Ford Motor Co outlined a plan to cut costs and boost profit margins at a faster pace than previously announced, which includes dropping traditional sedan models in North America that have become increasingly unpopular with consumers. The plant will continue to make the Police Interceptor Utility, which accounts for 80 percent of the police market, said Joseph Hinrichs, Ford's executive vice president and president of the Americas.
One of North America's largest vehicle makers is shrinking its product line to save money and stay competitive in the auto market, company officials said.
Hackett said the market shift to utility vehicles and commercial vehicles means it's not in Ford's best interests to sink more money into passenger cars.
Ford reported first-quarter revenue of $42 billion and net income of $1.7 billion, or 43 cents a share, beating analysts estimates by 2 cents a share. "We're going to feed the healthy parts of our business and deal decisively with the parts that destroy value", he said.
The announcement of the turnaround plans come as Ford reported further signs of difficulty in the first quarter of 2018. Ford has also been implementing hybrid vehicle strategies on existing models like the F-150, Escape and Mustang. Ford's present lineup consists of six sedans and coupes in North America. Other models, including the Taurus, the original Ford Focus, the Fiesta and the Fusion, will no longer be available in the United States or Canada. The automaker will eliminate all but two cars from its North American lineup by that year.
According to Hackett, Ford's profit margin should bottom out during the year.
Ford also unveiled plans to pare an additional $11.5 billion in costs between 2019 and 2022.
In addition, Ford will cut $5 billion from capital spending from 2019 to 2022, reducing it from $34 billion to $29 billion.
"As recent as 2012 it was about a 50/50 mix between auto and light truck, which would include pickup trucks, utility vehicles, and the like" Wall said.
Ford's decision to pull back on vehicle production reflects a shift in consumer sentiment that has had an impact across the automotive industry.