Ford's Decision to Just Build Trucks

I'm sorry if this has been discussed here previously. I don't remember. But I think it's a serious topic because it could be a harbinger. I've read numerous articles. We all know that after 2020 Ford will stop building cars, except for a minimal few. I have liked Ford "performance" cars since the '89 Escort GT that I purchased new. I since bought a '93 Probe GT new and my current daily driver, my beloved 98.5 Countour SVT. I think the new CEO's decision is based on cheap gas and the expectation that cheap gas will continue. It might not. Then what? Thoughts?

We've learned nothing.

A lot of their "trucks" are just tall station wagons. 

I think it's smart. Like if Barnes and Noble had decided to stop selling books in physical stores and instead focused on selling stuff on "the internet".

Ford sees the car market as shrinking, and manufacturers are all killing themselves trying to sell more stuff into a smaller and smaller pool of buyers. Ford decided not to play that losers game anymore.

Change is hard. But trying to fight change is much much harder.

I remember gas going through the roof a few years ago, and a rusty Corolla held together with load bearing paint would sell for $1,300 in less than a day. Build trucks. They sell. And we've learned nothing. I bought the reasonably fuel efficient new car. I'll never buy a new car again. Or truck for that matter. I don't care if Ford is potentially shooting itself in the foot for short term profit. If it works, great. If not say Hi to Pontiac and Plymouth for me.

I'm not convinced that fuel prices will have as much of a negative impact as they did in the past.

The most fuel efficient 2008 F-150 was rated at 14mpg city and 20 mpg hwy

The most fuel efficient 2018 F-150 is rated at 20mpg city and 26mpg hwy

The new Ford Ranger (which is similar in size to the 08 F-150) should beat the 2018 F-150 in fuel economy with 30mpg hwy being a realistic goal.

Similar improvements have occurred with their CUVs/SUVs in that time, and they don't really sell hybrid versions of any of these vehicles at the moment, which can only help.

Robbie said:

I think it's smart. Like if Barnes and Noble had decided to stop selling books in physical stores and instead focused on selling stuff on "the internet".

Ford sees the car market as shrinking, and manufacturers are all killing themselves trying to sell more stuff into a smaller and smaller pool of buyers. Ford decided not to play that losers game anymore.

Change is hard. But trying to fight change is much much harder.

Here's the thing- Toyota makes money selling cars at a price point that is generally higher than anyone else.  And if you look at sales numbers, their higher priced cars consistently lead their market segments- some by a wide, wide margin.

Cars are not going away- B&N sell real books, but they cover the internet market really well- Borders died because they just sold books.

The fault, to me, is not seeing that 1) you can make cars cheaper than Toyota does (which is a fact- both GM and Ford spend less money making their product), and 2) you can pick and choose where to make the cars more valuable to the customers, and where not to make compromises.

Cars are not going away, and Toyota is going to just increase their annual profits supporting that market.  

Picked up my new fleet Fusion at the dealer last night. The sales guy (a rare 'car guy' in the field) chatted with me about business for quite awhile. He stated Ford is going after Toyota. My initial reaction was "Good luck with that" but after a moment I decided setting Toyota as your goal is probably a good idea. You may not achieve your goal but you certainly will improve in an attempt to try.

It is also worth remembering that Ford is not ceasing construction of cars; they are merely not going to offer them in the US. To my knowledge Ford will still be building cars in the UK and Germany at a minimum.

They have to sell what the buyer wants and right now the buyer wants silly crossover style wagons and ginormous SUVs. Pickups have always been a Ford staple (F150 being the top selling vehicle in the USA for practically forever). Nothing much changes with 'real' trucks other than more people buying them to use as cars. The SUV and crossover segment is the one where they are taking an educated gamble.

And there will still be Mustangs, which is all that really matters anyway.

In reply to alfadriver :

Cars may never go away completely, but sales are lagging across the board. Toyota's bread and butter is the Camry in the mid-size segment, and even they are struggling in the current market. That's a 10% drop in sales in the last 2 full years, and they're on pace for only around 350k in 2018 with a brand new, highly regarded model:

Honda Accord sales are down 20% from their peak in 2014. The new critically acclaimed Accord might sell 290k in 2018 if their monthly average continues through the final 2 months of the year:

Meanwhile:

and:

Gary said:

I'm sorry if this has been discussed here previously. I don't remember. But I think it's a serious topic because it could be a harbinger. I've read numerous articles. We all know that after 2020 Ford will stop building cars, except for a minimal few. I have liked Ford "performance" cars since the '89 Escort GT that I purchased new. I since bought a '93 Probe GT new and my current daily driver, my beloved 98.5 Countour SVT. I think the new CEO's decision is based on cheap gas and the expectation that cheap gas will continue. It might not. Then what? Thoughts?

I agree with you and I think that when expensive gas comes back, and American companies are selling nothing but huge trucks (which have historically been unpopular overseas) with particularly loose emissions standards (if things continue on the currently plotted course), it's going to be another Malaise Era:

https://grassrootsmotorsports.com/forum/grm/anyone-else-notice-that-the-stage-is-being-set-for/139189/page1/

In reply to STM317 :

I know that. But the numbers are more than large enough to get sales and make a lot of money. 

200k will run one plant all year and make money, if you do it right. 

In reply to alfadriver :

Simple profitability is not enough for Wall St. They won't stand for modest growth from an established company in a mature market. They want quick bucks and massive growth from potential "disruptors". Everybody wants to find the next tech company whose stock price jumps 500%, and anything less is seen as a disappointment and punished.

In reply to STM317 :

I hate Wall St.  Toyota plays a game that the goal is to make as much money as you can.  And they are winning.  Thanks to Wall St. we are playing a game to make our shareholders happy, and every time we try, we lose, BIG.  Cars and personal transportation are not a real growth industry- you grow at at the rate of population growth, and that's it.  As soon as you accept that, you go into the Toyota long term game, and all of a sudden, you are making products that customers are willing to pay more for, and at the same time- you also the #1 maker.

And to be compared somehow to Alphabet and FB who really make barely any product, when we make and sell over $150B of product, in a market that is saturated with other makers- that's insane.  Let alone the crazyness with Tesla.

Wall Street Sucks.

alfadriver said:

In reply to STM317 :

I hate Wall St.  Toyota plays a game that the goal is to make as much money as you can.  And they are winning.  Thanks to Wall St. we are playing a game to make our shareholders happy, and every time we try, we lose, BIG.  Cars and personal transportation are not a real growth industry- you grow at at the rate of population growth, and that's it.  As soon as you accept that, you go into the Toyota long term game, and all of a sudden, you are making products that customers are willing to pay more for, and at the same time- you also the #1 maker.

And to be compared somehow to Alphabet and FB who really make barely any product, when we make and sell over $150B of product, in a market that is saturated with other makers- that's insane.  Let alone the crazyness with Tesla.

Wall Street Sucks.

Preach brother!  The average joe has no idea how much of an impact the auto industry has to our overall economy.  We could survive without Alphabet and FB, but we would be gutted without Ford, GM and FCA and all the associated suppliers. 

I don't know much about this, but my understanding is that trucks are a much higher profit item than cars.  If car sales are soft relative to trucks, then I don't see it as surprising that Ford would want to push trucks and their higher margins...

alfadriver said:

In reply to STM317 :

Toyota plays a game that the goal is to make as much money as you can.  And they are winning.  Thanks to Wall St. we are playing a game to make our shareholders happy, and every time we try, we lose, BIG.  Cars and personal transportation are not a real growth industry- you grow at at the rate of population growth, and that's it.  As soon as you accept that, you go into the Toyota long term game, and all of a sudden, you are making products that customers are willing to pay more for, and at the same time- you also the #1 maker.

Timely Toyota News They might be playing the game better than Ford, but there's a lot of the same strategy coming out of Toyota these days regarding reducing the number of models offered in the American market, and prioritizing high-margin vehicles.

stroker said:

I don't know much about this, but my understanding is that trucks are a much higher profit item than cars.  If car sales are soft relative to trucks, then I don't see it as surprising that Ford would want to push trucks and their higher margins...

The risk is what do you do with the customers who don't want a truck or SUV?  Let them go someplace else?  And if they are like us- we have one of each- so if they don't sell me a car, when we go SUV shopping- do we also go back to the other companies?

If you want to JUST gor for max profit margin- then we should reduce our total volumes to about 1M/year, and just sell cab off variants- they are super cheap to build, and sell at HUGE margins.  That would give you the best profit margin.  But not the max total profits.

Gary said:

I'm sorry if this has been discussed here previously. I don't remember. But I think it's a serious topic because it could be a harbinger. I've read numerous articles. We all know that after 2020 Ford will stop building cars, except for a minimal few. I have liked Ford "performance" cars since the '89 Escort GT that I purchased new. I since bought a '93 Probe GT new and my current daily driver, my beloved 98.5 Countour SVT. I think the new CEO's decision is based on cheap gas and the expectation that cheap gas will continue. It might not. Then what? Thoughts?

People want to buy trucks.  Catering to what people want is an excellent business model.

It sucks, but it seems that the majority of Americans are weenies.

I informed Ford Customer Service that I most likely have bought my last Ford (FiST) after many years.

 They did reply that they were sorry to hear that.

I know it won't have any effect but it made me feel better.

Current Car Lineup:

Fiesta

Focus

Fusion

C-Max

Mustang

Taurus

(GT)

SUV Lineup:

EcoSport

Escape

Edge

Flex

Explorer

Expedition

Truck Lineup:

Transit Connet

F-150

Transit

Super Duty

Thoughts on:

Current Car Lineup:

Fiesta (Cheap, and the ST model was kinda popular, but its so close in price to the Focus that many moved up to the Focus.) 

Focus (I don't feel it's keeping up with it's competition. The RS is sweet, but $40k cars of today are not like the hot hatches of yesterday. Kids and most young adults dont have that kind of money) 

Fusion (dont care if they kill.)

C-Max (is this really a car?)

Mustang (glad they are keeping)

Taurus (dont care if they key)

(GT) (will they kill this?)

SUV Lineup:

EcoSport (a decent Fiesta replacement)

Escape (a decent small crossover)

Edge (why do they make this?)

Flex (why do they make this also?)

Explorer (replacement for Taurus and Fusion)

Expedition (Suburban/Yukon competitor)

Truck Lineup:

Transit Connect (needs more powa)

F-150 (like a roc...wait...)

Transit 

Super Duty

In reply to STM317 :

How much of the Camry / Accord drop is offset by people buying larger than before Corollas / Civics? I recall when the Accord was smaller than today's Civics...

Fiesta is done at end of year

Focus not far behind, to be followed by something with the same name.

  C-Max is out

   Fusion will hang around awhile.

   Taurus is done

In reply to Knurled. :

truth. I still get a kick out of going to Home Depot and putting 300# of lumber on my e30,s roof rack next to a super duty that hasn’t ever carried anything of substance in its life.

itsarebuild said:

In reply to Knurled. :

 

truth. I still get a kick out of going to Home Depot and putting 300# of lumber on my e30,s roof rack next to a super duty that hasn’t ever carried anything of substance in its life.

 

So many people feel the need to keep up with the Jones’