Sole survivors: Mustang and a new Focus Active
Cost cutting at Ford means car cutting.
“The company will not invest in next generations of traditional Ford sedans for North America,” Ford President and CEO Jim Hackett announced today in releasing the company’s first-quarter earnings that expand the breadth of cost-cutting in many areas, including the paring of the car lineup.
The car lineup will be reduced to two vehicles: the Mustang and a new Focus Active hatch coming out next year.
Mustang expands with a hybrid version coming as well as the Shelby GT500. The latest Focus will be imported from China. China continues to sell the full-size Taurus, a version that was never introduced in the North America. And other markets will continue to offer the subcompact Fiesta and midsize Fusion, or Mondeo as it badged in Europe.
Ford is also making a big push for further electrification. There will be hybrids or plug-in hybrid versions of just about everything in the vehicle lineup including the F-150 pickup.
The first pure electric vehicle, a Mustang-styled performance SUV, comes to market in 2020, and Ford is pledging 16 battery electric vehicles by 2022. Ford has also said it expects to be the No. 1 producer of hybrids by 2021.
Since taking over the top job almost a year ago, Hackett has been working on a cost-cutting and restructuring plan but raised the ire of investors by refusing to go into much detail of the six efficiency initiatives that are the crux of his plan. More information will be provided to investors at an event scheduled for Sept. 26.
But Hackett now is targeting an additional $11.5 billion USD in cost cutting by 2020—on top of $14 billion USD previously announced that chops $4 billion USD from the engineering budget. The new plan reduces capital spending to $29 billion USD over the next three years, meaning $5 billion USD less being spent on new products like cars that are not selling as well as trucks and SUVs.
At a recent product lineup preview, Ford outlined plans to focus on utility vehicles and trucks, hinting at the extinction of the car lineup as we know it. By 2020, Ford will have replaced 75 percent of its lineup and added four new nameplates, all of them trucks and SUVs, reducing cars to just 14 percent of the lineup.
SUVs coming include the next-generation Ford Explorer which will share the new platform from the Lincoln Aviator, which debuted in concept form at the New York auto show and will include a plug-in hybrid option. The Explorer will also be offered as a hybrid and have an ST performance variant.
The next Escape will also bring back a hybrid. And the front-drive platform will spawn a similar-sized off-road compact SUV. The SUV lineup also grows with the Ford Bronco galloping back into the stable in 2020.
On the truck side, the F-150 had added a diesel engine and a hybrid version comes in 2020. A new Super Duty is also in the works for 2020. The return of the midsize Ranger pickup is next year and a Raptor version can’t be far behind.
Platforms will be replaced by five vehicle architectures: front-wheel drive unibody, rear-drive unibody, commercial van unibody, body-on-frame, and battery electric vehicles. Cost cutting is also helped by speeding up product development.
General Motors is seen as the more nimble, stable, and successful of the Detroit-based automakers, led by Mary Barra, a strong CEO not afraid to take drastic actions for the health of the company.
Fiat Chrysler is less predictable but has a transparency that Wall Street appreciates. As CEO Sergio Marchionne winds down in anticipation of retirement, FCA will release a new five-year business and product plan on June 1 that will reveal the continued course the company will take in his absence. This will be the third such plan Marchionne has released.
In releasing first-quarter earnings, the automaker exceeded Wall Street expectations, but profits and market share are down in North America and the company’s struggles continue internationally with losses in Asia Pacific, South America, and the Middle East and Africa.