Ford is about to abandon American sedans

29 April, 2018, 08:14 | Author: Elaine Woods
  • Ford is pivoting away from small and mid-size cars and toward trucks and SUVs

Ford said on Wednesday the only passenger vehicle models it plans to keep on the market in North America will be the Mustang and the upcoming Ford Focus Active, a crossover-like hatchback that's slated to debut in 2019.

It will still produce SUVs and pickups as they continue to be popular with customers, but the Fiesta, Taurus, Fusion and regular Focus models will disappear from USA showrooms.

"For Ford, doubling down on trucks and SUVs could be just what the brand needs", Jessica Caldwell, an analyst for Edmunds.com, said in an email.

Ford's board ousted its CEO a year ago and replaced him with Jim Hackett, a cost-cutter who's prepared to make the sort of audacious gambles that Wall Street thinks have been missing.

Mr Hackett told investors the company is undergoing "a profound refocus" of its operations and is planning to get rid of unprofitable business.

"The passenger vehicle rationalization plan is just the sort of bold and decisive action we believe investors have been waiting for", Ryan Brinkman, an auto analyst at JPMorgan Chase & Co. wrote in a report Thursday. We're going to feed the healthy part of our business, ' and dispose of marginal operations'.

Ford is expecting pretax profit margins to reach 8% globally while 10% in North America in two years, ahead of its previous 2022 target or four years.

Ford shares rose 2.6% to $11.40 in after-hours trading on Wednesday.

Only 2 car models to remain at Ford's North American dealerships
In North America, Ford's largest and most important region, pretax profit was $1.9 billion, down $200 million from a year earlier. Hackett says the multi-year transition will leave the iconic Mustang and a redesigned Focus crossover as Ford's remaining cars.

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Just two years from now, a mere 10 percent of the vehicles rolling off Ford assembly lines will be sedans and sports cars.

Ford Motor Co. on Wednesday said it plans to stop selling all Ford brand sedans in North America and that it is almost doubling its cost-cutting target by 2022 from the plan it laid out only six months ago.

The carmaker has come under heavy pressure from investors to make improvements to its product lineup as well as lift its profit margins that have fallen. Together with its subsidiaries, Ford Motor Co., designs, manufactures, markets, and services automobiles in North America, South America, Europe, the Middle East and Africa, and the Asia Pacific.

"Everything will be on the table" to fix the company, Chief Financial Officer Bob Shanks said last week.

The company reported a first-quarter net profit of $1.74 billion, or 43 cents per share, up from $1.6 billion, or 40 cents per share, a year earlier.

Despite the higher profit, Ford's adjusted pretax profit margin fell to 5.2 percent from 6.4 percent in the same quarter in 2017.

Now the Dearborn company is more aggressively phasing out its passenger cars as it focuses on trucks and electric vehicles.

Shanks suggested that Ford could reduce investment in certain geographic regions or exit them completely if it did not see adequate returns on the horizon.

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