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Wednesday, August 16, 2006

Ford's Quality Problem

Stocks: (GM)(F)(TM)(HMC)

The upgrade that Bear Stearns gave the Ford stock recently from "underperform" to "outperform" is still puzzling. More so in light of the University of Michigan American Customer Satisfaction Index.

The results of the study, summarized by Reuters, show that US cars continue to lag Japanese competition in quality.

Out of a potential score of 100, Toyota has an 87. Buick has an 86. Honda and Lexus also had scores of 86, and BMW has an 85. Ford had the lowest score in the industry for the second year in a row with a 77.

Bear Stearns said its upgrade was based on the fact that most of the good news was already out at GM, but that better news from Ford was still to come.

The news on Ford was not all out. Bear Stearns was right about that part.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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