Ford To Shift $7 Billion From Car To Truck / SUV Development

Ford CEO Jim Hackett has unveiled his long-awaited strategic update to investors.

The update follows a four month investigation into Ford’s business operations and seeks to transform the automaker into a leaner and more profitable company.

Under Hackett’s new plan, every single vehicle built in the United States will be offered with some kind of connectivity by 2019. The company has similar plans for China and other markets as 90 percent of Ford’s new global vehicles will feature connectivity by 2020.

Hackett intends to dramatically reduce costs including $10 billion in incremental material cost reductions. The CEO also wants to reduce engineering costs by $4 billion over the next five years by increasing the use of common parts, building fewer prototypes, and reducing complexity.

Perhaps the biggest change is Ford’s decision to focus on areas where the company can “win the future.” As part of this change, Ford is reallocating $7 billion of capital from cars to trucks and SUVs. As a result, Ford will offer fewer cars and there will be a handful of new trucks and SUVs including the Bronco and Ranger.

Ford will remain open to partnerships and expand its commitment to hybrid, plug-in hybrid, and electric vehicles. As part of this decision, the company will reduce investments in internal combustion engines.

The company didn’t reveal much about future products but confirmed 90 percent of the manufacturing equipment used to make the F-150 can be reused for the next-generation model. The automaker also plans to dramatically reduce the number of different build combinations on the next-generation Escape and Fusion. In particular, the number of combinations for the Fusion will be cut from approximately 35,000 to just 96.

Speaking of new models, Ford wants to reduce vehicle development time by 20 percent over the next five years and cut the new model changeover time by 25 percent.

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  • Michelin

    Same strategy of FCA. Stop small Cryslers and Dodges and produce new Jeep and RAM…..

  • G82FS

    As if ford quality was not already bad enough…

    • Jay

      Well their trucks quality and reliability is marginally better.

  • Mill0048

    No brainer: go where the money is.

  • diesel_vdub

    What’s next, offering every new Ford the way Henry intended, “any color you want as long as it’s black”?

    Seriously though, 35,000 different combinations for the current Fusion? What genius ever thought that was a good idea?

  • SteersUright

    Makes sense. Ford can’t build quality cars for sh*t, neither can GM, and the Europeans don’t seem so interested in the truck market in a meaningful way. Goodbye to well-sorted, future Mustang’s I guess.

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