Cleveland, Ohio – The company that mobilized the world and made cars affordable to the mass market is almost entirely getting out of the car business.
Ford Motor Co., by 2020, will pare its car lineup in North America to only the Mustang and a crossover version of the Focus due out next year. Vehicles to be abandoned are the Fusion mid-sized sedan, Fiesta subcompact, Taurus large sedan, and other versions of the Focus compact.
”By 2020, almost 90% of the Ford portfolio in North America will be trucks, utilities, and commercial vehicles,” Ford President and CEO Jim Hackett said in announcing $1.7 billion in 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.”
To some degree, the news is akin to hearing that an old, very sick relative has finally died. The inevitable was coming, but it’s still a shock to hear the words.
Ford and other automakers have been shuffling resources away from cars for the past five years as consumer tastes have abandoned smaller vehicles in favor of crossovers and sport utility vehicles (SUVs). As noted in the March issue of Today’s Motor Vehicles, cars were 45% of the new car market in 2012 but slightly less than 33% by 2017, and their share of the market continues to fall.
”We have gained clarity on our vehicle portfolio and where we want to go,” Hackett said. “We’re going to feed the healthy part of our business and deal decisively with the areas that destroy value.”
It’s a trend that caused Fiat Chrysler Automobiles (FCA) to follow a similar strategy to Ford’s – scrapping the Dodge Dart compact and Chrysler 200 mid-sized sedan. At General Motors, production of the Chevy Cruze in Lordstown, Ohio, is set to move to a single shift, down from three shifts in 2017.
Detroit’s Big Three automakers aren’t the only ones dealing with the problem. Hyundai/Kia has been the worst-performing major automaker in the U.S. for the past two years, primarily because it has a car-heavy lineup with few crossovers and SUVs. Toyota has had to slow assembly lines and shift investments on the small car side, and Honda has shifted some CR-V crossover production to its plant in Greensburg, Indiana, a facility original built for the Civic compact car.
At Ford, declining consumer interest in cars led to decisions that garnered political headlines last year.
In 2016, the company announced plans for a $1.6 billion plant in Mexico to make the next-generation Focus – moving that car out of a Michigan plant, and retooling that U.S. plant to make Ranger pickups and Bronco SUVs. The move garnered criticism from then-presidential-candidate Donald Trump.
In early January, 2017, company officials announced they wouldn’t build the Mexico plant, winning praise from the president-elect. The reasoning behind the cancellation, however, was recognition of car sales trends. With significantly lower volumes expected for the new Focus and the Fusion mid-sized, a car built at an existing plant in Mexico, Ford only needed one plant for both vehicles.
A few months later, even sharing production lines in Mexico wasn’t enough to support manufacturing investments in new small car lines. Rather than invest in Mexico, Ford opted to make future Focus models in China and export them to the U.S. Volume expectations were so low that shipment costs would be lower than required investments in Mexico.
Automaker officials did not spell out the time frame for phasing out each of its car lines, other than noting the 2020 completion for that project. They also did not share details on the Focus Active, the crossover-like vehicle that will be its only car, other than the Mustang. It is likely to be something like the C-Max hybrid, a large hatchback vehicle built on the same architecture as the Focus.
Ford Executive Vice President Jim Farley, director of much of the company’s vehicle strategies, says the automaker will still have plenty of vehicle options for drivers seeking different price points.
”We will have a very diverse passenger car business. It just won’t be traditionally silhouetted sedans that tend to be commoditized,” Farley said.
The company will also continue to invest heavily in hybrid and electric powertrains to ensure that it has fuel-efficient products if rising gasoline prices scare customers away from gas guzzlers. Hybrid Mustang, F-150, and Explorer models are on the schedule for the next few years.
Ford Executive Vice President and President of Global Operations Joe Hinrichs, responsible for manufacturing decisions, says the shift away from cars won’t have a huge impact on North American production.
”We have high utilization in North America today,” Hinrichs said. “We have a great plan to utilize our manufacturing capacity moving forward.”
Ford has been shifting car production out of the U.S. for several years. Its Chicago plants builds the Taurus, but most of that plant’s capacity goes to the Explorer SUV. The Focus comes from Michigan, but that plant is already being retooled for trucks and SUVs.
Ford’s Flat Rock, Michigan, plant makes the Mustang, a vehicle that will be staying, and the low-volume Lincoln Continental. In addition, that plant is set to make a self-driving, electric SUV there. Last year, in announcing plans to scrap the Focus plant in Mexico, Ford officials announced big investments to make Flat Rock a center for electric and autonomous vehicles.
The Fusion is made in Mexico, so the only cars left are a handful of Lincoln vehicles that are made in Canada.
Hackett said shrinking the product line will help designers move from sketch to production 20% faster, simplify manufacturing and design, lower capital expenditure costs, and increase corporate profitability.
About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 18 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.