Ford accelerates cost-cutting plan, will drop most U.S. sedans

[enigma-2]

Ford just announced they are restructuring.

https://www.fidelity.com/news/article/top-news/201804251619RTRSNEWSCOMBINED_KBN1HW2UH-OUSBS_1

[Larry]

So much for keeping work in the USA. Lincolns in China, Electric in Mexico. Great way to use their BIG tax cut. I thought the big tax giveaway was supposed to keep jobs here and bring jobs back. Ford stock is up though.

 

Maybe trump will tweet about this too.

 

 

Ford man and Union man, not happy

[TheWizard]

I thought I had lost four years of my life when I saw them mention "the sporty Mustang, which debuted 50 years ago this month," since it actually debuted in April of 1964 - 54 years ago. Darn! I wouldn't mind being four years younger, although I'm not sure I'd want to go through those last four years again.

[fishx65]

Maybe it's just me but I still see just as many sedans on the road as trucks/SUVs. Instead of giving up on the sedan market Ford should try to get a bigger share of it by making better and more desirable vehicles. I'm gonna say that it's a big mistake to ignore the sedan market but I ain't no economist.

[Waldo]

So much for keeping work in the USA. Lincolns in China, Electric in Mexico. Great way to use their BIG tax cut. I thought the big tax giveaway was supposed to keep jobs here and bring jobs back. Ford stock is up though.

 

Maybe trump will tweet about this too.

 

 

Ford man and Union man, not happy

 

Not sure what you're reading here, but all Fusions are already made in Mexico, so dropping them won't affect any US jobs. And China Lincolns are additional production for China market to avoid the tarrifs, there's no reduction in US production.

[Waldo]

Maybe it's just me but I still see just as many sedans on the road as trucks/SUVs. Instead of giving up on the sedan market Ford should try to get a bigger share of it by making better and more desirable vehicles. I'm gonna say that it's a big mistake to ignore the sedan market but I ain't no economist.

 

What would be the point of selling more of something they are losing money on? Just because a lot of sedans are sold, doesn't mean there's a lot of money to be made in that market.

[TheWizard]

With few exceptions, they're not losing money on sedans. They're just not making enough of a margin on them. They want to improve their profit margin to 8% (currently between 5% and 6%). That may or may not improve their total profit depending on how the market reacts.

 

I think there may be a bunch of intangibles that may not go the way they expect. For example, their rental car and police fleet market will largely disappear. But the biggest thing that they may regret is that car buying customers who are forced to go to other makers may also buy their SUVs and trucks from other makers. The true blue Ford customer who now has to go to someone like Nissan for a sedan may decide that the Titan is a pretty good truck as well or that they like the Pathfinder better than the Explorer... something they might never have considered previously.

 

There will be a reduction in US production as Focus and Taurus are built here now. Some of that may be converted to SUV or truck production but that would only be if the demand goes up. They aren't currently suffering from a supply shortage.

[akirby]

Maybe it's just me but I still see just as many sedans on the road as trucks/SUVs. Instead of giving up on the sedan market Ford should try to get a bigger share of it by making better and more desirable vehicles. I'm gonna say that it's a big mistake to ignore the sedan market but I ain't no economist.

 

They can't do that and all the other stuff they want to do with electric and hybrid vehicles.

[akirby]

their rental car and police fleet market will largely disappear.

 

There will be a reduction in US production as Focus and Taurus are built here now. Some of that may be converted to SUV or truck production but that would only be if the demand goes up. They aren't currently suffering from a supply shortage.

 

They're already cutting back rentals and rentals are going more to utilities anyway just like the retail market. And Explorer is the future of Police vehicles not sedans. Ford is pretty much the leader in that area now.

 

Focus production is being replaced with Ranger and Bronco - that's why it was being moved to Mexico originally anyway. No net loss there.

Flat Rock is being expanded for autonomous vehicle production. It should also get some new models on the CD6 platform for Lincoln. Taurus production is being replaced with the new Aviator in Chicago.

 

If anything there will be a net increase in US factory production, not a decrease.

 

You have to look at the big picture.

[TheWizard]

Here in Jacksonville, the sheriff's office just competed a conversion of their fleet from Impala to Taurus and is about to add 50-70 more. Florida Highway Patrol has been switching to Explorers but many local departments are still using sedans. I'm not privy to their reasoning but it's quite possible that they could go back to GM (or Dodge Chargers) in the next round of ordering if there is no sedan option from Ford.

[akirby]

Most officers seem to prefer the added room of the Explorer over any of the sedans. But I’m guessing the sedans are a little cheaper.

[fishx65]

With few exceptions, they're not losing money on sedans. They're just not making enough of a margin on them. They want to improve their profit margin to 8% (currently between 5% and 6%). That may or may not improve their total profit depending on how the market reacts.

 

I think there may be a bunch of intangibles that may not go the way they expect. For example, their rental car and police fleet market will largely disappear. But the biggest thing that they may regret is that car buying customers who are forced to go to other makers may also buy their SUVs and trucks from other makers. The true blue Ford customer who now has to go to someone like Nissan for a sedan may decide that the Titan is a pretty good truck as well or that they like the Pathfinder better than the Explorer... something they might never have considered previously.

 

There will be a reduction in US production as Focus and Taurus are built here now. Some of that may be converted to SUV or truck production but that would only be if the demand goes up. They aren't currently suffering from a supply shortage.

I agree with ya Wiz about losing loyal customers and future customers. I would guess a lot of F150 and Explorer owners started off with cheaper Ford sedans before they started making a better living and were able to afford a, very expensive, big truck or SUV. Now consumers will have to turn to other makers like GM for a decent affordable mid-sized sedan and will, more then likely, look to that particular brands truck and SUV offerings in the future. My brand loyalty to Ford started off with their inexpensive sedans like the Taurus and, as I started making more money, I started purchasing Explorers, F150's and Lincolns. I wonder what other manufacturer is gonna pickup most of the loyal Fusion/Taurus customers.

Edited April 27, 2018 by fishx65

[akirby]

Fusion isn’t going away until 2020. They will probably have a “Fusion Active” vehicle similar to Focus Active. Just not a traditional sedan body style.

 

They’re also betting on getting more customers with hybrids and plug in hybrids - every vehicle outside of Super duty and Transit van.

 

It’s a gamble for sure, but they’ll still have Mondeo and Focus in Europe should they need to bring them back.

[Waldo]

I wonder what other manufacturer is gonna pickup most of the loyal Fusion/Taurus customers.

 

There are no loyal Fusion/Taurus customers. The loyal ones have already moved to SUVs and the rest are fleet sales or the type that treat their vehicles as appliances and will just go with whatever offers the best deal at the time.

 

Nothing in this news says Ford is going to stop making affordable vehicles. The EcoSport, Escape and the not-yet-released vehicle coming in between them will all have prices that overlap the current car lineup. In fact it's the young entry level buyers who are the ones demanding SUV/Crossovers over sedans anyway.

[PrinzII]

With few exceptions, they're not losing money on sedans. They're just not making enough of a margin on them. They want to improve their profit margin to 8% (currently between 5% and 6%). That may or may not improve their total profit depending on how the market reacts.

 

I think there may be a bunch of intangibles that may not go the way they expect. For example, their rental car and police fleet market will largely disappear. But the biggest thing that they may regret is that car buying customers who are forced to go to other makers may also buy their SUVs and trucks from other makers. The true blue Ford customer who now has to go to someone like Nissan for a sedan may decide that the Titan is a pretty good truck as well or that they like the Pathfinder better than the Explorer... something they might never have considered previously.

 

There will be a reduction in US production as Focus and Taurus are built here now. Some of that may be converted to SUV or truck production but that would only be if the demand goes up. They aren't currently suffering from a supply shortage.

 

That is the exact rationale for the decision. However, like when GM dropped models like the Impala SS, it's one that may come back to bite them. For instance, people like me are not going over to Nissan (Not a huge CVT fan), nor Toyota (can't fit into anything comfortably short of a Sequoia or Tundra). That leaves GM, Lincoln, or Chrysler.

 

As for the police departments, they are going to go where they get the best deal. For instance, the AZ Hwy Patrol mostly runs Explorers and Tahoes. You rarely see a Taurus Interceptor but still see plenty of P71 Crown Vics. On top of that, you will see a handful of Expeditions, Mustang 5.0s and F-Series. Phoenix, on the other hand has some Explorers. However, the fleet is mostly Tahoes, and Caprice PPVs. Besides, the vehicles themselves, one of the biggest expenses for any police department is actually the lighting and upfitting. For example, the cost of a Federal Signal Valor lightbar (LED) configured for DPS is over $5000 a piece.

[fishx65]

I like having both a big sedan and SUV and have been extremely loyal to Ford for 30+ years. I'll be replacing my Taurus in the next few years and will probably take a good look at the Chevy Impala. I also like the looks of the new Traverse and will definitely test drive one. I've suffered from foreign vehicle nameplate allergies my whole life so I'll never go that route unless Ford and GM go DODO bird on me.

[akirby]

You're assuming there will be an Impala in a few years. I wouldn't take that bet.

 

Although it is GM so anything is possible even if it doesn't make business sense.

[omar302]

The Impala is also under consideration to be stopped.

 

http://autoweek.com/article/car-news/report-ford-taurus-fiesta-chevy-sonic-impala-put-out-pasture

[Waldo]

Drove a new Traverse the other day. It was so bland I felt like I was in a rental car the whole time. No excitement in the interior, in the driving experience or in the styling in my opinion.