A seismic shift is happening in the car market in North America as legendary car maker Ford says it will cut the production of its sedan models by upto 90%. The Ford car models facing the axe are the Fiesta, Taurus, Fusion and the regular Focus which will disappear in the United States and Canada.
The only passenger car models Ford plans to keep on the market in North America will be the Mustang and the upcoming Ford Focus Active, a crossover-like hatchback that's slated to debut in 2019.
In a statement, Ford CEO Jim Hackett explained the move away from sedans and hatchbacks. "We are committed to taking the appropriate actions to drive profitable growth and maximize the returns of our business over the long term," Hackett said. "Where we can raise the returns of underperforming parts of our business by making them more fit, we will. If appropriate returns are not on the horizon, we will shift that capital to where we can play and win."
By 2020, "almost 90 percent of the Ford portfolio in North America will be trucks, utilities and commercial vehicles," the company’s press release says. "The company is also exploring new 'white space' vehicle silhouettes that combine the best attributes of cars and utilities, such as higher ride height, space and versatility."
Ford also said it was making “a full commitment” to alternative propulsion engines, including adding hybrid-electric powertrains to company icons such as the F-150 and the Mustang. The company is considering exiting or selling money-losing operations in Europe and South America, its chief financial officer, Robert L. Shanks, told reporters. “North American operations had been hurt by rising costs for key commodities such as steel and aluminum,” he added.
The announcement of the turnaround plans come as Ford reported further signs of difficulty in the first quarter of 2018. The New York Times reported that Ford’s net income totaled $1.7 billion, up by $100 million from the same period a year earlier, and earnings increased to 43 cents a share, up by 3 cents. But the company’s profit margin slipped to 5.2 percent from 6.4 percent a year earlier. Profits before taxes fell to $2.2 billion from $2.5 billion. And in every region of the world, Ford reported either a decline in profits or a loss.
In North America, Ford’s largest and most important market/region, pretax profit was $1.9 billion, down $200 million from a year earlier. Its margin in North America fell to 7.8 percent from 8.9 percent.
Due to Ford’s announcements, what was not explicitly stated but is likely that Lincoln’s sedans will also disappear. Lincoln currently sells the mid-size MKZ and full-size Continental which share platforms with Ford counterparts. If Ford is phasing out development of sedan platforms, Lincoln will likely suffer, too.
This reduction in sedans has been undertaken as Ford recognizes that North American consumers have increasingly turned to crossovers, trucks and SUVs over sedans and small cars. This change includes financial incentives like low-monthly payments, trade-in value of cars as well as the improvement of several factors from more fuel-efficient and better-equipped trucks and SUVs to improved safety ratings and ride qualities of these vehicles.