Auto buyers these days love SUVs.
Ford will shrink its vehicle portfolio, and at the same time it plans to add five all-new SUVs over the next two years, along with the 2019 Ranger midsize pickup that debuted at the Detroit auto show in January.
Ford on Wednesday promised to raise its operating profit margin from 5.2 percent to 8 percent by 2020, two years earlier than a previous forecast. They don't, however, love actual cars like hatchbacks and sedans -as Ford has learned.
Ford's new fitness regime kicks off with a dramatic shift in product and market strategy, starting with the sedan segment in North America. Within a few years, Ford will offer only two cars in the United States: the Mustang sports vehicle and a new Focus variant with the shape of an SUV, Hackett said.
Ford has also made clear that waning consumer demand and product profitability are two reasons why it's halting investment in the next generation of sedans. It is, by far, the company's most dramatic production change in its 115-year history since Henry Ford adopted the assembly line. Of course we know that trucks are popular in America, but this move demonstrates manufacturer belief that the current desire for SUVs shows no signs of abating either. CEO Jim Hackett said that this was to turnaround "underperforming" models.
Why Is Ford Doing This?
Ford has seen the future - electric and hybrid vehicles - and the near future - trucks, SUVs and sport cars. Trucks and SUVs have always been the brand's strengths.
"Everything will be on the table" to fix the company, CFO Bob Shanks told reporters Wednesday at the company's headquarters in Dearborn. He adds that Ford will do "whatever it takes" to fix low-performing areas.
"Ford also said it is looking into new "'white space' vehicle silhouettes that combine the best attributes of cars and utilities, such as higher ride height, space and versatility".
Last May, Ford's board called on Hackett, a former chief executive of the office furniture-maker Steelcase who had been running Ford's new businesses related to autonomous vehicles, to whip the company into shape.
Thoughts about Ford's drastic move?
But on the whole, it appears as though repairers and insurers might encounter greater severity based on Ford's existing pricing model and the dimensions of the SUVs (bigger panels, for example, could incrementally boost labor times, and higher curb weights might lead to more aluminum being incorporated). As always, if you have anything to share, feel free to sound them off in the comments section below!