The judge put me on the spot big-time Wednesday at the Half. Yep, CNBC's Scott Wapner asked why we own Ford (F) and not GM (GM) for my charitable trust. After that heavenly report from GM Wednesday, how could I not cut and run from Ford and embrace the company that had the better quarter?
I was momentarily stunned, cut to the quick, because I was in awe of what Mary Barra has accomplished at General Motors. GM has a terrific car, SUV and truck line-up and a battery technology, Ultium, which, right now, is the envy of the industry. Her letter to shareholders was about as thoughtful as it gets, and everything from China to GM Finance to U.S. sales may be among the best quarters this storied company has ever presented.
But I have stuck with Ford for one reason: Jim Farley. As much as Barra has been a break with the past, caring passionately about the environment, while designing a line of cars that includes the ultra cool GMC Hummer EV, I think Farley has done something simply incredible for Ford: He has decided to not lose money.
Before you laugh, you have to understand that the Ford Motor Company has had a long history of trying to make vehicles everywhere to be The World Car. That's a noble goal in theory, but a disaster in reality as there are whole countries -- make that whole continents -- where you can pretty much rest assured you will lose money. The obsession's an odd one, given the fact that Ford is far weaker in China, the only growth market, than GM is. So much for world dominance.
Farley made it clear that if he was going to take the job, he wasn't going to lose money. And he was going to electrify everything, including the storied F-150 truck line, the best selling vehicle in the country. Plus, Farley's something that Ford desperately needs: He's a car guy. He loves cars, something quite different from the last CEO, who came out of the steel cabinet business. Farley, who races cars in his spare time, has come out with a Mustang Mach E that I wish I could say is flying off the lot, but it has already flown off the lot. You can't get an electric Mustang, because they are sold out.
But what about the $2.5 billion in sales that he left on the table, because of the chip shortage, something that seems to have been managed far better than Ford? I think it's hard to fault Farley for this. The company had been run in a just-in-time fashion, that lean supply chain where you just dial up on the chips only when you need them. Farley misjudged the voracious desire of people to buy Fords -- a high quality problem -- but he is at the mercy of the foundries. The good news here is that Renesas (RNECY), a plant that was destroyed by fire in Japan, one that is crucial to Ford's production, will be at 50% by this month and at 100% at the beginning of July. That means, I believe, that Ford's third quarter could ignite the stock. You don't want to leave it now.
In the end, though, if you put a gun to my head and asked me right now to choose between Ford or GM, first I would ask you to take the gun from my head, and then I would say that at these prices, it's a bit of a push, but this is a halcyon moment for the U.S. car industry and no matter what, you have to own one of Detroit's finest. They are too cheap and too good to ignore.