Ford Execs Shed More Light On Why They’re Killing Their Cars

By now, everyone’s heard about Ford’s shocking decision to only have the Mustang and Focus Active as its car offerings in the United States. The automaker’s plans will all unfold before the end of May 2019. While everyone may not agree with Ford’s move, the brand’s executives provided some more information on why its sticking with its bold plan.

In an interview with Automotive News, Ford CEO Jim Hackett said, “We’re going to feed the healthy part of our business and deal decisively with the parts that destroy value.” Those healthy parts include pickup trucks, crossovers, and SUVs. The destroyers, as the outlet points out, are cars, “most Lincoln products,” and other aspects of Ford’s overseas business, said CFO Bob Shanks.

By cutting out unprofitable areas, Ford is expecting to save more than $25 billion by 2022.

Ford didn’t come out and state exactly how much money it’s losing on selling small cars in North America. But Colin Langan, a UBS analyst, told the outlet that the figure could be roughly $800 million a year. On the flip side of that, the brand reportedly made $3 billion in the first quarter thanks to the “high performing” segments of its business.

One of the major issues people have with Ford’s recent move is that it mirrors similar mistakes the automaker, and many others, made when gas prices spiked. The company, though, doesn’t believe it’s making the same faults, as the industry has changed a lot.

2018 Ford Focus Active

“Customer view and experimentation on the utility side is so much more broad,” said Jim Farley, Ford’s head of global markets. “Utilities are the preferred body style. This wasn’t the case before the downturn.”

Farley also points towards how fuel-efficient crossovers and SUVs have become in relation to sedans. As Auto News points out, the 2018 Fusion has a combined EPA rating of 27 mpg, which is only one better than what the Escape can achieve – 26 mpg. Not to mention that the Escape has a more spacious cargo area.

Leaving a high-volume segment is still a risky venture for Ford, but Farley believes the company can win customers over with more emotionally-charged products. “We think we can tempt some of those customers with an image upgrade,” stated Farley. “Where Ford does best is where we play to our strength of emotional products.”

Other automakers have come out with plans to stick with cars, like General Motors and Volkswagen. GM’s reason for sticking with cars can be traced back to China, while VW believes the body style is more fuel-efficient.

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  • LWOAP

    “One of the major issues people have with Ford’s recent move is that it mirrors similar mistakes the automaker, and many others, made when gas prices spiked. The company, though, doesn’t believe it’s making the same faults”

    Of course they don’t. When gas prices do spike though, we’ll see if Ford’s decision was sound and reasonable. I personally don’t think it is.

    • Dennis Scipio

      Okay, we get it!

    • Rzrlf

      i agree, unless they are devoting more resources to EVs but i also heard they axed a ton people from there small vehicle design group

    • Six Thousand Times

      Except most crossovers are not as thirsty as the old SUVs were in 2000.

      • LWOAP

        Ok, and? Cars are still more efficient because they’re lighter and don’t have to move as much weight as a truck or SUV. When you’re pinching pennies and trying to save every dollar those extra few MPG make a world of difference.

        • Six Thousand Times

          The market hasn’t really borne that out. If people want to save money, they’re now more likely to go from say, an Edge to an Escape of even an Ecosport rather than a Fiesta.

      • Cobrajet

        and Americans will still want big cars. I want the Crown Victoria to come back, with a V12 (just like the Germans). Fuel efficiency is not good enough a reason to keep sedans.

    • Bug S Bunny

      And your qualifications on the subject are?

    • SteersUright

      Why wouldn’t it be? Ford will have plenty of efficient crossovers at the ready including likely some EV’s and hybrid versions as well. Its wise of them to respond in real-time to market changes and not stick to stodgy and outdated business plans. The more dynamic company that offers consumer what they want when they want it is the one that wins out. I’d be more concerned to see where GM and its abysmal management end up with their standards of gross overpayment of executives, second-rate cars and trucks, ruination of Cadillac, and no announcement of a clear future plans other than invest everything in China. At least Ford is attempting to remain a dynamic and forward thinking company.

  • Ford better hold on to their britches…gas prices where I live are at $3.30/gal right now…with the global economy picking up and oil production levels reduced, it is predicted that gas prices will shoot up over $4/gal. very soon…

    • Christian

      poor you, poor you…We only have to pay around 8-9 $ in Europe…. SO STOP BITCHING!

      • EU gas prices are due to heavy taxes you pay for your infrastructure and health systems…US is also now considering adding extra taxes to pay for our crumbling infrastructure…Americans are very price sensitive to gas prices…the last recession in 2008 illustrated this…

        • U8INIT

          We do pay…it’s called the Highway Trust Fund…

          • Not as much compared to EU and our gas taxes do not include health care…

        • Auf Wiedersehen

          Indiana, as part of the deal many years ago to get lottery passed as legal, agreed to put a portion of the lottery revenue into infrastructure. Now the roads are total crap and they want more money anywhere they can get it. So once again, the putz that run most governments spend like there’s no tomorrow on everything but what they should…then they end up with no money and a country literally crumbling in front of us.

          • True. These taxes never end up where they are supposed to go. Here in NY, Lotto funds were to be allocated to give us better schools…never happened and schools are still strapped for cash, while property taxes, which fund school districts, keep going up…

          • Auf Wiedersehen

            Same thing here! That was another agreement they didn’t hold up their end. We have one school district that has state of the art athletic facility…no messing around! (FOR HIGH/JR HIGH SCHOOL MIND YOU!!) and last election they were asking for a $9M referendum for a record shortfall…and it’s in one of the most wealthy affluent areas. $9M! So yeah, maybe spend less on your professional football arena and professional football PRACTICE fields and maybe there’d be no shortfall. Maybe I dunno, TEACH the kids some stuff!

      • Dr Strangefingger

        Dude, move.

        Then you can stop your bitching.

      • Puddingpopper

        European gas is at least way more refined than US gas… getting hard to find a station that isnt blended with “up to 15%” Ethanol

      • Bug S Bunny

        Poor you – it’s because you elected tax-and-spend politicians and have “free” health care….so STOP BITCHING!

      • DJ

        He’s not bitching, he is trying to make a point that FORD are being short sighted. We all know that fuel prices are much higher in other countries. In the US oil companies receive tax credits to keep the price artificially low. The better question though is what are their plans for those markets where fuel prices are at $ 8.00 + ? Do they have an SUV that can take the place of the Ka or 1.0. Fiesta ? Are these vehicles as cheep to produce as the large truck based SUV’s ? Also, how many people would be comfortable driving a Expidition or edge in London or Rome.

    • Cobrajet

      They will still make small passenger cars in Europe and China, if that happens they will import them again.

      • That isn’t so easy to do quickly…US has different vehicle requirements, and in many cases, are tougher…

  • LJ

    What I want to know is why aren’t their cars profitable? That speaks to an issue in how they develop their sedans. If they can’t make a profit off of selling cars, that’s not the market’s fault, that’s their’s.

    Regardless, it’s business savy to cut out the parts which aren’t making money. It’s not like they can’t bring sedans back if they wanted/needed to.

    • Merc1

      “What I want to know is why aren’t their cars profitable? That speaks to an issue in how they develop their sedans. If they can’t make a profit off of selling cars, that’s not the market’s fault, that’s their’s.”

      Bingo!
      Bingo!
      Bingo!
      Bingo!

      There is something wrong with their business model.

      Question is though how long would it take them to bring sedans back if the market changes?

      M

      • Puddingpopper

        probably 2 years too late

      • Auf Wiedersehen

        Right after they get another round of Government funding.

        • Bug S Bunny

          Except that they never got any government funding.

    • Bug S Bunny

      Let’s see, pour billions into re-designing their cars (all are due) which are in declining segments. I don’t see why it doesn’t make sense.

    • ChrisInIL

      “Economy of scale” means a lot more when the scale is that of the US car and light truck market. Sales of cars in the US have been dropping for years. The supply shrinks with the demand, and the per unit cost goes up.

    • Stephen G

      Supply/Demand. Simple math. There are lots of choices for something nobody (in US) wants. Americans are more willing to spend 50K on a truck than 22K on a sedan. It’s mostly a reflection on our lives. What sedan would you recommend for a guy that has a wife, 3 kids, dog, boat, travel trailer and has a bunch of home improvement projects going? Get it. Cars were doomed since the time they were unable to do those things. The EPA is a part of the reason that happened.

  • Loquacious Borborygmus

    If they don’t make money and you are in business to make money, well it’s sensible.
    They will probably get away with this in the US as long straight roads favor suvs (yes I know you have corners too but not too many roundabouts) but they couldn’t do the same thing in the UK and possibly EU.
    Ford no longer making “global cars” then?

    • Puddingpopper

      Earth is flat obvs

      • Loquacious Borborygmus

  • PhilMcGraw

    “Farley also points towards how fuel-efficient crossovers and SUVs have become in relation to sedans. As Auto News points out, the 2018 Fusion has a combined EPA rating of 27 mpg, which is only one better than what the Escape can achieve – 26 mpg.”

    While this is true, it also should be noted that they are comparing the most fuel efficient Escape with the second most fuel efficient Fusion. The Fusion Hybrid makes 42 mpg combined – a whopping 16 mpg more than the Escape. This is what I don’t understand with these manufacturers giving up on sedans: why aren’t you instead just getting rid of every option but the hybrid and going forward with that. Part of the reason people don’t buy hybrids is because of the added cost, but if you instead offered it as the same price as the entry level vehicle then more people might purchase a sedan.

    Of course if buyers see a $25k car that makes the same mpg as a $25k SUV then they are going to choose the SUV. But if you instead offer a hybrid at that price and equip it with the same features as the SUV then I bet there will actually be a choice to be made there.

    • Kyle Newberry

      I agree. However, I wonder if the problem that Ford’s current non SUV offerings are quite old and outdated. If they brought the new Focus, I think they would be surprised. Look how well the new Civic has sold.

      I think the trade off is if they add a hybrid option to the Escape, the MPG difference becomes far less. I think they did that to show the most efficient non hybrid version. I have to believe that most people don’t buy the hybrid options, as it is there mostly for EPA regulations.

      • PhilMcGraw

        You are correct that in the past nobody has bought the hybrid version, but again the hybrid version normally was more expensive right off the bat. A base Fusion hybrid costs $3,000 more than the regular base Fusion. And on top of that, they never really made the hybrid feel like a normal vehicle.

        If they focused on making their hybrid sedans sportier while still offering the same 40+ mpg then I think you could find a reason to continue to offer the sedan. The Fusion just looks plain boring and vanilla when you compare it to something like a Nissan Maxima or even the new Accord and Camry. I agree with you that the sedan lineup needs some overhauling, but they should’ve done it while also investing in making the Fusion a low cost sporty hybrid.

    • DJ

      A more accurate comparison would be the Fusion against the Edge, which share a platform. The Escape is Focus based. Of course they assume the general public is oblivious to this

    • jimie orleg

      Fusion should be compared to edge, it’s literally not in the
      same class as escape.

  • Six Thousand Times

    I’m afraid Ford won’t be alone. The market wants crossovers. I don’t think the cycle will turn back to cars. I kept waiting but it hasn’t happened. It’s too bad because I personally don’t give a rat’s ass about SUVs or crossovers and have been a car enthusiast my whole life. I guess all I will have left is the classics

  • Dustin

    “most Lincoln products.”

    When the issue is Ford cars, they terminate selling cars. When the issue is Lincoln products… What’s the plan to address that?

    • Bug S Bunny

      Not yet specified.

    • PhilMcGraw

      I would honestly somehow hope that they sell off the Lincoln brand and hopefully it is taken over by an owner appreciative of what they’ve accomplished over there.

      I think part of the reason Lincoln has a bad image is most of the time they just look like upscale Fords instead of something more unique (Navigator and Aviator are obviously the only outliers to this mentality). But every time I see an MKZ I just can’t help but think it’s just a slightly better looking Fusion. The interior is barely different. But when they let Lincoln do it’s own thing (like as in the aforementioned Navigator), that’s when the brand shines.

    • brn

      Dustin, that was my take-away from reading the article too? What’s going to happen with Lincoln??

      Also, “other aspects of Ford’s overseas business”. That’s pretty broad.

      Is Ford really that desperate?

  • John F. Murphy

    The descendants of Henry Ford should take back the rains and STOP this insane attack on car’s. The only coupe is the Mustang, witch has NO back seat room. A 2 door Fusion the same size and or a 2 door Taurus would be awesome. Let alone the current Taurus is 10 years old, the current Fusion started production in 2012 model 2013, so don’t blame Ford owners because the company chose NOT to change / update with new model. Doing a small refresh does not mean what it use to. Ford has NOT push cars in advertising in years, so little in tv ads. If cars got the same treatment as the Explorer, Expedition, and even the F150 they would blow the doors off of the Dealerships. Ford CEO Jim Hackett and the board NEED TO BE REPLACED before they ruin FORD!

    • PhilMcGraw

      I’m pretty sure Bill Ford was all behind this move. So there goes your descendants of Henry Ford plea.

  • eb110americana

    When the current gen Focus came out, they were selling nearly a quarter million per year in the US. In 2014 and 2015, the Fusion sold over 300K per year, and still sells over 200K each year. Ford is not losing money on these models–especially since development costs are amortized worldwide. I am certain that the inspiration is simply that Ford can sell an Escape for $10K more than a Focus, or an Edge for $10K more than a Fusion. It might pad their bottom line for a little while, but eventually those buyers will just get a Civic or a Camry and Ford will shrink its market just as Chrysler and Dodge have done. This kind of attrition only makes sense to shareholders, bean-counters, and business-types.

    • eb110americana

      And the fuel economy comparison is bogus. A Focus gets 26/38, 31 comb. MPG with the mid-level 2.0L, where an Escape gets 21/29, 24 comb. in its mid-spec. 2.5L. Interior volume is bigger in the crossover, but not hugely different at 113.3 cu.ft. for the Focus, 132.4 cu.ft. for the Escape–both are compacts. Things look even worse if you compare the most efficient engines: Focus 1.0t manual: 30/40, 34 comb. Escape 1.5t FWD: 23/30, 26 comb. That means 5-10 MPG sacrifice for going with the crossover, closer to 10 MPG loss if traveling on the freeway.

      • Stephen G

        Escape is more comfortable, easier to enter/exit, is taller than the hubcaps on a semi and will haul 2000+# boat. Nobody cares about the extra $500 extra annually for gas.

  • jimie orleg

    This guy is even dumber than I thought. I own an escape and fusion.
    Not even close to the same size or class (ride quality is night and day).
    The fusion is almost exactly the same size as an edge (except height obviously).
    Edge Sport got 16MPG, while fusion sport got 20 (in Car and Driver road tests).
    Edge is slower and handles worse (even with a much bigger 265 wide tire).

    • S3XY

      16 MPG in a non exotic car? Doing it way wrong.

  • smartacus

    i dunno. abandoning cars
    just as the gas prices are
    escalating, is not brilliant.

  • Bug S Bunny

    Queen Clinton? There’s your problem.

  • Marty

    I feel my knowledge of the English language is failing me. If crossovers and SUVs aren’t cars, what are they?

    • Status

      Marketers will want you to say “crossovers”.

      Normal people will say “shit”.

      • Marty

        Yes, letting marketing people control the definition of words is a dangerous thing. “Crossover” is probably the most stupid kidnapping of a word since there are so many other crossovers like SUVs, MPVs, hot hatches and so on.

  • gibgibgib

    hmm, does this mean Lincoln is in danger? I think the Mustang platform should be developed properly so it’s used as a Mustang for Ford and a range of RWD cars and crossovers for Lincoln. I don’t see it being cost effective to continue to use a platform only for Mustang

  • Daniel Cowden

    This looks like Ford is in a panic. It does not bode well for confidence in the marque.

  • Daniel Cowden

    Why can’t Ford leaders figure out that when they open their mouth they should be saying any changes at the Company are designed to be sound business decisions that are focused on providing the best value to their loyal customers. Ford will succeed as a business when they consistently provide that great value to their customers.

  • Six_Tymes
  • Six_Tymes

    Obviously he, or they could be wrong with this move, I think it makes sense. Time will tell who is right, posters here who have many years of car industry experience (NOT) or the Ford Execs.

  • Karl

    GM fanboy?

  • Cobrajet

    No pride, or patriotism like the German brands, just pure profit.

    • the German brands only sell in America the models they know are going to sell. And with the current administration, killing the EPA, your fuel prices… Americans don’t really care about fuel economy. The F150 is still the king of sales, why bother with cars no one wants? And Ford is still making sedans and small cars on other markets, they can still import them if suddenly gas prices would rise enough and for a long time.

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