A top Wall Street auto analyst just called out Ford for falling behind GM. But there's nothing wrong with second place.

FILE PHOTO: Newly named Ford Motor Company president and CEO James Hackett answers questions from the media during a press conference at Ford Motor World Headquarters in Dearborn, Michigan, U.S., May 22, 2017.   REUTERS/Rebecca Cook Newly named Ford Motor Company president and CEO James Hackett answers questions from the media during a press conference at Ford Motor World Headquarters in DearbornThomson Reuters

  • Morgan Stanley analyst Adam Jonas published a research note contrasting GM's and Ford's prospects.
  • He rightly touted GM for its leadership and execution.
  • But he underestimated Ford's tenacity and experience being No. 2 in the US market.

On Thursday, as the media-and-Wall-Street aspects of the Detroit auto show were winding down, Morgan Stanley auto analyst Adam Jonas published a research note in which he praised General Motors' business and leadership and made some accurate - yet harsh - points about crosstown rival Ford.

The upshot is that GM CEO Mary Barra has made tougher decisions and has put GM, just 10 years on from its bankruptcy, in a stronger competitive position. Ford CEO Jim Hackett is still tackling a work-in-progress.

But he saved the best for last, writing, "Ford has been here before and we believe has every opportunity to improve its fortunes under the right combination of leadership and strategy."

That's an understatement - and an old argument. In the history of the US auto industry, Ford has almost always been No. 2, except for a short period about a century ago before GM really existed, Henry Ford was still in charge, and the Model T was rockin' and rollin.'

Read more: Ford and VW just announced a global alliance - the first collaborations will be commercial vans and pickup trucks

Ford has only recently been kinda, sorta No. 1 when GM and what was then Chrysler (now Fiat Chrysler Automobiles) went into Chapter 11 and government bailouts. And even then, a "new" GM returned to its top position in the US by market share in short order.

Ford has a perfectly good business, with the bestselling F-Series printing money and the balance sheet in very strong shape for the restructuring that Hackett has undertaken. The carmaker has attracted less attention and overt outside investment for its electric- and autonomous-mobility efforts, but it's early days for that stuff, and the company is in the game.

A reversal of fortune

GM CEO Mary Barra.JPGGeneral Motors Chairman and CEO Mary Barra speaks at GM's press conference at the North American International Auto Show in Detroit, Michigan, U.S., January 16, 2018.Rebecca Cook/Mary Barra

Clearly, GM is struggling far less these days than Ford, and that's heightening the contrast between the two companies. For years, it was GM that was under all the pressure, exiting bankruptcy into the massive issue of an ignition-switch recall that cost the automaker billions. Ford capitalized on its "we didn't take any bailout money" equity for a long time, papering over some of its product problems.

(Jonas also highlighted GM's board composition against Ford, which is Ford-family heavy. But he neglected to note that family ownership has helped Ford avoid showdowns with activists. Barra has fought off two of these at GM under her watch.)

Jonas is an analyst who likes a story to drive investment, and at the moment, Ford seems to have lost the plot. Goodwill toward the automaker has reversed; Wall Street rightly admires Barra's relentless execution while Jonas and others are baffled by Hackett's more measured approach.

The bottom line, however, is that Ford can operate quite effectively as the No. 2 US car company - it trails GM by just a few percentage points in a market where nobody can grab 20%. More importantly, Ford is accustomed to sitting in second position. Yes, it could improve its fortunes. But even if it doesn't do so swiftly and dramatically, it will probably be OK.

Get the latest Ford stock price here.

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