Ford concerned about competing with government

Now that the federal government will own significant stakes in both of their main American competitors, Ford is raising legitimate questions about how those relationships may distort the automobile market and work against their own financial health. Automotive News reports on some of those concerns.

With both General Motors and Chrysler LLC in bankruptcy, Ford Motor Co. is calling for the U.S. government to maintain a level playing field for all auto manufacturers.

“The reality is, if you’re competing against a company that’s majority owned by the U.S. government, that does raise certain concerns about what the competitive dynamic will be for the industry,” Ford spokesman Mark Truby said. “So we’re hoping we can work with the administration and the task force to be heard on those issues as this progresses.”

One issue of concern is the infusion of taxpayer money into GMAC, which now handles the financing for new car sales for both GM and Chrysler. Because GMAC converted to a bank holding company in order to qualify for TARP funds, they now have lower borrowing costs than Ford Credit. The latter company has been trying to win licensing approval to become chartered as an industrial bank, which would similarly lower their cost of credit and help them be more competitive with GMAC’s ability to offer low interest rates and special financing arrangements.

Another area of concern is the effect that billions of dollars in taxpayer aid might have on the car buying decisions of consumers. Ford leaders believe that the inflow of government money has allowed GM and Chrysler to offer larger incentives to buy their vehicles, which would in turn reduce their own sales.

These are legitimate concerns that Ford is hoping to receive some reassurances on from the Treasury Department.