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Ford’s future strategy is lower volumes and smaller cars

Ford’s future strategy is lower volumes and smaller cars

Nelson Ireson May 26th, 2008 Nelson Ireson By Nelson Ireson Author May 26th, 2008
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December 31st, 1969 High fuel prices are not going away in the United States - or anywhere else for that matter - and Ford is finally realizing it can't continue to sell as many pickup trucks and large SUVs as it has in the past. The first quarter's unexpected $100 million profit notwithstanding, all the markers are pointing Ford toward a smaller future, both in terms of products and sales volume. Cutting sales and production by 15% in the second quarter and by as much as 20% in the third quarter of 2008 means Ford will see far fewer vehicles built this year, especially on its light truck assembly lines, where total volume will drop to levels not experienced since the Taurus sedan's strong success in the 1980s, reports Automotive News. Chrysler has already figured out a similar route to what it hopes will be a profitable future with its project Genesis and related initiatives. General Motors, just coming off of a strike that costs nearly 300,000 units of production and $2.8 billion in sales hasn't announced similar plans, but the strike has operated as a sort of de facto production cut, so it may not need to take separate action for the immediate future. Ford's production numbers and sales expectations are based on forecasts of total U.S. market sales of 14.7-15.1 million vehicles, which is on the lower side of the accepted range. General Motors and Chrysler are still expecting between 15.0 and 15.5 million in total sales, while industry analyst groups J.D. Power and Global Insight see the numbers more like Ford does, at 14.9 million and 14.8 million respectively. Until Ford can get some more fuel-friendly vehicles on the road and find a way to turn around its plummeting sales, it looks like $100 million surprise profits are a thing of the past. Already the company is saying it will be slashing more jobs - as many as 9,000 - by August and the company can't say when it will return to profitability. And the smaller, more efficient cars like the new global Focus that are hoped to turn things around? They aren't due until 2010 at the earliest.
Ford’s future strategy is lower volumes and smaller cars

Ford’s future strategy is lower volumes and smaller cars

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High fuel prices are not going away in the United States - or anywhere else for that matter - and Ford is finally realizing it can't continue to sell as many pickup trucks and large SUVs as it has in the past. The first quarter's unexpected $100 million profit notwithstanding, all the markers are pointing Ford toward a smaller future, both in terms of products and sales volume.

Cutting sales and production by 15% in the second quarter and by as much as 20% in the third quarter of 2008 means Ford will see far fewer vehicles built this year, especially on its light truck assembly lines, where total volume will drop to levels not experienced since the Taurus sedan's strong success in the 1980s, reports Automotive News.

Chrysler has already figured out a similar route to what it hopes will be a profitable future with its project Genesis and related initiatives.

General Motors, just coming off of a strike that costs nearly 300,000 units of production and $2.8 billion in sales hasn't announced similar plans, but the strike has operated as a sort of de facto production cut, so it may not need to take separate action for the immediate future.

Ford's production numbers and sales expectations are based on forecasts of total U.S. market sales of 14.7-15.1 million vehicles, which is on the lower side of the accepted range. General Motors and Chrysler are still expecting between 15.0 and 15.5 million in total sales, while industry analyst groups J.D. Power and Global Insight see the numbers more like Ford does, at 14.9 million and 14.8 million respectively.

Until Ford can get some more fuel-friendly vehicles on the road and find a way to turn around its plummeting sales, it looks like $100 million surprise profits are a thing of the past. Already the company is saying it will be slashing more jobs - as many as 9,000 - by August and the company can't say when it will return to profitability. And the smaller, more efficient cars like the new global Focus that are hoped to turn things around? They aren't due until 2010 at the earliest.

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Posted in: Ford, News


Comments (9 total)

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  1. By Alex #1, Posted: 5/27/2008

    about time......

  2. By bambam #2, Posted: 5/27/2008

    wot you mean about time, they said 2010. LOL
    I hope this does not mean that SUV are not being look after. because it was just so fresh and new, it just needs a serious move to green alternative. Any solution?
    That pic above (focus) has just stepped up to a different class(higher).

  3. By amac #3, Posted: 5/27/2008

    Still trying to shake off the hangover from that decade-long SUV party are they? I don't get it. Ford's been selling successful, small, fuel-efficient cars in Europe for years and they can't even figure out how to import one of them to North America before 2010? It's not like they have to design and build a whole new car from scratch. What's the excuse?

  4. By HECTOR #4, Posted: 5/27/2008

    I wholeheartedly disagree with the first sentence of the article. I'm sure that people who lived through the oil crisis of the early 70s felt the same way, as did the ones who saw the highest gas prcies in the early 80s.

    And then oil prices came down to the point where gigantic oil companies were almost bankrupt and were forced to merge. Yes, the same oil companies many think are gauging us now.

    Oil prices will come down again. it's inevitable. Just wait for it.

    Not that it means you should buy an Expedition, mind you. And AMAC poses a very good question: Why the Taurus and not the Mondeo? Why the American Focus and not the European one? I don't like Ford very much. It's time they learned that making mediocre produts will no longer be tolerated.

    Then again when (not if) fuel prices come down they'll be back to making crap again and the public will buy it. You gotta love capitalism.

  5. By chris #5, Posted: 5/27/2008

    bambam; its not a focus, its a fiesta, and its just a concept at that.

    amac; if you had a bunch of new products coming out in the next 24 months, would you bother retooling your older outdated factories? if ford started making the current MK2 focus here, in 2 years when the MK3 focus comes out in europe, ford NA wouldnt have enough money to retool again, and youd only confuse the public. they've done a major revision to an old platform to get them through until that date.

    hector; the taurus we have here today is a volvo s80. the mondeo is a volvo s60. the quality is comparable, its just that the taurus is a bigger car. you should be asking why we get the fusion (mazda 6) instead of the mondeo. but then the fusion would be a better car than the mazda 6, and ford wouldnt be able to sell mazdas here. and by the way, the 09 update on the fusion will be using the updated platform from the next 6 as well.

    basically all this article says to me is that they recognize that they cant produce as many large trucks and SUV's.. and that they need to put more effort into the smaller cars. It used to be that people who bought a focus in NA (with exception to the SVT), were either half broke kids, or older people who didnt want to spend much on a car or on gas, so they just got what ever.

    even car enthusiasts who would normally put themselves into a larger vehicle (i'm thinking the monte carlo as a good example, with its nascar styling) will be looking at smaller cars. even the older generation will reconsider small cars and remember how zippy and fun they are.

  6. By bambam #6, Posted: 5/27/2008

    Its better to be late, then rush in a some trash can.
    yeah sorry about that, its a Fiesta.
    but still looks great.

  7. By Gus #7, Posted: 5/27/2008

    They were raking in profits from the big SUV's a while ago, it was just piss poor handling of that money that put them in the crunch they are in now, kind of like many people who cashed in their home equity and then didn't have any savings when the economy weakened.
    I agree with Hector, people only seem to see the end of their nose and think the sky is falling every time something bad happens. It will all pass and come around again, just like the housing market did before, and will again.
    Those that hate the US, both internally and externally, are rubbing their hands in glee at our imminent self destruction, just as they have before, and surely will again.

  8. By amac #8, Posted: 5/27/2008

    chris: Everything you say makes perfect sense, but I'm still skeptical. I think Ford is stalling in hopes that the price of oil will eventually come down, then they won't have to bother making fuel efficient vehicles in North America. If smaller, fuel efficient vehicles were as profitable as SUVs they'd be retooling their plants and cranking out those cars well before 2010.

  9. By NaBUru38 #9, Posted: 5/28/2008

    "Lower volumes" is PR-speak that means "we don't care about the sales war between General Motors and Toyota, because we can't keep up with them."

    "if ford started making the current MK2 focus here, in 2 years when the MK3 focus comes out in europe, ford NA wouldnt have enough money to retool again, and youd only confuse the public. they’ve done a major revision to an old platform to get them through until that date." That's right. The mistake (not to release the Focus II in North America) is over, so they had no better option than that.

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