waiting for PBS/NightlyBusinessReport... ...wonder if the stock will plummet or ......It seems very likely we'll get to some layoffs and plant closures soon, especially with this much volume going away.
Ford brand sedans to be nixed in N.A. under deeper cost targets
Venerable Taurus, Fiesta, and Fusion, won't be replaced
AutomotiveNews - Nick Bunkley - April 25, 2018
UPDATED: 4/25/18 6:23 pm ET - adds details
DETROIT -- Ford Motor Co. on Wednesday said it plans to stop selling all sedans in North America and that it has nearly doubled its cost-cutting target by 2022 from the plan it laid out only six months ago. The automaker said it will either fix or eliminate unprofitable portions of the business.
Ford said the only cars it will keep in North America beyond their current generations are the Mustang and the Focus Active arriving in 2019.
The automaker said it now expects to achieve an 8 percent global profit margin by 2020, two years sooner than planned. It upped its five-year cost-cutting goal to $25.5 billion, from the $14 billion projected by CEO Jim Hackett in October.
Ford CFO Bob Shanks announced the improved guidance as the company reported a 9 percent increase in first-quarter net income. Its global profit margin was 5.2 percent in the quarter, as higher commodity costs reduced earnings in North America. The company posted a 6.4 percent margin during the same quarter last year.
Ford shares rose 2.6 percent to $11.40 in after-hours trading, as of 5:48 p.m. ET Wednesday.
"Our intention is to raise the level of performance on all parts of the business through fitness," Shanks told reporters at Ford's headquarters near Detroit. "But frankly, that is not going to address completely the underperforming part of the business. We will have to make choices around how we disposition those businesses going forward. We can make different investments; we can partner; we can exit products, markets. And we will do that."
Small cars lose money
Shanks said small cars and "most Lincoln products" are among those losing money.
Ford officials already signaled that some cars would be removed from the portfolio as consumers gravitate toward far more profitable pickups, SUVs and crossovers. He said the Lincoln brand as a whole is not in danger but noted that it lost money in China because it is in ramp-up mode there after being introduced in 2014.
While Ford didn’t mention them, analysts say the future of the Lincoln Continental and MKZ sedans, which share platforms with many of the Ford cars slatted to be scrapped, also remain in doubt.
Shanks suggested that Ford could reduce investment in certain geographic regions or exit them completely if it did not see adequate returns on the horizon. That echoes the strategy General Motors has employed in selling its European business and abandoning several other countries, including Russia.
Less capital spending
He also said the company was reducing its planned capital spending from 2019 through 2022 by $5 billion to $29 billion through such actions as using common “modules” to account for 70 percent of the value of each vehicle and reusing tools and equipment.
Shanks wouldn’t say whether Ford would need to eliminate jobs to achieve the additional $11.5 billion in cost cuts. Nearly half of the cuts would be in sales and marketing -- through incentive optimization, reduced advertising and other actions -- with the rest coming from engineering and product development, material costs, manufacturing and information technology, in that order.
About $4 billion of the $11.5 billion in cuts would be accomplished in 2019 and 2020, Shanks said, with the rest occurring in the subsequent two years. He said the company used “hard work” to find more efficiencies after Hackett unveiled his plan in October. The plan was met with a tepid reaction from analysts and investors, who have been eager to hear more specifics.
“We have looked at every single part of the business,” Shanks said. “I don’t think they’re done yet.”
In the first quarter, net income rose $144 million to $1.74 billion, and revenue grew 7.4 percent to $42 billion. About $100 million of its income was due to a lower tax rate.
Ford’s North American pretax profit fell 9.2 percent to $1.94 billion, with commodity costs accounting for more than the entire decline. It lost $149 million in South America, 37 percent less than in the first quarter of 2017, and earned $119 million in Europe, down 43 percent. Its Asia Pacific business swung to a $119 million loss, from a $148 million profit a year ago.
Ford Credit’s profit jumped 33 percent to $641 million, while the automaker’s fledgling mobility ventures lost $102 million, 59 percent more than a year ago.
This story will be updated.
Ford confirms the only cars it will sell are Mustang, Focus Active
Hybrid F-150, Mustang, Explorer, Escape and Bronco also confirmed
Autoblog - JAMES RISWICK - Apr 25th 2018
Confirming what has long been suspected, Ford today announced in its quarterly financial report that it will not invest in a next generation of sedans for North America.
"Over the next few years, the Ford car portfolio in North America will transition to two vehicles — the best-selling Mustang and the all-new Focus Active crossover coming out next year," the statement reads. "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."
By 2020, Ford says 90 percent of its portfolio in North America will be trucks, SUVs and commercial vehicles. This move is due to consumer demand and product profitability.
The company also announced that it is committed to developing "new propulsion choices," indicating it would add hybrid powertrains to the F-150, Mustang, Explorer, Escape and upcoming Bronco. It also announced it will produce an EV starting in 2020 that will be a "performance utility," and that there will be 16 battery-electric vehicles by 2022.
Now, let's delve into this a bit. First, it's important to note that these announcements concern North America. The recently redesigned Fiesta and Focus will still be sold in other markets (after all, the Focus Active is just a Crosstrek-ified Focus), and sedans like the Fusion continue to have appeal elsewhere. We also wouldn't be shocked if one of those "white space" vehicles with higher ride height, space and versatility turned into a Outback-ified Mondeo Estate.
Another point is that "few years" could mean anything, and that without a firm timetable, the exact discontinuation of each car can be determined at a later date. Given the age of each, though, none seem long for this world. The Fiesta and Focus have been replaced in other markets by next-generation models and therefore are likely to meet their makers first. The Ford Taurus is a million years old, and no one buys full-size sedans, so it's got seconds to live. The Fusion has held up well, but dates back to 2013, putting it in its sixth year (typically the point of a generational change even if Ford tends to drag things on longer than most). The C-Max would be the only other car model, and we don't know anyone who would miss it. The Focus ST and Focus RS ... ah, you'd better move to Europe.
One would imagine the announcement reinforcing Ford's commitment to electrification would be aimed to answer the inevitable questions about the danger of rising gas prices and a product lineup devoted almost entirely of trucks. Certainly, Ford's reliance on trucks and lack of car development in the late 1990s and early 2000s left it ill-prepared for the skyrocketing gas prices and focus on fuel economy that would come later in the decade. The promise of EVs seems meant to assuage the fears of investors and the wagging fingers of the environmentally conscience.
Look for more updates on Ford's grand car cull as questions are asked and further details are discovered.