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Ford Undergoes a Transformation

The automaker will phase out all but two cars to concentrate on trucks and SUVs.

I’ve always been a Ford man. I guess that’s one of the many legacies I got from my late grandfather – along with my political interest and my love for writing and telling stories. Since college, when I was able to buy new(ish) vehicles of my own, I’ve always driven Fords.

So Ford’s recent announcement took me aback. The company is transforming itself, phasing out all but two cars and concentrating mainly on SUV/crossovers and trucks.

Ford announced plans late Wednesday to eliminate some of the company’s most well-known cars in North America, including the Fiesta subcompact, Fusion midsize sedan, Taurus large sedan and the C-Max van, according to Ford’s quarterly earnings statement. The decision followed years of declining car sales.

Ford said eliminating most of the company’s cars except for two models will allow the company to focus on their “winning portfolio” in the United States, Canada and Mexico.

Which cars will the company keep? The Mustang – naturally – and retooled version of the Focus, along with its Lincoln lineup of luxury sedans. The move comes in response to the changing tastes of baby boomers and millennials. (Wait – why does it always have to be about boomers and millennials? When do we Gen-X-ers get to have a say in things?)

Buyers are gravitating toward SUVs for versatility, space, and vehicle height. The fuel efficiency of crossovers and SUVs are getting better and better every year as well – in fact, Ford plans to launch 16 battery/electric models in the next four years. And, of course, Ford’s truck line remains strong.

It’s worth noting that Ford is cutting the fat of lesser-selling cars in a year when they report a profit of $1.7 billion the first quarter, up 9 percent from last year. Michelle Krebs, an executive analyst at AutoTrader.com, thinks the move works as a way to get rid of what’s not selling.

“Ford’s car sales have been abysmal,” she said, noting that she has expected Ford to abandon the Taurus for years. “They’re king of the truck market, and their SUVs do well, but they’re losing money on their cars.”

At least one other analyst says the move makes sense.

“The passenger car 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, according to Bloomberg. “It is indicative of a management team for whom there are no sacred cows and which seems increasingly likely to pull other such levers to aggressively improve earnings and shareholder value.”

Look, I’ll always be a Ford man; I don’t see that ever changing. But beyond my obvious bias, the move makes sense to me. We’ll see how it pays off in the long run.

Smart business sense. Have heard that car manufactures actually loose money on sedans but make a nice profit on SUVs and Trucks. Understand keeping the Mustang. GO Ford!

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That is being proactive and not waiting until the excrement hits the fans to make a bold move. The car market is a lot more competitive from numerous brands, such as Toyota, Kia, etc. I would imagine the increased competition and the much lower price, drive the profit down per new vehicle tremendously from a truck to a mid-size sedan. $2,000 on a $15,000 car is a lot bigger deal than $2,000 on a $40,000 truck. At that point, people are going to buy what they want and pay $2,000 more. On the car end, it may mean the difference between new and used.

For the record, I have never had vehicle that was newer than 6 years old (and that one was a salvage title first car for $2,500 in 1997). My current truck is a 2001, which was 14 years old when I bought it. So, I happen to be in the camp that consider buying a new vehicle an exercise for suckers, unless you have a job that necessitates a lot of travel or where reliability is of the utmost importance. We live a rural area will family all around, so an occasional breakdown is manageable (though extremely rare).

I won't be seeing any of them for at least a decade, after someone else burned off most of the cost.

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I always liked the redesigned Thunderbird that came out in the early 2000’s. Too bad it wasn’t a better seller.

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I've always been a Ford guy, but usually bought used ones, or, like you, bought salvage titles. I did that for twenty years, and saved a killing. I have only bought two new cars, both Fords, and never had a problem, except for the sticker shock that goes along with any new car purchase. I finally found a 2011 f-250 that I really like, and it will likely be my last purchase, since my other cars in the driveway are BMWs, now. Ford is probably doing the right thing. I wish they could have hung on to Alan Mullaly, as boss. He got the ball turned around, and headed Ford back in the right direction, after a couple decades of malaise. Whoever is making the decisions, I think they are heading in the right direction.

Two thirds of people never buy a new car; millennials aren't driving as much as their elders. Ford was prescient in 2007, they appear again to be ahead of the curve.

1.) Sedans will live on at Ford via their Lincoln association. Taurus, Fusion, etc.. Luxury sedans are where there’s still profit. Lincoln will compete with Audi, Lexus, BMW, Volvo, etc.
2.) A less obvious point is Fords abandonment of the rental car market. Sl
Sales to Hertz, Budget, National, Enterprise, etc. used to allow Ford to claim it had the best selling sedan in the nation.

  1. Henry Fords Model T/Model A mfg philosophy of building and pricing an affordable car that the average person could afford seems to have died at the company he founded.

P.S. my dad retired from Ford after 30 + years in the factory and we never drove anything else but Fords.

If you are interested in the real action that takes place behind the scenes and in the boardroom, read "American Icon," the story of Alan Mullaney's almost miraculous rescue of Ford at the turn of the century. I listened to it on disc, and I found it to be gripping, almost exciting.

Since the EPA has abandoned (thankfully) the fleet economy restrictions, Ford (and presumably other companies) are now free to sell the models they want and not have to have the high-economy vehicles.

Who cares about Ford Fiestas and whatnot? As long as I'll be able to buy a new F-150 when the one I have now dies, I'm happy.

In my mind every small SUV/Crossover is simply are reversion to the classic American car in size and capability. Low slung, low headroom, small size sedans are not the traditional US personal car. My 1967 Pontiac Catalina given to me from my grandfather was huge. Nothing new here but a repudiation of going "world car" mad.

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