By 2020, Ford said, almost 90 percent of its portfolio in North America will be trucks, utilities and commercial vehicles. This is exactly what Fiat Chrysler Automobiles NV did to overtake Ford in profitability in the North American region.
Ford announced plans late Wednesday to eliminate some of the company's most well-known cars in North America, including the Fiesta subcompact, Fusion midsize sedan, Taurus large sedan and the C-Max van, according to Ford's quarterly earnings statement.
The news comes as Ford announced a $1.7 billion profit for the first quarter of 2018.
A memo released by the company for 2017 showed truck and SUV sales climbed 4.3% compared to 2016, while passenger auto sales dropped by 15.2%.
- Ford Motor Company is cutting back on vehicle models to just two by the year 2020, according to a release Wednesday.
"We will have a very diverse passenger vehicle business", Jim Farley, Ford's president of global markets, said Wednesday. "Small cars are important internationally, and they still make up a chunk of sales in the United States". "If appropriate returns are not on the horizon, we will shift that capital to where we can play and win".
Bob Shanks, Ford chief financial officer, told reporters Wednesday that he expects one-third of the cuts to be achieved by the end of 2020.
Ford Motor Co.is sharpening its cost-cutting knives and cleaving another $11.5 billion from spending in the coming years to reach an elusive profit margin target ahead of schedule. Let us know which models you will miss and your overall thoughts on Ford's decision to tighten up their lineup. The company's balance sheet shows an effective tax rate of 9 percent for the quarter.
Ford also reaffirmed its commitment to the creation of hybrid electric powertrains for the F-150, Mustang, Explorer, Escape, and upcoming Bronco. In addition to putting hybrid-electric power trains into high-volume sellers in its SUV and truck line, the company will roll out a "performance utility" vehicle powered by an electric battery in 2020.
In just two years, about 90 per cent of Ford's North American portfolio would comprise pickups, commercial vehicles and SUVs.
That means there will be an end of production for slow-selling sedans such as the Taurus, Fusion and Fiesta.
But the move is expected to leave Canadian operations intact, since they are focused mainly on sport utility vehicles and light trucks. "We're going to feed the healthy part of our business and deal decisively with the areas that destroy value".
"They probably just need to keep up with the times".