Ford Drops All Cars Except Focus Crossover, Mustang

Michigan-based automaker company Ford said that it will cut more than 80 percent of its car lineup in North America, except for Mustang and Focus Active.

This means that Ford will no longer sell its Fusion midsize car, Taurus large car, Cmax hybrid compact, and Fiesta subcompact in the US, Canada, and also in Mexico.

Ford estimates that SUVs could make up as much as half the whole US industry’s retail market in 2020. As a result, the company shifts its $7 billion investment capital from its car business to the SUV segment. 

Bob Shanks, Ford’s Chief Financial Officer, said that the company anticipates reaching an 8 percent profit margin in 2020. He added that Ford has found another $11.5 billion in cost cuts and efficiencies, bringing the total to $25.5 billion expected in 2022.

According to the company’s official press release, “In 2020, almost 90 percent of the Ford portfolio in North America will be trucks, utilities, and commercial vehicles. The company is also exploring new 'white space' vehicle silhouettes that combine the best attributes of cars and utilities, such as higher ride height, space, and versatility."

Ford’s first-quarter earnings per share and revenue beat forecast estimates at $1.7 billion.

Ford CEO Jim Hackett said that Ford will not make the next generation of sedans, which confirmed months of reports that Ford was considering cutting off its unprofitable car models in favor of trucks and SUVs. He added that the changes include getting rid of all cars in North America during the next four years, except for the Mustang sports car and the new compact Focus crossover vehicle.

Kick-Starting

According to the executives, exiting most of the car business comes as the US market continues a dramatic shift toward trucks and SUVs. In addition, Ford could also exit or restructure low-performing areas of its business.

Consumers’ shift to modern trucks and SUV are driven by several factors, such as better fuel-efficiency and better-equipped vehicles that improved overall riding quality and experience.

“We’re going to feed the healthy part of our business and deal decisively with areas that destroy value. We aren’t just exploring partnerships; we’ve now done them. We aren’t just talking about ideas; we’ve made decisions,” Hackett said on an earnings call on Wednesday.

He added, “Everything is on the table. We can exit products and markets. We will do that. That work has really gained traction. We have looked at every single part of the business. It’s a very complex endeavor. We are determined to turn this business around right throughout the whole company. There’s more work that’s underway.”

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