Ranger, Bronco expected to drive $1B in profit at Michigan Assembly
New York — Ford Motor Co. expects the new Ranger midsize pickup and forthcoming Bronco SUV will drive $1 billion in earnings out of the Michigan Assembly Plant in Wayne.
Jim Baumbick, Ford vice president of enterprise product line management, told investors at the Bank of America Merrill Lynch 2019 Auto Summit that Ford is focused on spending money where it will see the biggest return on investment.
That's part of CEO Jim Hackett's push for "fitness," which aims to ensure Ford isn't wasting money building vehicles customers don't — or won't — want.
"Those underperforming businesses are consuming capital," Baumbick told investors. "That's where we shouldn't spend our time."
Baumbick pointed to the production shift at Michigan Assembly as a proof-point. Ford made the slow-selling Focus and C-Max compact cars there before shifting production to the Ranger and the all-new Bronco expected to hit showrooms by the end of 2020.
That move will generate more than $1 billion in operating earnings improvements in 2021 when compared to 2017. Ford expects to produce more than 200,000 Rangers and Broncos at the Wayne plant in 2021. In 2017, 200,000 Focus and C-Max cars rolled off the line there.
Baumbick stressed Ford executives' new push for quicker decision-making. The automaker planned and funded a new entry-level vehicle program in 12 weeks, Baumbick said, a process that would have taken several months in the past. By 2023, the average age of a vehicle in Ford's lineup will be three years, compared to nearly six-years-old in 2019.
The decision to exit the sedan market was also partly a decision to drive profits rather than volume, Baumbick said. Ford was lambasted by analysts, dealers and consumers following a 2018 announcement that the automaker would kill all cars but the Mustang.
But the automaker has plans for an entry-level vehicle planned for production in 2022, he said. That answers one of the questions the automaker left unanswered when it announced it would kill its most affordable products.
The Bronco will target Jeep, which currently dominates the off-road SUV market. Jim Farley, Ford president of global markets, has said before that Ford plans to lean on the Bronco as a brand as much as a singular product. Baumbick said Wednesday that Ford sees Bronco as an opportunity to develop "a whole range of derivatives."
The automaker is planning an unnamed off-road SUV on the same platform as the recently launched Escape and Lincoln Corsair compact SUVs.
"The way we're approaching it is what's the better business," he said. "If a better business has slightly lower volume, then so be it. It's the better business."