Why is Ford worth 44% more than GM?

Ford's market cap is 16.39 billion, GM's is 11.39 billion. This is relatively recent, in October of 2007, GM was worth much more. It also has a 5% dividend yield while Ford has none. I understand that the American Axle strike and Delphi bankruptcy have held down GM's stock but those are short-term issues. Long-term, GM should still be worth more than Ford right?

There are many metrics to compare the "value" of Ford versus GM. Yahoo Finance lists them in the Key Statistics area of the stock page for each stock.
A quick glance confirms that Ford is "valued" at higher ratios than GM for most of the metrics cited.
You have to keep in mind though, that the metrics cited are backward looking and accounting driven. In other words, they are from the last reported accounting period (or whatever period Yahoo uses). GAAP reporting does not always capture a company's true value. GM may have taken more accounting charges than Ford (especially for their recent deal with their labor unions) that temporarily reduced their GAAP statistics. One metric that I did not compare for both companies was their cash flow, which might present a better picture of how much money they are actually making (without the various accounting charges).
Finally, Ford owns 100% of Ford Motor Credit, a finance subsidiary which itself has publicly traded debt. I believe Ford Motor Credit was not involved in any subprime mortgage financing and was strictly involved in financing cars and dealer inventory. GM sold a 51% interest in their financing subsidiary, GMAC, to Cerebus. I believe they continue to account for their 49% interest in GMAC under the "equity method" which might produce a different valuation than Ford does for its holding of Ford Motor Credit. Also, GMAC was involved in subprime mortgage financing through its holding of Residential Capital and other aspects of residential funding (like title insurance) and had to contribute millions of dollars to keep ResCap solvent. Finally, Ford recently sold its Jaguar and LandRover divisions to Tata Motors of India, and after that deal closes, the accounting charges (assuming they show a loss) might reduce Ford's overall value (for accounting purposes).
Longer term, the relative value of each U.S. car company will be determined by which company can better reduce its costs (chiefly its high union wage and health care costs), produce cars that people actually want to own (hybrids, etc.) and more importantly, expand into the various growing emerging markets. I have heard that GM has a tremendous headstart (even ahead of Toyota) in this area and sells a ton of cars (some through joint ventures) in Russia, Eastern Europe and now China. I don't know much about Ford's position in these areas. Clearly, both companies will be able to make more money in these markets than they can in the US because of their legacy costs here (where they still have to pay laid off union workers who are no longer actually working).

This is why we have stock markets. So people can decide on their own what they think stocks are worth and make their investment decisions based on that. If you really think Ford is over-valued and that GM is really under-valued. Then by all means, short Ford and buy GM.

price is subjective.....................usually not related to reality in the short term..........

1) Because Alan Mulally is 44% smarter than Rick Wagoner.
2) No.

Ford is a much larger seller than GM, as well as the fact that they pay less cost per vehicle for backwards costs (pension plans, lifetime health benefits on past employees, etc). GM is pretty bad on this, so bad in fact that they have recently done a buyout so within a couple of years they will be back in the game. Ford is still poor at this too, just not as much. Honda and Toyota barely pay any backwards costs on their vehicles, and are making outstanding headway on their vehicles, but they do not sell as much as ford overall, despite the civic and related being amazing successes to the point of where their profit is greater.

The actual per stock cost is not a measure of the value of the company. General Motors is the second largest automaker, behind Toyota. One thing to consider is the number of outstanding shares. If GM did a split of 2:1, the stock would be worth half as much per share, but there would be twice as many shares. One of the concepts within the markets is that the price of a share needs to be at a value that the investor can afford. Some companies limit the number of shares available by buying them back as Treasury stock. This will control the amount available to investors and affect the price per share as well. Look at the performance( loss or gain) over long term to determine which is better for youe investment strategy and which has a risk tolerance you can live with.

I DONT NO OR CARE NOR DO I EVER PLAN TO CARE!!!

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