor Company (NYSE:F) is facing more serious threats as its older models were identified with breaches in their functionality. However, the stock lost about $0.6 that is almost 3.5% of its value per share since September 5, which is about 0.7 percentage points less than the drop in the price of its Detroit, Michigan-based rival. The key difference lying in the fact that Ford Motor Company (NYSE:F) managed to rise the earnings of its shares despite a slight drop in sales.

In the best case, this update will not have a major impact. Both companies will take care of the current deficiencies and prepare more cautiously for the future ones. Bulls see this perspective in bright red colors. However, if the story happens anew in some other form or context, the two points in time could be enough to draw a downward sloping line for the valuation of the car manufacturers.

Disclosure: none