Ford USA: Fusion, Focus, Fiesta, Taurus - So long!

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Eggstor
By 2025, the CAFE mileage (which is roughly 25% higher than the EPA "sticker" mileage) will go up from an average of 41.4 mpg for cars this year to an average of 56.0 mpg, and from an average of 30.0 mpg for "light trucks" this year to an average of 40.3 mpg.
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Didn't they just cancel that though?
 
This looks like a reactive move to simply chase down their market success in order to survive. It's really shows that they have no vision for the future.
 
Saw this on The LA Times:

Ford's board ousted its chief executive officer last year and replaced him with Jim Hackett, a cost-cutter who's prepared to make the sort of audacious gambles that Wall Street thinks have been missing.

"The passenger car rationalization plan is just the sort of bold and decisive action we believe investors have been waiting for," Ryan Brinkman, an auto analyst at JPMorgan Chase & Co., wrote in a report Thursday. "It is indicative of a management team for whom there are no sacred cows and which seems increasingly likely to pull other such levers to aggressively improve earnings and shareholder value."

By not investing in next generations of any car for North America except the Mustang, Ford now anticipates it'll reach an 8% profit margin by 2020, two years ahead of schedule. Abstaining from that spending is part of Hackett's plan to cut $25.5 billion in costs by 2022. That figure, announced Wednesday, is almost double what the CEO laid out in October.

"We're going to feed the healthy part of our business and deal decisively with areas that destroy value," Hackett said on an earnings call Wednesday.
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As an automotive enthusiast, it pains me to see a company with a vast history behind it fall into this attitude. I appreciate the need to make a business profitable, but I feel like too often auto maker CEOs place 'build great cars' many rungs down from 'make lots of money'. When the customer/consumer (and by extension, the car) is less important to the company than the shareholders, we get underdeveloped, underdesigned, anodyne cars. Remember Toyota's 'white goods' period of the 00s? Or the phase Honda is just now trying to crawl out of? Or the entire American automotive industry from 1973 to 2005? Ugh. This is not good for anyone who likes Ford vehicles more than Ford stock value.

I should also add that this will probably be a long-term loser from a business perspective, because the company, in the end, sells cars. The CEO will probably be gone by the time any real consequences happen, but the gains he'll get for the company from the wall street hype will surely net him a big pay package.

Edit: For further reading, see Bob Lutz' excellent Car Guys vs Bean Counters. If you don't know who Lutz is....
 
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I'm still excited for the forthcoming Mustang Hybrid 2020. if electric torque coupled with GT V8 , count me in!

Times are changing, it's happening all over various industries, we're in transitional times, all the largest corporations across America are axing partners, logistics, because when you're that big, the ailing bottom line is even bigger. That's a nono to corporate America.

I miss my '79 Ford LTD. thx for the memories Dad.
 
R1600Turbo
Didn't they just cancel that though?
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No. The only actual news on CAFE over the last year-plus is that the NHTSA is proposing not increasing the fines for not meeting CAFE standards from $5.50/0.1 mpg miss/vehicle to $14/0.1 mpg miss/vehicle, which is otherwise due to go into effect with the 2019 model year.

The 2022-2025 portion of the CAFE standards is technically not final because the NHTSA could not legally set that more than 5 (model) years into the future. They had been seeking comment on an environmental impact statement of a full review of options for those model years last year, but that EIS has not come out yet. Those standards (which likely will go out to 2026) are to be finalized no later than April 2020.

The difference in required (or "advocated" in the case of 2025) mileage between 2021 and 2025 would be about 8.5 mpg for cars and 5.5 mpg for "light trucks").
 
Ford has announced it will switch from the Fusion to Mustang for competition in the 2019 season in NASCARs top series. I wonder if they will stay in in the future or consider cutting cost here too? Or shall they continue to market the mustang?
 
Mustang will be in Supercars in Australia to replace the extinct Falcon. I don't think the Focus and Fiesta will sell well in America it already has duel clutch transmission problems I think Americans will find other brands that make better cars just like what people did in Australia.
 
GM bas been cutting the Cruze production and Fiat has already killed the Dart and the 200 altogether.

@Rinsky thanks for the hardwork on building me a great truck about 3 years ago! :cheers:

@GTP_Patrick1 Lets hope nothing!
 
Eunos_Cosmo
One thing that I see over and over again is the "high margins" made on crossovers. The margins are high because they can be sold for more money relative to production costs, presumably because consumers are more willing to pay more for them than they are for cars of roughly the same footprint.

This has me wondering something. Even the admission of 'high margins' has an appearance of 'overpriced' to me. Is there some sort of unspoken agreement between automakers to not cut those margins? It seems apparent that we will be inundated with crossovers to the point where they are a large majority of cars sold in the not-to-distant future. Will that not incentive somebody to cut those margins to increase market share in such a crowded field? It seems like it would only take one car maker doing this to cause the whole crossover 'high margins' thing to cascade down to 'normal margins' especially once cars are out of the picture as a relative bellwether of how expensive a crossover should be. Ford would seem especially susceptible to this without any cars to differentiate its crossovers with.

I mean it's just a thought experiment, but it's occurred to me a few times.
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It's a relative thing. Margins for crossovers are higher than for passenger cars because you can sell effectively the same thing (in terms of raw materials and R&D) for more money. It's not profiteering though so much as improving what can be pretty lousy margins on regular cars.

The average car today is about the same price, inflation adjusted, as its equivalent quarter of a century ago. But they're more expensive to produce, for myriad reasons - labour costs, materials costs, the expense of meeting legislation etc. It's very, very difficult to make money on smaller cars particularly, because stuff like R&D is no cheaper than it is for much bigger cars sold for more money, and in terms of basic materials and production expenses they're closer to those big cars than they are to being free.

A Volkswagen Up, for instance, is less than half the price of a VW Golf over here in Europe, but in pure weight terms (a simplistic but reasonably easy to measure metric for how much physical stuff has gone into making the car) it's maybe only a quarter less. So in very basic terms, VW only has to spend a third more to make a Golf than it does an Up, but can sell it for twice the price. And then it can go and sell a Golf R, which is an even smaller step over a basic Golf in terms of costs, for twice as much again (or four times the revenue than selling an Up, but maybe only 50% extra in costs). Or it can sell whatever the Golf crossover is for maybe 15% more than a Golf for again, a minimal increase in costs.

Now the margins on even a basic Golf are probably quite slim, so that extra 15% is quite valuable to a big carmaker. It probably means there's very little risk of one company suddenly chopping 15% off its crossover to gain market share either, because it'd mean taking a significant revenue hit.

For Ford, this decision is probably quite an easy one. It can sell an Ecosport or whatever for a good few thousand more than a Fiesta, but spend no more actually developing or producing it (given the Ecosport was designed for and engineered in third-world markets, it could well be significantly less expensive to develop and produce than a Fiesta).

The trouble comes if there's suddenly a paradigm shift away from crossovers in the US. A big hike in the price of gas, a tax based on size or weight, something that encourages people to buy something smaller and cheaper to buy and run. If Ford literally doesn't have anything smaller or cheaper to run for customers to buy, that could be problematic.
 
I'm sad that the wagon market is all but dead in the US, but I would still rather drive a minivan than one of those half-assed trendy by default cross-overs or suv's. I never understood the whole idea here that wagons and minivans are boring and for suburban moms to drive the kids around, so now all the suburban moms drive the kids around in boring suv's instead.

School and shopping runs must be so exciting now, and a great utilization of all that extra 1" of ground clearance. /s
 
homeforsummer
It's a relative thing. Margins for crossovers are higher than for passenger cars because you can sell effectively the same thing (in terms of raw materials and R&D) for more money. It's not profiteering though so much as improving what can be pretty lousy margins on regular cars.

The average car today is about the same price, inflation adjusted, as its equivalent quarter of a century ago. But they're more expensive to produce, for myriad reasons - labour costs, materials costs, the expense of meeting legislation etc. It's very, very difficult to make money on smaller cars particularly, because stuff like R&D is no cheaper than it is for much bigger cars sold for more money, and in terms of basic materials and production expenses they're closer to those big cars than they are to being free.

A Volkswagen Up, for instance, is less than half the price of a VW Golf over here in Europe, but in pure weight terms (a simplistic but reasonably easy to measure metric for how much physical stuff has gone into making the car) it's maybe only a quarter less. So in very basic terms, VW only has to spend a third more to make a Golf than it does an Up, but can sell it for twice the price. And then it can go and sell a Golf R, which is an even smaller step over a basic Golf in terms of costs, for twice as much again (or four times the revenue than selling an Up, but maybe only 50% extra in costs). Or it can sell whatever the Golf crossover is for maybe 15% more than a Golf for again, a minimal increase in costs.

Now the margins on even a basic Golf are probably quite slim, so that extra 15% is quite valuable to a big carmaker. It probably means there's very little risk of one company suddenly chopping 15% off its crossover to gain market share either, because it'd mean taking a significant revenue hit.

For Ford, this decision is probably quite an easy one. It can sell an Ecosport or whatever for a good few thousand more than a Fiesta, but spend no more actually developing or producing it (given the Ecosport was designed for and engineered in third-world markets, it could well be significantly less expensive to develop and produce than a Fiesta).

The trouble comes if there's suddenly a paradigm shift away from crossovers in the US. A big hike in the price of gas, a tax based on size or weight, something that encourages people to buy something smaller and cheaper to buy and run. If Ford literally doesn't have anything smaller or cheaper to run for customers to buy, that could be problematic.
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I don't think I was disputing any of this. What I'm trying to get at is that once the market is totally saturated with these type of vehicles, somebody is inevitably going to start cutting into their margins to increase their market share, especially if they have no other vehicles in the lower price ranges. Let's say there are 10 crossovers for sale in the compact crossover segment a few years from now (or whatever segment). Divided simplistically, that's 10% market share for each. If Chevy (for instance) wants to increase their revenue from this particular segment, lowering their prices to increase their market share (say to 15%) could be one method, if other methods (such as increasing advertising budget, improving vehicle design, etc) have a more expensive outlook or have already been done without result. So if a Chevy is selling for 20% less than the competition, they are bound to pick up the majority of value shoppers. So if the margin cut is done, and Chevy manages to get that 15% of the market, that is 5% less for everyone else. Other car makers could then decide that reducing their margins is worth not conceding market share.
 
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dlshearon
GM bas been cutting the Cruze production and Fiat has already killed the Dart and the 200 altogether.

@Rinsky thanks for the hardwork on building me a great truck about 3 years ago! :cheers:

@GTP_Patrick1 Lets hope nothing!
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I've been at that plant for 20 years so there is a good chance I painted yours.
The Ford SuperDuty is one Hell of a Truck so glad you enjoy it.
 
Eunos_Cosmo
somebody is inevitably going to start cutting into their margins to increase their market share
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I'm not sure it's inevitable - it's not really the means many carmakers use to that particular end. Prices shift here and there but it's not a viable long-term strategy.

Carmakers are more likely to differentiate their products through the push for premium, even in a saturated market. Ford or Chevy will make more money not through selling a slightly higher percentage of a certain vehicle at a lower price, but by positioning their vehicles in the market so as to appear more premium than their competitors.

Selling the same product at a higher price because it's got slightly nicer trim or a fancy infotainment system is more economically viable than chipping away at the price to try and snare budget buyers. Particularly when nobody buys cars at list anyway these days - it's all on monthly payments, and the difference in monthly payments between cars that are even a couple of grand apart can be minimal. Few customers drive away feeling smug they got the cheapest car - but they might drive away feeling smug if they feel they've got great value for money on a more expensive one full of desirable options.

Options are another good profit-maker in fact. Special trim lines too, a bit like the Focus Active that Ford will continue to sell. Again, little cost increase for Ford, but plenty of potential to sell for a lot more money.

The race to the bottom can only happen for so long. The race to the top is, in theory at least, limitless.
 
Tornado
I've often wondered when someone in a position of power in the government (be it federal or one of the more influential states like California or New York) would finally say "enough is enough" and eliminate any light duty truck differentiation in fuel economy standards (among other differences they have in regulations). If Ford doing this is not enough to make it considered, I'm guessing GM repeating the process on their model lineup certainly would be.


The Japanese makes are going to laugh themselves all the way to the bank either way. Again.
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Yeah I hope whoever says " enough is enough " disappears and never comes back. MPG shouldn't be decided by the GOV , but by the consumer who obviously wants that . But if I want to buy a gas guzzling car I should be able too. Light duty trucks require high torque when carrying heavy loads. Anyways screw the gov . California still makes me smog my 79 Rx-7 . I'm honestly contemplating just not regestering the car and sneeking off to the mountains at night . An impound fee is cheaper than spending another 500$ to revert back to the stock set up only to hope it passes is geting abit tyrannical .
 
I should clarify my position on the article I linked- I grew in the late 70's/early 80's in SE Michigan as a "GM Brat". Dad was in HR at GM Corp, and then Buick. If our auto industry got even a tiny bit of support, we might be reading a different article. There's no question that the Big 3 made some crap, but they got their act together much earlier than anyone wants to admit.
 
homeforsummer
I'm not sure it's inevitable - it's not really the means many carmakers use to that particular end. Prices shift here and there but it's not a viable long-term strategy.

Carmakers are more likely to differentiate their products through the push for premium, even in a saturated market. Ford or Chevy will make more money not through selling a slightly higher percentage of a certain vehicle at a lower price, but by positioning their vehicles in the market so as to appear more premium than their competitors.

Selling the same product at a higher price because it's got slightly nicer trim or a fancy infotainment system is more economically viable than chipping away at the price to try and snare budget buyers. Particularly when nobody buys cars at list anyway these days - it's all on monthly payments, and the difference in monthly payments between cars that are even a couple of grand apart can be minimal. Few customers drive away feeling smug they got the cheapest car - but they might drive away feeling smug if they feel they've got great value for money on a more expensive one full of desirable options.

Options are another good profit-maker in fact. Special trim lines too, a bit like the Focus Active that Ford will continue to sell. Again, little cost increase for Ford, but plenty of potential to sell for a lot more money.

The race to the bottom can only happen for so long. The race to the top is, in theory at least, limitless.
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I'm not sure I agree, but it I think we'll know one way or the other in a few years.
 
homeforsummer
Options are another good profit-maker in fact. Special trim lines too, a bit like the Focus Active that Ford will continue to sell. Again, little cost increase for Ford, but plenty of potential to sell for a lot more money.

The race to the bottom can only happen for so long. The race to the top is, in theory at least, limitless.
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The American vehicle market can also be a bit fickle; a fully-optioned entry-level vehicle is usually one that does not sell, even though it represents a good deal to the consumer. Usually, most are thinking bigger and/or more powerful, typically avoiding other options, since they're usually sold in "packages". Mid-sized vehicles have always been the bread-and-butter and after that, bigger is viewed as better. In an age where technology is seen as an ever-greater convenience, this has sort of changed, but also brands have integrated many of these wireless/smartphone-adaptive goodies into their basic option packages.

Want a manual transmission and the performance engine but without leather, navigation, and stereo? Go buy a vehicle that lets you build your own and wait, because you won't find it at most mainline automotive brands. Building a Boolean search is not the same as option packages designed for a streamlined assembly line process and dealer profit. Entry-level luxury cars have failed to sell in great numbers, and dealers have often been reluctant to bother selling vehicles that nip at the next segment up the food chain (unless there's sales incentives to rid them), never mind that the entry-level owners are usually far less likely to service them back at the dealer and make a little more profit down the road.
 
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R1600Turbo
Isn't the GT one of those "we're building this many then it's done" cars?
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Yes.

If a dealer has one, somebody pulled a scam by offering synthetic blinker fluid as a currency to pensioners in the organized borough of Putz-Vandalia and they now have to try to get rid it because the guy that signed his name with an emoji and used an alphanumeric Social Security Number fled the land for a planet with less gravity,

Or their sportsball career didn't work out. Something like that.
 
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The Focus getting cut surprises me since they seem fairly common in my area at least. I won't even notice that the others have gone out of production.

I don't think the issue is even people not wanting to buy cars, it's just people not wanting to buy Ford's cars. There really seems to be little reason to buy a Ford (or GM) car over what Japan and South Korea have been offering.
 

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