Ford confirms that it's abandoning all its car models in the United States except two — the Mustang and the new Focus Active.
The company has previously hinted at scaling back in its consumer car department in favor of two other markets: trucks and SUVs. As part of the move, Ford will be phasing out sales of traditional sedans and hatchbacks in the North American market.
Ford Cuts Sedan Lineup
The drastic move was announced in its quarterly earnings call, where Ford CEO Jim Hackett confirmed the Mustang and Focus Active as the only two models to be sold going forward in the United States. Drastic but also logical, considering that in 2020, 90 percent of Ford's North American revenue will come from trucks, utility, and commercial vehicles, according to the company's estimates.
Ford has also made clear that waning consumer demand and product profitability are two reasons why it's halting investment in the next generation of sedans. Ford's present lineup consists of six sedans and coupes in North America.
Ford has allocated $7 billion of research funds from cars to SUVs and trucks.
"We're starting to understand what we need to do and making clear decisions there," said Hackett.
Why Is Ford Doing This?
The move was a long time coming. As consumers in North America slowly choose trucks, SUVs, and crossover vehicles, interest in sedans and small cars has been dropping. Several factors are involved in this transition, a couple of which being that trucks and SUVs are often more fuel efficient and better in terms of safety ratings and ride quality.
Cost-Saving
Executives say Ford could also exit or restructure low-performing areas of its business, in an aggressive effort to save costs. The company will cut $5 billion from capital spending from 2019 to 2022, meaning it will only have $29 billion instead of $34 billion to burn. The Lincoln brand might be affected by the austerity measures, but CFO Bob Shanks said sales are still growing. He adds that Ford will do "whatever it takes" to fix low-performing areas.
The company is exploring new "white space" vehicle that combine the best of cars and utilities, such as "higher ride height, space and versatility." By white space, Ford refers to vehicles that don't fit into typical categories.
Thoughts about Ford's drastic move? Is it wise to cut its sedan offerings to just two and instead focus on trucks and SUVs? As always, if you have anything to share, feel free to sound them off in the comments section below!
