Ford Motor Co. stated Wednesday it will cease investing in sedans in North America, bowing to U.S. drivers’ seemingly unending zest for crossovers and pickup vans.
shifted focus on “building a winning portfolio” of automobiles, by which it meant no extra of its slow-selling sedans no less than for North America.
U.S. drivers have gravitated to SUVs and pickup vans for years, thanks in half to their relative gasoline economic system enhancements and value drops. Many automobile patrons additionally report having fun with the high-riding seating place of an SUV or pickup truck.
“Ford realized it can’t be everything to everyone, and in today’s market that could be okay,” stated Jessica Caldwell, an analyst with Edmunds. “The key to success is focusing on where your customers are and where your strengths lie, and for Ford doubling down on trucks and SUVs could be just what the brand needs.”
The transfer isn’t with out threat, nevertheless. Ford is willingly alienating a few of its automobile homeowners and conceding market share in segments that, whereas declining, are nonetheless related to some patrons, she stated.
Ford introduced final 12 months it would reallocate $7 billion to SUVs and trucks.
The firm additionally introduced final 12 months it would carry again its Bronco SUV and Ranger pickup, which followers anticipate to see in the subsequent few months. Tesla Inc.’s
subsequent automobile, dubbed the Model Y, is reportedly a compact SUV. The Silicon Valley automobile maker’s second automobile in its line up was, after all, the Model X SUV.
By 2020, nearly 90% of the Ford portfolio in North America will be vans, utilities and business automobiles, the corporate stated Wednesday when it reported its first-quarter earnings.
“Given declining consumer demand and product profitability, the company will not invest in next generations of traditional Ford sedans for North America,” Ford stated.
Over the subsequent few years, Ford’s automobile portfolio in the area will transition to simply two automobiles, the best-selling, muscle automobile Ford Mustang and an all-new Focus Active crossover, popping out subsequent 12 months, it stated.
The firm can also be exploring new automobile varieties that mix “the best attributes of cars and utilities, such as higher ride height, space and versatility,” the corporate stated.
Ford reported first-quarter earnings and gross sales above Wall Street expectations on Wednesday, and shares gained greater than 2% in late buying and selling.
The firm stated it earned $1.7 billion, or 43 cents a share, in the quarter, in contrast with $1.6 billion, or 40 cents a share, in the year-ago interval. Sales rose to $42 billion, from $39 billion a 12 months in the past.
Analysts polled by FactSet had anticipated earnings of 41 cents a share on gross sales of $36.eight billion.
In addition to dropping sedans in North America, the corporate additionally unveiled plans to scale back its capital spending by $5 billion in the approaching years.
Ford had beforehand anticipated to spend about $34 billion in capital from 2019 to 2022, however on Wednesday reduce that by $5 billion to $29 billion over the identical interval. Ford additionally stated it would fast-forward some monetary targets to 2020 because of $11.5 billion in cost-cutting and effectivity measures.
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Ford additionally stated it was making “a full commitment” to different propulsion engines, together with including hybrid-electric powertrains to firm icons such as the F-150 and the Mustang.
Shares had ended the common buying and selling day up 1.four%. Ford inventory is down three.2% in the previous 12 months, versus good points of 11% for the S&P 500 index
and 15% for the Dow Jones Industrial Average.