Ford stands by decision to cut sedans
Ford Motor Co. Executive Chairman Bill Ford Jr. says the automaker’s decision to slash its sedan lineup is in the best interest of its shareholders, despite criticism and hand-wringing at the annual meeting Thursday.
“We’ve been listening to our customers and watching shifts in the marketplace,” Ford said in response to a question from a shareholder about the pivot away from sedans. “We’re placing bets where we believe we can get you, the shareholders, very good returns.”
The Dearborn automaker announced last month it plans to cut its North American passenger car lineup by more than 80 percent, eliminating the Taurus, Fiesta, Fusion, C-Max and Focus sedans within a few years. Only the Mustang and a crossover version of the Focus will survive the cuts.
“This doesn’t mean we intend to lose those customers,” CEO Jim Hackett said. “We’re simply reinventing the American car.”
Ford criticized press coverage of the decision to cut nearly its entire sedan lineup, encouraging shareholders to read “beyond the headline.”
“I wish the coverage had been a little different of that announcement,” he said. “The headlines looked like Ford was retreating when in fact nothing could be further from the truth. We are actually going full-speed ahead on new products.”
The announcement of the reduction in sedans came on the heels of a commitment to add five all-new SUVs over the next two years, along with the 2019 Ranger midsize pickup that debuted at the Detroit auto show in January. The company plans for nearly 90 percent of its vehicles sold in 2020 to be a truck, SUV or commercial vehicle.
At the Blue Oval’s annual meeting — held online for the second year in a row — shareholders expressed concern with the drastic portfolio change and wondered if Ford was abandoning promises to reduce emissions or improve fuel economy.
Gas prices are surging, with crude oil prices at the highest level in more than three years.
Hackett rebutted the concerns, referring to a Medium post he authored with Ford in March.
“What we’re suggesting to you, is in the future,” Hackett said. “Customers will have propulsion options that essentially don’t give them the fuel penalty that they would have had in the past.”
Ford said earlier this year it would up its investment in electric powertrains, spending $11 billion to launch 40 new electric vehicles by 2022 — including 16 full battery-electric vehicles.
At the 2017 annual meeting, less than two weeks before former CEO Mark Fields was ousted in favor of Hackett, Ford said he was just as frustrated with the stock price as shareholders. A year later, he’s still not happy — and neither are shareholders who called Ford’s stock price “dismal” and “ridiculously low.”
“I share your frustration and actually the whole management team does,” he said.
Hackett was brought in after Ford shares slipped about 40 percent on Fields’ watch. Hackett was lauded as a “change agent” who would right the ship and bring Ford into the 21st Century.
But the stock price has barely budged. The automaker’s stock price closed at $11.41 the day Hackett officially took over last summer. Ford’s stock price was up 12 cents to $11.18 Thursday morning, a day after shares fell nearly 2 percent following a fire at supplier plant that stopped F-150 production.
The Blue Oval’s top brass did not address continuing negotiations to acquire the Michigan Central Depot at the annual meeting. The Detroit News has reported that Ford is advancing talks with the historic train station’s owner, the real estate arm of the Moroun family’s Central Transport International Inc., to buy the depot and assemble land for a surrounding urban campus. The Corktown presence would anchor the Dearborn automaker’s mobility, electrification and autonomous vehicle development.