Ford lineup to grow by 2023 despite axing sedans
Ford Motor Co. will have 23 vehicles in its lineup by 2023 — three more than it does today — despite plans to cut passenger cars from its portfolio.
"It's not a strategy to shrink," Hau Thai-Tang, Ford's executive vice president of product development and purchasing, said Thursday. "This is not us shrinking and reducing our size in the marketplace. It's all about reallocating resources and capital where we can win, also consistent with some of the consumer trends we're seeing."
The automaker said in March that nearly nine out of every 10 vehicles sold in 2020 will be a truck, SUV or commercial vehicle. Ford would achieve that ratio by cutting cars.
The automaker plans to transition at least one of the nameplates currently on its sedans into larger crossovers. The Focus Active crossover will debut in the U.S. in the second half of 2019. The Fusion, Taurus and Fiesta sedans will be cut, though the automaker stressed that does not mean those nameplates will disappear.
All told, Ford will add nine new nameplates in the next few years, seven of which will be trucks and utility vehicles, Thai-Tang said Thursday.
Ford is braving slipping sales in 2018 as consumer demand wanes and its lineup becomes more stale compared to its competition.The automaker plans to cut its average product age from 5.7 years to 3.3 years by 2020.
The decision to cut cars to focus on SUVs is driven in part by consumer demand of utility in a vehicle. The sedan design doesn't deliver the value — or return on investment — Ford needs.
"This is a really important secular shift," Thai-Tang said. "It's not something that's cyclical. It's not a fad, it's not a trend."
Leadership at Ford is reacting to that market shift, as other automakers' product cadence lined up more directly with that shift among consumers. Thai-Tang said Thursday that in 2015 the automaker spent as much money on cars as it did on SUVs — and it spent more money on cars than it spent on trucks.
Starting this year, 80 percent of Ford's capital will be spent on trucks and sport utilities, he said.
Rejuvenating the portfolio will be spurred largely by Ford's shift to use five "flexible" vehicle architectures that would cut costs and production times. Under the new design structure, new Ford vehicles would be built on one of five architectures: front-wheel drive unibody, rear-wheel drive unibody, commercial van unibody, body-on-frame or a battery-electric platform.
The architectures will allow Ford some manufacturing flexibility that could save the automaker from converting a plant if it needs to make a different vehicle using the same architecture.
That transition is part of a cost-cutting strategy Ford executives are planning for the next few years. The automaker plans to cut $25.5 billion in operating costs by 2022. Ford executives also plan to spend $11 billion over the next three to five years to restructure its global business.
But that's failed to resonate with Wall Street. Shares of Ford stock closed trading Wednesday at $9.45, their lowest in more than five years; Thursday's trading closed at $9.51.
"We have to do a good job not only telling the story and the rationale, but giving them tangible proof points," Thai-Tang said. "We understand the issues, we have a point of view on how we're going to fix it, and now we're implementing it."