*The Mustang will be one of the only traditional cars in the Ford line
*Ford Largely abandons the car market, doubles cost-cutting
*Taurus, Fusion and others to be discontinued
Along with first-quarter earnings results, the American automaker announced Wednesday that traditional sedans will eventually disappear from its product portfolio, leaving only a sport coupe and a crossover-like version of an existing economy car.
"Given declining consumer demand and product profitability, the company will not invest in next generations of traditional Ford sedans for North America. Over the next few years, the Ford car portfolio in North America will transition to two vehicles" — the Mustang and the new Focus Active crossover. That means the Taurus, Fusion, Fiesta and other Focus models will go away.
The new Focus Active, a 5-door, car-based crossover made in China, goes on sale in the U.S. next year. It will be the only Focus model to remain. Ford Taurus production will end by March 2019. Ford Fiesta production will wind down by May 2019. The Fusion will go away "in the next few years," Ford said.
By 2020, Ford said, 90 percent of its portfolio in North America will be comprised of trucks, utilities and commercial vehicles, reversing the strategy put in place by former Ford CEO Alan Mulally, who wanted Ford to shift to more cars from utilities and trucks. The company is also exploring new "white-space vehicle silhouettes" that combine attributes of cars and utilities, such as higher ride height, space and versatility, but without a fuel economy penalty. "They won’t be traditional silhouetted sedans that tend to be commoditized," said Ford Executive Vice President Jim Farley.
New models will include performance and emotional models that will result in beefier returns on investment, said Farley. New nameplates will emerge with a growing variety of utility vehicles. "To give you a flavor, we’ll have more authentic off-roaders, building our Built Ford Tough background, like Bronco and other nameplates not named yet." Ford will refresh the entire line of traditional crossovers and SUVs, including the Explorer and Edge.
Earlier, Ford said it’s all-in on hybrid and electric vehicles. Hybrid-electric powertrain options will be added to high-volume, high-profit vehicles like the F-150, Mustang, Explorer, Escape and the upcoming Bronco. A dedicated EV launches in 2020, with 16 EVs going on sale by 2022.
Doubling Cost Cuts
Ford also announced it’s almost doubling its cost-cutting, going after another $11.5 billion in cuts by 2020. Earlier, Ford announced cuts of about $14 billion by 2020.
Nearly half of the cuts will come from sales and marketing, Ford Executive Vice President Jim Farley said in a phone call. The rest will come from product development, manufacturing and purchasing. Ford’s goal is for a profit margin of 8 percent globally and 10 percent in North America.
Better Q1 Results Than Expected
Ford’s first-quarter results of $1.7 billion in profit, or 43 cents per share — up 9 percent from a year ago, with revenue up 7 percent on lower unit volume — beat analysts’ forecasts. Ford said much of the better-than-expected results was due to a lower tax rate from the tax reform bill passed by Congress in December 2017.