Ford's New strategic Direction Coming soon

[SpeedRacer]

Ford Sets Radical Shift To Fuel-Efficient Cars....

 

 

7/22/2008

 

 

© 2008 The New York Times Company. All Rights Reserved.

 

 

Ford sets radical shift to fuel-efficient cars Champion of SUVs and trucks taking European approach

 

DEARBORN, Michigan -- For nearly 20 years, Ford Motor has devoted itself to putting millions of Americans into big pickup trucks and sport utility vehicles.

 

Now, with gasoline prices soaring and consumers shunning larger vehicles, Ford is about to radically shift its focus to building small cars.

 

Ford, which is finding itself even more in trouble than its fellow Detroit automakers, plans to announce its transformation on Thursday, when the company is expected to say that it will convert three of its North American assembly plants to cars from trucks.

 

And Ford will not stop there, as it places a huge bet that the U.S. auto industry is moving closer to the model in Europe, where fuel efficiency is a much higher priority.

 

The changes are the result of months of strategic discussions by Ford executives, and represent a drastic response to the woes afflicting Detroit's automakers.

 

According to people with knowledge of its plans, Ford will also announce a major shift in production to more fuel-efficient engines and plans to manufacture six of its next European car models for the U.S. market. It is also expected to end speculation about its Mercury division by making the brand an integral part of its new small-car strategy.

 

The sweeping changes at Ford come in the midst of the worst decline in auto sales in the United States in more than a decade. Over all, vehicle sales have slumped 10 percent so far this year, with Ford sales falling 14 percent.

 

Moreover, gasoline at $4 a gallon, or $1.06 a liter, in the United States and a weak economy have battered the market for big SUVs and pickups, and sent automakers scrambling to revamp their product lineups.

 

No company has more at stake than Ford, which popularized the SUV in the 1990s with its truck-based Explorer and led the boom in pickups with its best-selling F-series model.

 

After losing $15.3 billion in 2006 and 2007 combined, Ford had hoped to stabilize its operations this year and return to profitability in 2009. But rising fuel prices and the collapsing truck market pushed Ford, the second-biggest United States automaker, after General Motors, to abandon its profit target and accelerate its shift to smaller vehicles.

 

Since May, Ford's chief executive, Alan Mulally, has directed planning for a sweeping overhaul of the company's future product plans.

 

In the United States, Ford's sales have been skewed to about 60 percent trucks and SUVs, versus 40 percent passenger cars and car-based crossover vehicles.

 

The chief goal is to reverse the ratio and make cars and crossovers the bulk of the product line.

 

A Ford spokesman, Mark Truby, declined to comment Monday on the details of the company's plans. ''We said when we made our June announcement about accelerating our transformation plan that we would have more details to share when we report our second quarter financial results in July,'' he said. ''We are not going to comment on what we may or may not announce.''

 

Industry analysts say that they believe Ford cannot wait any longer to reshape its manufacturing operations and increase its emphasis on small cars.

 

''Trucks and SUVs have been so central to their strategy for so long, but the bottom line is that consumers have moved on,'' said David Cole, director of the Center for Automotive Research in Ann Arbor, Michigan.

 

The sharp drop in vehicles sales this spring and summer has raised fresh concerns about the viability of Detroit's automakers.

 

With its stock dropping to historic lows and rumors spreading about a possible bankruptcy filing, General Motors last week announced broad plans to improve its cash reserves by $15 billion.

 

Chrysler, now a privately held company, has also struggled to turn itself around.

 

Ford has already cut more than 40,000 jobs in the past three years, and sold three of its European luxury brands to raise money.

 

But the company is now about to address its fundamental, and increasingly precarious, reliance on big trucks as its engine for growth. Ford is expected to convert three of its big assembly plants from truck-based products to cars, including its plant in Wayne, Michigan, that currently builds the Ford Expedition and Lincoln Navigator jumbo SUVs.

 

The company plans to use the factory to increase its output of the Ford Focus, a compact car that has become one of its best sellers this year.

 

Ford is said to be planning to retool two V-8 engine plants to also produce more fuel-efficient 4-cylinder and V-6 engines.

 

By 2010, Ford plans to begin building six of its coming European car models in North America, starting with the Ford Fiesta subcompact designed for global markets.

 

And while Ford has shed luxury brands like Land Rover and Jaguar that no longer fit its long-term strategy, the company will keep the Mercury brand and use it as another distribution channel for its European-style cars.

[Cobramach1]

One thing I just can't figure out is why make the same car in three different offerings via Ford, Mercury and Lincoln. That to me just doesn't make sense at all. I'm shocked they haven't chopped Mercury out of the equation yet as a money saver because I can't see how it makes them money?

[ingram4868]

One thing I just can't figure out is why make the same car in three different offerings via Ford, Mercury and Lincoln. That to me just doesn't make sense at all. I'm shocked they haven't chopped Mercury out of the equation yet as a money saver because I can't see how it makes them money?

 

I agree. Provide a few luxury options for the Ford line and radically update the Lincoln line.

[Torch40]

Is this any surprise? While the Detroit automakers have struggled, foreign companies have been opening plants in the USA

building small cars. Ford, please keep building V8 Mustangs.