OT: Ford to stop producing (nearly all) sedans and hatchbacks
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.
yes, but from what i've heard, the idea is to raise capital to re-invest into electrification and autonomous vehicles.
Small car. 10k to build, sell for 18k, 8k profit.
suv/truck. 20k to build, sell for 40k, 20k profit.
Also I found that Ford has eliminated the 8cylinder for a SC 6cylinder so more profit.
I would not buy a Truck/Raptor/Mustang with a 6 though not a 70k truck like the Raptor.
Raptors used come with a 6.2L V8. They have moved to a High Output 3.5L V6 Ecoboost, pushing 450hp + 510 ft-lb of torque. Ford's claiming it's more than the 6.2LV8.
Also Raptors' start at 50K.
hmm. Looks like they aren't even offering the 5.0L/V8 with the Raptor either.
The engines are getting more efficient though. Also a bulk of the driving is done in urban/suburban conditions, where a smaller engine would still be adequate.
I'll take a turbo 6 over a NA 8 any day. More fuel efficient, more power. And those sweet turbo noises.
Can someone explain if bigger vehicles have a higher profit margin? This seems a bit drastic to me. Especially considering that a new presidential administration could move to tighten fuel efficiency standards and hurt SUV/truck sales.
April 27th, 2018 at 10:00 AM ^
The thought is if people want to downsize from an SUV, they are more and more looking to CUVs. CUVs are a lot of times built on the same platform as sedans, so they cost about the same. For example, car builds for 8k, sells for 14k. CUV builds for 9k, sells for 20k.
April 27th, 2018 at 11:25 AM ^
American consumers like the foreign cars more. In California (where dad lives) I have to believe the foreign to domestic CAR ratio is 20:1. This is the result of a bad 20 years for US car manufacturing in the 70s & 80s. They put out some real garbage which allowed foreign car companies to get a foot hold. Now, I believe American made cars are just as good as imports, but it's too lithe too late.
Sorry, but that's not correct. Ford is going to keep making amazing small cars! They just had a HUGE debut for the new Focus!
https://www.caranddriver.com/news/the-new-ford-focus-has-debuted-heres-what-we-know-news
The only difference is that Ford won't SELL the Fiesta, Focus (will sell the Focus Active), or Fusion here. They just announced a new Fiesta delivery van!
IF market conditions change, they can bring these back for SALE within the US market within a year.
Like if/when fuel prices jump again?
It's funny how all it took for prices double what they were to become normal was a few years at triple the previous prices.
All they have to do is have a couple year run at $5-6 a gallon to make $4/gallon to be an acceptable rate to fill up your 14 mpg SUV.
I just had a Suburban as a rental and I94 Chicago to Detroit I averaged 21MPG. The Escape gets about 30MPG.
Yes, but how much will you get form the Suburban while stuck in Detroi traffic? Or driving kids to soccer practice and school and doing grocery?
I had an Escape Hybrid & got about 33. Much better than the 8-9mpg I got in my old 1977 Eldorado!
April 26th, 2018 at 10:28 PM ^
Seems like quite a harsh move, but I'm not sure what their sales look like. Of course, anything will be criticized--they'll get criticized for making "cars nobody wants," they'll get criticized for not selling those same cars, etc.
Sedans are still a significant part of the market, but it may be that Ford's sedans simply aren't selling well enough to justify continued inclusion. But it's surprising to see a big company like Ford just give up on such a large space.
The ford sedans don't sell well but I think its a mistake to give up on them for solely bigger cars because gas prices will go up and even though truck and suv mileage has increased sedans still have much better value at the pump.
Of the top 20 vehichles sold in 2017 7 were sedans according to some googling, rankings below:
19)Ford fusion
16) Nissan sentra
14)Nissan altima
10)Toyota Carolla
9)Honda accord
8)Honda civic
6)Toyota Camry
For reference in 2008 when gas prices peaked sedans/hatchbacks were 12 out of the top 20 including #3-8. The fusion made it up to #11 that year.
Just punting on that knowing that gas prices will go up at some point again for increased short term profitability seems like a recipe for failing again but who knows.
Where do the Escape, Rogue, CRV, and Rav4 sell relative to the cars you're citing? And how are they all doing year over year?
April 27th, 2018 at 10:49 AM ^
What about all those Ford sedans that they have for rentals or company cars? Maybe I'm over estimating how much business they get from corporate sales.
Rental and commerfical fleet sales are bad for the residual values of their vehicles. It's in the interest of car companies to limit those sales as much as possible
Plus they're typically the lowest trim levels, making them less profitable at the point of sale, too.
I could be wrong, but I think this will go back the other way after a couple years. I doubt we've seen the end of sedans forever from Ford. Once they realize they're missing out on some sales and other manufacturers are getting ahead, they'll come back to it. My guess is they'll be back to selling cars by 2025.
I think this could snap back quickly - if people buy cars again.
It doesn't matter that Ford is missing out on sales. If the cars aren't profitable, stop selling them!
This is a gradual draw-down anyway. It's not like all of the sedans are leaving lots tomorrow--this is a years-long process that still accomodates vehicles like the Focus Active.
Sometimes tastes change. Nobody buys the full-size monster sedans that were everything you could get in the 70s.
I work at a Tier 1 automotive supplier. I think it's all overblown.
The Fusion and Escape get the same gas mileage. This isn't 2003 when everyone was buying H2s that got 11MPG highway. They’re going to keep making these cars for Europe, if Americans start buying small cars, they’ll federalize them and bring them over. It won't be difficult to do. The Honda Accord is all new and outstanding. And it's down like 20% YOY because everyone walking into a Honda dealership buys a CR-V. People are buying Rav4s instead of Camrys. You have to build and sell what people want to buy. For some reason, Americans really like tall station wagons with 2" of black plastic around the wheels.
https://jalopnik.com/why-ford-killed-its-cars-1825546289
https://jalopnik.com/jeep-s-success-and-hyundai-s-losses-illustrate-why-ford-1825562558
part of the belt tightening by the family, would recommend they sell the Lions. That would be a win/win - money in the Ford families pockets and a chance to get an owner with more than half a brain owning the Lions, giving them a chance to put a winner together for the good people of Michigan.
One playoff win over the last 50 years. Yep - One. Fucking pathetic. Sell the team, Martha...
you get how public companies work?
the majority of the voting shares, the non-voting shares are a different story. I think they only own a small percentage of shares that have value tied to the stock price, but own a majority of the voting shares
edit:
thanks forbes!
https://www.forbes.com/sites/joannmuller/2010/12/02/ford-familys-stake-…
2% ownership; 40% vote
Who gives a shit - I just want the inbred, idiot offspring of Henry Ford to sell the Lions and go enjoy their trustfund baby wealth somewhere else.
Their quality is having an impact on their sales and some of their vehicles are dated vs competitors like Kia & Hyundai
As I understand them, mileage standards apply to sales across the entire fleet. How are they going to meet those standards if 90% of sales are of trucks/SUVs? Make the trucks more efficient? Seems tough, particularly if a new administration/congress come in with higher standards. Maybe they plan to push electric/hybrid, but I'm not sure how soon they're ready for that, and GM is pushing hard into that segment.
They're done by footprint, not weight. So they'll make the trucks/SUVs lighter and better on gas.
The Escape already gets the same mileage as the Fusion
Ford has made a lot of changes in favor of efficiency. Even the Ford Raptor, which is a halo product, uses Ecoboost engines which are supposed to produce better fuel efficiency.
The F150 with a diesel motor was just certified with a 30 mpg rating on the highway. A hybrid/electric version is also coming for the F150 and just about every model.
April 27th, 2018 at 10:44 AM ^
Ford employee here, I actually like this direction. Many of my colleagues were very nervous in the office today, though. We'll see how it plays out... One thing that is absolutely certain - Ford needs to improve its margins, QUICKLY.
I understand why Ford is doing this, but aren't they worried that tastes could change in the future? What if small electric/hybrid cars become more popular in the future?
April 27th, 2018 at 10:44 AM ^
It's not that big of a deal really. If gas prices go to $4 a gallon, people can go buy CUVs that get virtually the same gas mileage as sedans. And car companies make much better margins on those CUVs
I am a Ford guy and love their cars. I am not big into their SUVs, trucks or smaller trucks; I specifically like their cars. I work in the automotive industry (Ford being one of our related companies) and the Ford cars are selling well. There is something behind closed doors that Ford is not telling the general public for their decision to eliminate all of their car models except for the Mustang in North America.
With this decision by Ford, and Chrysler/Dodge's same decision a couple years ago, these three historic brands are pushing car lovers to go for Chevrolets and imported cars. If Ford does not offer any small, midsize or compact car, then I can't lease or purchase from Ford if that is all I want, so I will have to go to Chevrolet, Subaru, Nissan, Mazda, etc.
Ford vehicle quality has been slipping the past few production years...particularly the cost of repairs, in the form of labor, has been going up dramatically. No clue if this is a factor but the cost to restore quality may be out of proportion to the manufacturing profit margins of cars.