Sunday, March 29, 2009

Ford Gets Its Bailout From Car Buyers

It is one of the great economic ironies. Ford has spent the last two years shrinking as fast as it could. The result? It is rapidly gaining market share. Meanwhile, customers are deserting the competitors that tried the hardest to expand in 2007 and 2008.

A Los Angeles Times story today suggests that the shifting market is because of the ongoing public relations disaster related to the federal bailout at General Motors and Chrysler:

A survey released this month by polling firm Rasmussen Reports found that 88% of Americans would prefer not to buy a car from an automaker receiving government aid. That’s worse than the 63% who said they would eschew buying from a bankrupt car company.

The bailout boycott is surely a part of what’s going on, but I believe it’s only a small part. There is also a positive reason for the shift to Ford. People believe that by buying a vehicle from Ford, they are contributing to the company’s survival. Ford encouraged this kind of thinking when it turned down bailout money and said that the sales revenue from the vehicles it sold would be enough for it to survive. In essence, Ford said that its bailout would come from car buyers. This positioning lets Ford customers buy into a survival story.

It’s the American way to root for underdogs, winners, and people who work hard. Right now, the way the public sees it, Ford is all of these. When people are choosing a new car, why wouldn’t they choose one that comes with a story like that?