Goldman Sachs Group Inc. Flips Its Preference to Ford

According to the experts at Goldman Sachs, it is high time to put brakes on General Motors and rev up the engines at Ford.

Goldman, in a research note on Tuesday after the close in New York said that Ford will benefit in this year’s second half from the redesigned F-150 pickups. The company is also showing improvement in China.

GM’s incentives on light trucks are climbing because of competition, and the Detroit-based company may miss its forecasts in China as that market weakens, according to the note.

It has been said that Goldman analysts Patrick Archambault and David Tamberrino raised Dearborn, Michigan-based Ford to buy from neutral and increased its 12-month price target for the shares to $19 from $18.

Ford rose 1.4 % to $15.50 in New York, the highest closing price since May 21. GM slid 3.1 % to $35.16, the steepest daily decline since April 23.

GM is more exposed to the Chinese auto market, which has seen a rise in promotional activity. Auto sales in China have slowed alongside economic growth and as local governments have rolled out curbs on car ownership in an effort to reduce pollution.

Goldman's China autos team lowered its 2015 retail sales growth forecast to 9.5 per cent from 11 per cent. Its 2016 forecast was reduced by 100 basis points to 8 per cent; and its 2017 forecast 100 basis points to 7 per cent.

As per Archambault, Ford will have a better growth trajectory given its much smaller market share in China and an aggressive push with 15 new models in the country this year.