Ford officials already signaled that some cars would be removed from the portfolio as consumers gravitate toward far more profitable pickups, SUVs and crossovers. The company will instead focus only on high-profit models like trucks and SUVs.
The decision to eliminate the entire sedan lineup in North America is drastic to say the least as even Fiat Chrysler Automobiles chose to keep the Chrysler 300 and Dodge Charger when it chose to focus on trucks and SUVs. It upped its five-year cost-cutting goal to $25.5 billion (Ford reports earnings in US dollars), from the $14 billion projected by CEO Jim Hackett in October.
"Where we can raise the returns of underperforming parts of our business by making them more fit, we will", Hackett said.
Ford shares finished the trading day on Wednesday up just over 1%, to $11.
Given the wholesale shift from sedans to SUVs and CUVs in the US and Canadian markets, the Ford marque is going in big on what Jim Farley, executive vice president and president of global markets for the Ford Motor Company, calls "new silhouettes". There's also the potential for new cars combining the "best attributes of cars and utilities, such as higher ride height, space and versatility".
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Ford CFO Bob Shanks announced the improved guidance as the company reported a nine per cent increase in first-quarter net income. Ford's best-selling sedan is the Fusion but that too will not see an all-new model although it is yet to be known when sales will stop.
Hackett also announced that Ford Motor will implement $11.5-billion in cost reductions by 2020, on top of $14-billion in cost reductions announced earlier. It identified Lincoln as a low-performing area but Shanks said sales are growing and the brand is not in jeopardy.
Shanks said the automaker is focused on building great new products to maximize revenue while reducing incremental cost. Europe was the only region to turn a profit for Ford. The news is also a reversal of the company's previous strategy as Ford had plans for a next-generation Fusion as late as October 2017.
"We are driven to turn this business around".
In North America, Ford's largest and most important market/region, pretax profit was $1.9 billion, down $200 million from a year earlier.