Here's Why Ford is Killing Off Most of Its Cars
Ford‘s passenger car lineup is going to change significantly over the next few years.
Last week, the American automaker made the surprising reveal that the only passenger cars it will keep in its lineup is the new Focus Active and iconic Mustang. That means the Fusion, Fiesta, and Taurus are on their way out over the next few years. But why is Ford going that direction? “We’re going to feed the healthy part of our business,” said CEO Jim Hackett. “and deal decisively with the parts that destroy value.”
What isn’t a surprise is the healthy part of Ford’s business. At the center of it are pickup trucks, crossovers, and SUVs. The company believes the change will change $25.5 billion in costs by 2022, which is nearly double the $14 billion it had identified as of October. Ford’s CFO, Bob Shanks, says that cars, “most Lincoln products,” and parts of Ford’s overseas business are among the value destroyers. Combined with the demand for cars dropping, Ford’s decision may be bold, but it makes financial sense.
SEE ALSO: Ford Flips to Crossovers, Car Portfolio to Only Consist of Mustang, Focus Active
Ford isn’t the only American automaker from the Detroit Big 3 making changes. FCA previously announced it was killing off the Chrysler 200 and Dodge Dart, while GM plans on getting rid of a production shift at its Cruze plant in Ohio, while adding jobs in Tennessee to build more crossovers.
For now, Chevrolet says it won’t be following in Ford’s footsteps, but it has been reported the company is looking at eliminating some of its slow sellers such as the Sonic and Impala. But GM is looking to leverage Ford’s abandonment of the market, with GM spokesman Jim Cain saying it “gives us an incredible opportunity to further narrow our gap to Ford in the profitable commercial vehicle segment.”
[Source: Automotive News]
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Jason Siu began his career in automotive journalism in 2003 with Modified Magazine, a property previously held by VerticalScope. As the West Coast Editor, he played a pivotal role while also extending his expertise to Modified Luxury & Exotics and Modified Mustangs. Beyond his editorial work, Jason authored two notable Cartech books. His tenure at AutoGuide.com saw him immersed in the daily news cycle, yet his passion for hands-on evaluation led him to focus on testing and product reviews, offering well-rounded recommendations to AutoGuide readers. Currently, as the Content Director for VerticalScope, Jason spearheads the content strategy for an array of online publications, a role that has him at the helm of ensuring quality and consistency across the board.
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This short term P&L strategy to enhance stock price, read: the value of his stock options and grants, will work great until gas prices cycle back up as we know they will. And then Ford will have no domestic offerings to compete with Honda, Toyota, Nissan, Hyundai or Kia and even VW. Hackett is a steel shelving hack who is destroying Ford right in front of the eyes of very short term focused greedy but foolish stockholders. NO DAMNED TAXPAYER BAILOUTS!
This reminds me of an exchange I had with Rich Ceppos, who's edited several car magazines. He basically said we should just turn the car business over to Japan (no South Korean competition then) and concentrate on trucks and the fledgling SUV business. I said, what happens when gas goes up? As it did, and sent the Big Three scrambling to build econoboxes. And Japan ate our lunch for years.