Big 3 no longer. Ford bowing out

Redbeard

Well-Known Member
Focus crossover and Mustang will be only Ford sedans sold in North American dealerships
4/26/2018

DEARBORN, Mich. — Ford Motor Co. said Wednesday it will shed most of its North American car lineup as part of broad plan to save money and make the company more competitive in a fast-changing marketplace.
The changes include getting rid of all cars in the region during the next four years except for the Mustang sports car and a compact Focus crossover vehicle, CEO Jim Hackett said as the company released first-quarter earnings.
The decision, which Hackett said was due to declining demand and profitability, means Ford will no longer sell the Fusion midsize car, Taurus large car, CMax hybrid compact and Fiesta subcompact in the U.S., Canada and Mexico.
Exiting most of the car business comes as the U.S. market continues a dramatic shift toward trucks and SUVs. Ford could also exit or restructure low-performing areas of its business, executives said.
The company has found another $11.5 billion in cost cuts and efficiencies, bringing the total to $25.5 billion expected by 2022, Chief Financial Officer Bob Shanks told reporters. Savings will come from engineering, product development, marketing, materials and manufacturing. The company previously predicted $14 billion in cuts by 2022.
One-third of Ford’s belt-tightening will come by the end of 2020, Shanks said.
"We’re starting to understand what we need to do and making clear decisions there," Hackett said.
Ford also promised to raise its operating profit margin from 5.2 percent to 8 percent by 2020, two years earlier than a previous forecast. That includes a 10 percent pretax margin in North America.
The company said its first-quarter net income rose 9 percent due largely to a lower income tax rate.
Ford made $1.74 billion from January through March, or 43 cents per share, compared with $1.59 billion, or 40 cents per share a year ago. Revenue rose 7 percent to $41.96 billion.
Earnings and revenue beat Wall Street estimates. Analysts polled by FactSet expected 41 cents per share on revenue of $36.78 billion. As usual, North America drove Ford’s profits for the quarter with pretax earnings of $1.9 billion.
Pretax automotive earnings fell $443 million to $1.7 billion, mainly due to higher metals costs such as steel and aluminum.
Investors reacted favorably to the earnings. Ford stock rose nearly 3 percent in after-hours trading Wednesday to $11.40. Through the close of regular-session trading Wednesday, it has fallen about 11 percent so far this year.
The cost savings will come by optimizing digital marketing and discounts on vehicles, as well as putting multiple vehicles on five flexible global architectures in the next few years. The company currently builds vehicles on nine platforms that aren’t as flexible.
Shanks said Ford is "unleashing the creativity of the teams to challenge norms, challenge conventions." Cuts and efficiencies are not done yet, he said.
Ford will cut $5 billion from capital spending from 2019 to 2022, reducing it from $34 billion to $29 billion. The company will spend less on low-performing areas such as cars. It identified Lincoln as a low-performing area but Shanks said sales are growing and the brand is not in jeopardy. More capital will be allocated to higher performing areas such as trucks and sport utilities, he said.
Lower-performing areas will be targeted for restructuring and some areas could be targeted for "disposition," Shanks said. Shanks defined disposition as a different business model, efficiency improvements, exiting or downsizing. "Whatever it takes," he said.
Shanks wouldn’t say if employees would be cut but said nothing is off the table.
Executives talked about the need to further improve operations in Europe and South America.
"We’ll restructure as necessary and we’ll be decisive," Hackett said.

http://www.tampabay.com/news/business/autos/Focus-crossover-and-Mustang-will-be-only-Ford-sedans-sold-in-North-American-dealerships_167694007
 
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Mooseman

Moderator
Taurus large car
That is funny. The Taurus was NOT a large car. Apart from cops, nobody bought them. And cops have even said they will stop buying them because of safety concerns due to its size making gun mounts unusable, the compartment cramped with a computer and getting in and out of them difficult unless you were less than 5'2". It won't be missed.

But why this shift towards trucks and SUV's? Are we all just getting so big that we don't fit in cars anymore? And because of that, we're getting gouged on truck prices.

And @Redbeard, please post the link to that story.
 

Eric04

Silver Supporter
You hit on it, Moose. The profit just isn't there in cars vs SUVs and trucks. I think everyone enjoys the space and utility. Many people I know who own pickups seldom, if ever, haul a darn thing but they still want the option just because. I don't know that I'd go back to a car as my sole mode of transportation, and my wife could downsize to a car now but prefers the crossovers.

This is the way they're all headed, really. Maybe not as drastically as Ford but still the lineups are getting thinner and for the most part are cross-platform with only body styling as the difference. Hell, the tech nerds are sure few of us will own cars in the near future and we'll all be hailing self-driven cabs anyway. (F that, BTW)
 

Mooseman

Moderator
But what they charge for trucks is ludicrous. Can't just walk in and ask for a basic pickup anymore. A friend of mine just bought a boat and was looking around for a truck to haul it with. He couldn't believe the amount of money that people are asking even for high mileage rusted out POS. It's become stupid.
 

Sparky

Moderator
My 07 Silverado LT Z71 sticker price was $33 or $34k I believe, only $2-3k more than my 02 Trailblazer LS sticker price was when it was new.

Now I dare you to try to find a 2018 Silverado LT Z71 with a similar option package close to that. You won't.
 

Reprise

Lifetime VIP Supporter
I saw this story as well.

I can understand why Ford is doing it (FCA has already cut back somewhat, and Chevy has strongly hinted several of their car offerings aren't long for the N. American market; what survives will likely be made in Latin America going forward.) That doesn't mean I agree, but I understand.

In effect, the three are effectively ceding the passenger car market to Asia / Euro makes, where cars are still king, and bringing variants to the N. American market costs very little as a result. At this point, Hyundai has a strong hold on the 'value' segment, and Honda / Toyota get the lion's share of the rest. Slowing car sales are also why you see the newer ones upcontented so much more compared to only a few years ago.

I have the feeling this may come back to bite the US carmakers (and I'll refrain from 'why' for now), but in the short-term, I see this being a profitable decision - they sell every one they make, and at a higher profit per unit besides. Not to mention that they still effectively own the NA truck market (I see few Tundras, and next to no Titans in my neck of the woods; Honda doesn't even compete in the full-size pickup segment.) I do see plenty of Asian SUVs, though, so there is some competition there, especially in the CUV / mid-size segments.

Unfortunately, domestic truck prices will probably get even worse as a result, including the used market. I may be somewhat wrong on the older used stock, but look for Ford to lead the way with price increases on all their lines (because they'll be 'The' NA truck company.) And the other two will follow within a year or two after that, partly out of necessity (so they're not perceived as an 'inferior' product, solely on the basis of MSRP.)
 
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