OT: Ford to stop producing (nearly all) sedans and hatchbacks

Submitted by Eye of the Tiger on April 26th, 2018 at 12:45 PM

Figured this would be of interest, given that many of us have connections to the Detroit auto industry (and Hackett). Sad for me as I love the Focus RS and ST. LINK.

Dearborn — Ford Motor Co. plans to trim $25.5 billion in operating costs by 2022 and cut its North American passenger car lineup by more than 80 percent, eliminating the Taurus, Fiesta, Fusion, C-Max and Focus sedans within a few years.

CEO Jim Hackett said Wednesday that Ford will not make the next generation of those sedans, confirming months of reports that the automaker was considering cutting some of its unprofitable car models in favor of trucks and SUVs. The Mustang will be soon be Ford’s only car; the new Focus will launch next year in North America as the Chinese-built Focus Active crossover.

That’s a deeper cut to the car lineup than industry analysts expected. That move, coupled with the reduction in operating costs and a plan to reduce capital spending from 2019 to 2022 by $5 billion announced Wednesday, come from the “fitness” initiative Hackett outlined in October.

 

 

Comments

DairyQueen

April 26th, 2018 at 1:15 PM ^

it's almost like the decision makers themselves get paid 10's of millions in bonuses no matter what and the government (the american taxpayers) will bail them out no matter what

and almost like this happened with the banks before, and the actual automotive company before that...

God Bless the usa

DairyQueen

April 26th, 2018 at 2:15 PM ^

Ford lobbied for, and was awarded a $5.9 Billion loan from taxpayer money in the wake of the bailout.

They leveraged it through their lobby saying the needed it in case the market was turbulent, and that they would use it fund fuel-efficient vehicle factories

I wouldn't blame Ford necessarily, and by language their funding wasn't part of the main "bailout", but they got the money from the millionaires "representing" the american people directly because of the bailout.

Chalky White

April 27th, 2018 at 9:19 AM ^

Ford didn't take loans from the government because they had already gothen loans from actual banks before the economy imploded. They would have taken money just like the other companies.

rc15

April 26th, 2018 at 1:22 PM ^

They officially didn't but they did get loans from the government... They also were there lobbying for GM and Chrysler to get a bailout, becuase if they had gone under, Ford would've too because they would've lost their supplier base.

DairyQueen

April 26th, 2018 at 1:53 PM ^

Sorry, the point I was trying to make is that these large-company CEO-types don't have to make any great decisions, they have zero skin in the game.

I'm absolutely not against the bailout, but with zero legal reprecussions (lobbying/paying off politicians will do that--which also isn't prosecuted), it's no surprise that this is now the total norm in executive decision-making. No skin in the game and all the incentives to cook the books to show profit.

The problem is the american people pay for their mistakes, but, curiously, don't profit from their wins. (not absolutely a "bad thing", but how is the typical american doing financially right now?)

And their performance has zero impact on their life-prospects (they bank $20-$50 Million plus options/benefits, by the time the jig is up), and their future job prospects (they go on to executive positions elsewhere).

Look no further than our previous athletic director (how did his next job go?).

No skin in the game.

pfholland

April 26th, 2018 at 1:55 PM ^

It's worth pointing out that this large company CEO is the man who replaced Dave Brandon on an interim basis.  CEO of Ford is his next job.  Given his history of great decision making I think it's worth holding off on lumping him in with CEOs like Dave Brandon.

"Look no further than our previous athletic department (how did his next job go?)"

 

DairyQueen

April 26th, 2018 at 3:00 PM ^

It has to do with incentives. And skin in the game.

At the micro level you can find exemplary behavior everywhere. (I absolutely believe people are essentially good-natureed, and genuinely mean well)

But at the macro, the incentives are too powerful.

A night game at the Big House will always have 10x more ejections than a day game.

This is exactly why state laws require bars to stop selling alcohol at a certain time, no one ever starts the night with their first drink intending to drunk-drive and kill/harm themselves/others.

rc15

April 26th, 2018 at 2:04 PM ^

I get what you're saying, and to add to that, CEO's usually only care about short-term profits becuase that's what they're judged on. In 5 years when the effects of this decision start to become obvious, Hackett will likely no longer be there.

But as a business decision alone, I think it was a smart idea for the government to bailout the Big 3. If they hadn't all of Michigan would have become like Detroit. Loaning them money definitely cost less in the end than paying millions of people unemployment.

Is it smart for an entire state's economy to be so dependent on one industry? No. But is it smart for people to build houses in flood plains or where they know hurricanes are likely? No. But the government bails them out too.

Tex_Ind_Blue

April 26th, 2018 at 3:23 PM ^

Money is a great motivator. I won't say that they have zero skin in the game. What you could call them out on is that they are well protected in case of a bad outcome. Salaried workers are completely screwed if the CEO messes up, while the C-level themselves are comparatively well protected. 

Everyone has skin in the game, just in a different way. 

Mpfnfu Ford

April 27th, 2018 at 1:39 PM ^

Went up the craphole when the idea of "executive experience" became a thing and executives started getting paid off the stock price instead of getting really great pensions. Focus shifted from "make sure this company is here in 20 years so my retirement doesn't evaporate" to "make the stock price higher by hook or crook so I can cash out." 

Mpfnfu Ford

April 26th, 2018 at 4:01 PM ^

It's not the car industry's fault that the banks collapsed the global economy giving bogus home loans, and that when the shit hit the fan suddenly nobody could get a loan to do anything, killing the car market as well. We can say Chrysler and GM weren't doing as well as they could and put themselves in a position they shouldn't have been in, but you can't bail out the assholes who actually collapsed the world economy and then tell industries and their workers who didn't have anything to do with the collapse but who suffered as a result to go pound sand.  

rc15

April 26th, 2018 at 1:07 PM ^

It does bring up a good point of customer obtaining/retention. Every OEM talks about how they want to get customers early and keep them for life. If you are getting rid of the entry/cheap market segment becuase you can make more money on SUV's, how many future SUV/luxury sales are you going to miss out on?

If you're hoping someone goes from a Focus as a recent college grad, to an Escape with their first kid, to an Explorer with the second/third kid, to a Lincoln in retirement, how much money are you really missing out on by not losing a couple hundred dollars on the first car? Some customers may go straight to the Escape or an EcoSport. Some may go to another OEM and become their lifetime customers...

Steeveebr

April 26th, 2018 at 5:42 PM ^

I'm sure there are studies that show I'm wrong and you are right, but my experience is that brand loyalty is definitely still a thing.  Most anyone I know who's had a Toyota will lean towards getting another Toyota because they don't experience the constant maintenance requirements of other cars.  That was my experience with a Corola as well.

I think brand loyalty is hard on American car companies because consumers end up having a bad experience.  I love my F150, but honestly it has a few consistent maintenance problems that I'd try to avoid in the future.

MJ14

April 26th, 2018 at 1:44 PM ^

I think this is the idea of the Ecosport though. It's an affordable SUV that is basically a focus that sets up a little bit. All of those entry level buyers will probably start with the Ecosport instead of the focus. The taurus was a really bad seller anyways.

Blue_42

April 26th, 2018 at 3:11 PM ^

Fiestas don't sell period. I've been in the industry 15 years, all with Ford, at one of the largest stores in this region. One of our big draws is the vast selection that we offer. I can tell you that we hardly ever have more than 6 Fiestas on the lot at any given time.

If you want an suv or pickup that's a different story. We have about a thousand of those combined.

Les Miles

April 26th, 2018 at 5:47 PM ^

That's a good point but if feel as a consumer if I want an SUV maybe I'll go with the company that specialises in making them instead of a jack of all trades car maker. Despite the jokes Ford is pretty good on reliability if you don't count the focus automatic. Much better than Chrysler and better than gm for most categories.