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  • William Maley
    William Maley

    Ford Executives Stand Their Ground On Car Cutting Decision

      There's a lot of pushback from a number of folks to this decision

    Last week, Ford shocked the industry by announcing that it would cut most of its passenger car lineup. The only models that would remain are the Mustang and the upcoming Focus Active - due to arrive in 2019. The move has earned a fair amount of ire from various folks, but the company is trying to push back and explain their reasoning.

    "We're going to feed the healthy part of our business and deal decisively with the parts that destroy value," said Ford CEO Jim Hackett to Automotive News.

    The "healthy part" are Ford's utilities and trucks. According to Ford CFO Bob Shanks, this part made more than $3 billion in the first quarter of 2018. Ford is projecting that light trucks will make up 90 percent of North American sales in the near future.

    The car side hasn't been faring as well with sales declining for the past few years. Ford hasn't said how much money they have been hemorrhaging on cars, but UBS analyst Colin Langan estimates Ford is losing $800 million per year on small cars in North America. Automotive News also notes that consumer demand for cars may be even weaker than first thought. Looking registration data from Polk, the outlet reports that a third of Fusions sold last year went to fleet buyers (about 69,874 models).

    Shanks said there are other items that could be cut, including "most Lincoln products" and chunks of Ford's overseas business.

    A number of people who hate this idea point out that this could hurt Ford if gas prices spike up like they did in the 2000s. But Jim Farley, Ford's head of global markets points out that the gap in fuel economy between sedans and crossovers has closed up significantly. The 2018 Fusion has a combined fuel economy rating of 27, while the Escape is rated at 26 mpg. 

    Farley also insisted that Ford isn't repeating the mistakes from the mid-2000s with their utility vehicles that almost sent them to the brink. The industry he says has "fundamentally changed" since then.

    "Customer view and experimentation on the utility side is so much more broad. Utilities are the preferred body style. This wasn't the case before the downturn," said Farley.

    "We intend to expand our passenger car lineup in the U.S We also intend to serve similar, affordable price points to today. What's changed here is just the format of the vehicle. Our dealers will have just as much opportunity to grow, just with a different portfolio."

    Still, there are some that are very skeptical about Ford's new strategy. 

    "Eight years ago, Ford Motor Co. announced it was killing Mercury. It assured us not to worry, because there would be no problem taking care of Mercury customers at Ford dealerships — those customers would just buy Tauruses and Fusions," said Chris Lemley, owner of Sentry Auto Group near Boston.

    Source: Automotive News (Subscription Required)

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    They have to stand by it, you can't put the toothpaste back into the tube.  I imagine the Lincoln sedans will get the axe also at the end of their life cycles.  

    The risk beyond the gas price thing, is what if the Japanese take their Crossover/SUV business the way they took their car business.  The Rav4 already outsells the Escape by a wide margin, Toyota and Honda will make more crossovers and keep chipping away at Ford's market share there too.  

    I am bewildered as to how Toyota and Nissan haven't been able to make a dent in full size trucks, instead they are still peddling trucks with the 5.7 liter and 5.6 liter V8s from 10 years ago that make 380 hp and get 14 mpg.  Toyota especially, they have deep pockets the Tundra should be a best in class product, not an also ran.

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    Models & styles come & go with the breeze. Of COURSE Ford could kill off most of their cars, then introduce new cars if they desired/had a business case for it in the near future; the auto industry is fickle.

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    Well, that's great, but it is still stupid. They still sold quite a few sedans, and they are pretty much giving those sales away.

    Yeah, some folks will go the CUV/SUV route, but as hard as it is to believe, some will still want a car, and go someplace else for it. It also helps that sedans are cheaper too.....

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    That's ok Honda, Toyota, Hyundai, GM etc will be happy to take Ford sedan buyers into their customer base while also building CUV's as good or better than Ford's offerings.

     

     

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    13 hours ago, smk4565 said:

    They have to stand by it, you can't put the toothpaste back into the tube.  I imagine the Lincoln sedans will get the axe also at the end of their life cycles.  

    The risk beyond the gas price thing, is what if the Japanese take their Crossover/SUV business the way they took their car business.  The Rav4 already outsells the Escape by a wide margin, Toyota and Honda will make more crossovers and keep chipping away at Ford's market share there too.  

    I am bewildered as to how Toyota and Nissan haven't been able to make a dent in full size trucks, instead they are still peddling trucks with the 5.7 liter and 5.6 liter V8s from 10 years ago that make 380 hp and get 14 mpg.  Toyota especially, they have deep pockets the Tundra should be a best in class product, not an also ran.

    Truck buyers tend to be very loyal compared to car buyers.  More importantly, if Toyota and Nissan got rid of all of their BOF trucks, no one here would actually care.  The plan for them is to take all the sedan and CUV sales from Ford and GM and render them obsolete and irrelevant.  Same with Honda, except they never invested in BOF.

    The highest selling vehicles last year were the F-series, Silverado/Sierra, RAM pickups, and then the RAV4 and Rogue.  Essentially, the US market has gone Japanese/Korean a long time ago and eventually a lot of the US market will look a lot like California's auto market: Japanese dominance and Detroit irrelevance.

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    11 hours ago, daves87rs said:

    Well, that's great, but it is still stupid. They still sold quite a few sedans, and they are pretty much giving those sales away.

    Why would they want those sales if they're losing money on them overall? 

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    15 minutes ago, riviera74 said:

    Truck buyers tend to be very loyal compared to car buyers.  More importantly, if Toyota and Nissan got rid of all of their BOF trucks, no one here would actually care.  The plan for them is to take all the sedan and CUV sales from Ford and GM and render them obsolete and irrelevant.  Same with Honda, except they never invested in BOF.

    The highest selling vehicles last year were the F-series, Silverado/Sierra, RAM pickups, and then the RAV4 and Rogue.  Essentially, the US market has gone Japanese/Korean a long time ago and eventually a lot of the US market will look a lot like California's auto market: Japanese dominance and Detroit irrelevance.

    Right but the F150 and GM pickups sold huge numbers still, while Titan and Tundra combined probably sold 100k or something, it is a fraction.  And I think it is because the new Titan has old Titan engines and the Tundra is just old.  If Toyota refreshed the Tundra ever 5 years with an all new truck like they do with the Camry they could eat away at F150 sales.  Not beat it, but take another 10% of Fords volume and 10% of GM's and that becomes 150,000 trucks, it adds up fast.

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    I would agree that I'm surprised Toyota hasn't made a competitive full size truck in the last decade. They seem to have an incredibly loyal customer base with the Tacoma and you'd think you'd want to give them a good opportunity to move to the next model up without almost forcing them to the D3 for the best truck. Whichever D3 you want is head and shoulders above the Japanese full sizers. 

    Edited by ccap41
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    18 minutes ago, frogger said:

    RAV4 is compact too though, I don't think it is considered a downgrade to the Camry to shoppers?  At least the new one that will share its platform..

     

    Seems like the RAV4 would be analogous to the Corolla, and the Highlander would be the Camry analogue...

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    1 hour ago, Cubical-aka-Moltar said:

    Escape seems more analogous to the Focus.  Compact. 

     

    1 minute ago, Cubical-aka-Moltar said:

    Seems like the RAV4 would be analogous to the Corolla, and the Highlander would be the Camry analogue...

    yes.

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    I think the majority of buyers are not spending the extra dough on the midsize CUV's when they ditch their midsize sedans.  At least here in Canada, the midsize sedans buyers are now compact CUV buyers... RAV4, CRV, Rogue.  The default family car became the large compact CUV here for families with 2 kids or less.  There are not nearly as many two or three row midsize CUV's around.

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    Just now, frogger said:

    I think the majority of buyers are not spending the extra dough on the midsize CUV's when they ditch their midsize sedans.  At least here in Canada, the midsize sedans buyers are now compact CUV buyers... RAV4, CRV, Rogue.  The default family car became the large compact CUV here for families with 2 kids or less.  There are not nearly as many two or three row midsize CUV's around.

    Yes... people are downsizing.   Getting empty-nesters to downsize was a key target demographic for the Encore when it first came out. 

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    5 hours ago, Drew Dowdell said:

    The Escape is not analogous to a Fusion.  I don't see people cross-shopping them and Fusion buyers would probably see an escape as a downgrade.

    they sort of cross on price in the showrooms.  i do think they battle each other for ford customers.

    4 hours ago, frogger said:

    I think the majority of buyers are not spending the extra dough on the midsize CUV's when they ditch their midsize sedans.  At least here in Canada, the midsize sedans buyers are now compact CUV buyers... RAV4, CRV, Rogue.  The default family car became the large compact CUV here for families with 2 kids or less.  There are not nearly as many two or three row midsize CUV's around.

    right.  they move down in size class to keep the price close.  however, the taller seat height helps offset the length legroom issues.  i find most of the time that CUV trunks are less accommodating than midsize sedan trunks, apart from a little extra cargo height.

     

    face it, a HUGE reason CUV's sell is the easier ingress and egress and taller seat height.  Some CUV's make better use of it than others.  The Rogue is very comfy for larger and taller folks because it is so tall inside.  Chevy screwed the pooch and the new Equinox is narrow inside.  The Escape has tight rear leg room.

    Ford's Edge is one of the nicest packages out there.  To me it is a jacked up Fusion.

    Why can't GM take my Malibu and just jack it up.  Same wheelbase.  same leg space, etc. with taller seats.  hatch area with the same footprint as the sedan, just taller.  GM never takes the easy way out.

    Edited by regfootball
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    36 minutes ago, regfootball said:

    Why can't GM take my Malibu and just jack it up.  Same wheelbase.  same leg space, etc. with taller seats.  hatch area with the same footprint as the sedan, just taller.  GM never takes the easy way out.

    uh.. they did literally that.  The CX platform the Acadia, Traverse, and coming Blazer ride on is just the crossover version of Epsilon

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    I hope the new Blazer is cool looking.  Not so sure about the front lights after seeing the latest surveillance photographs... could it be another Cherokee/Kona/new Santa Fe type light cluster?  I really want it to not be sad.

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    4 minutes ago, ocnblu said:

    I hope the new Blazer is cool looking.  Not so sure about the front lights after seeing the latest surveillance photographs... could it be another Cherokee/Kona/new Santa Fe type light cluster?  I really want it to not be sad.

    I am already stocking up on the half gallons of ice-cream because I'm prepared to be very let down by the new Blazer simply on the hardware.  I want Chevy to build a true Grand Cherokee competitor in terms of off-road capability options. I'm expecting it to be no better than a Murano for off-road.

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    I would love to see that too.  Maybe they'll tailor the current Trailblazer to American tastes, like they did with the Colorado pickup.

     

    I am conditioning myself to remember that the last Blazer was pretty mild, off road imagewise, being based on the S-10 pickup in 4-door form.  Those 4-door Blazers sort of took over the mantle of "family wagon".  The 2-door ZR2 Blazer was the standout back then.  I was puzzled why they never sold a 4-door ZR2 Blazer... although I would not have bought a 4-door at the time.

    I'm thinking the new Blazer will be just that what you said... a semi-sporty 2-row CUV to go against the Edge and Murano type customer.

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    15 hours ago, ccap41 said:

    Why would they want those sales if they're losing money on them overall? 

    1. It still gets people in the door.

    2. They could find a way to stop losing so much money....find where to save a few bucks. Build less if they need to.....

    5 hours ago, Drew Dowdell said:

    I am already stocking up on the half gallons of ice-cream because I'm prepared to be very let down by the new Blazer simply on the hardware.  I want Chevy to build a true Grand Cherokee competitor in terms of off-road capability options. I'm expecting it to be no better than a Murano for off-road.

    Me too!

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    Since the Blazer will be a tad larger than the Equinox, I hope to see a V6 engine option in it.  It would hit a sweet spot that way, and it would meet competitors' challenge.

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    Sounds like the Blazer will basically be a shorter wheelbase version of Traverse w/ different styling.  Probably the same engine choices.   Basically Chevy's version of the Acadia but 2 row.   Just another C1XX variant.  Their Edge competitor.  

    Edited by Cubical-aka-Moltar
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