Ford Motor Company announced on April 25, 2018 they will stop making most of the cars they sell in North America, focusing on only the Ford Mustang and the Ford Focus Active while continuing to sell trucks and SUVs.
The New York Times reported the automaker seeks to slash costs by discontinuing most of their sedan lines in an effort to reduce sales, marketing engineering and other costs by $11.5 billion between 2019 and 2022. The company had already planned on cutting an additional $14 billion over the next few years.
“We are undergoing a profound transformation,” said Ford Chief Financial Officer Robert L. Shanks, “and are committed to taking decisive action.”
Shanks said Ford is also considering exiting or selling money-losing operations in Europe and South America, with the intent of achieving a global 8% profit margin by 2020.
Technology blog TechCrunch reported Ford currently sells six sedans and coupes in North America: the Ford Fiesta, Ford Focus, Ford Fusion, Ford C-Max, Ford Mustang and Ford Taurus. Only the Mustang and the yet-to-be-revealed Focus Active will remain.
“It’s likely Lincoln’s sedans will also disappear, though this was not explicitly stated,” reported Matt Burns of TechCrunch. “Lincoln currently sells the mid-size MKZ and full-size Continental — both share platforms with Ford counterparts. If Ford is phasing out development of sedan platforms, Lincoln will likely suffer, too.”
Ford’s Focus and Fiesta lines came under fire a few years ago after failures in their PowerShift transmissions prompted a series of lawsuits.
Ford cited North American consumers’ preference for crossovers, trucks and SUVs over sedans and small cars as one reason for the company’s shift in priority. Burns said Ford reaffirmed its commitment to producing these larger vehicles, and that the company still plans on installing hybrid-electric powertrains in the F-150, Mustang, Explorer, Escape and the upcoming Bronco.
Ford’s profit margin slipped to 5.2% in first quarter 2018, down from 6.4% a year earlier. Profits before taxes fell to $2.2 billion from $2.5 billion. Shanks blamed aluminum and steel’s rising costs for part of the drop.
Neal E. Boudette of the New York Times called Ford’s choice a “momentous shift,” considering the Ford Fusion and Ford Focus was part of the company’s push to provide fuel efficient cars as fuel prices rose.
However, Americans are choosing trucks, SUVs and crossovers instead of the smaller vehicles, making sedans a losing proposition for Ford. The company now plans on introducing several new trucks and SUVs over the next three years in both gasoline- and battery-powered varieties.
“Ford realized it can’t be everything to everyone, and in today’s market that could be O.K.,” said Jessica Caldwell, a senior analyst at Edmunds.com, an auto-information website.
Ford could be seen as following the example of competitor Fiat Chrysler Automotive, which dropped small cars in North America two years ago. The company found success focusing on truck and Jeep sales.