Just so there can be more SUVs

Just a week ago Ford Announced that it would be cutting a number of its products in order to recover from its falling profit Margins. What products will be cut remains to be seen, however, we’ll get full disclosure about the product cuts later this year. While nothing is certain, models like the Ford Taurus, C-Max, and even the Lincoln MKZ are all suspect with low sales numbers and falling interest. Of course, Ford is on a mission to cut out $14 billion in costs, and the SUV craze is going strong, so this shouldn’t be much of a surprise. There’s a lot more to it, though, so keep reading to find out more.

2017 Lincoln MKZ High Resolution Exterior
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Part of this plan includes cutting costs amounting to $14 billion, as well as simplifying orderable products

Ford CEO Jim Hackett didn’t divulge more details about the product cuts, but the temperature within Ford suggests that the company is keen on adopting Hackett’s plan to build “smart vehicles for a smart world.” Part of this plan includes cutting costs amounting to $14 billion, as well as simplifying orderable products, and streamlining the entire model lineup to feature higher-margin segments that can be profitable in all parts of the world.

The company’s chief financial officer, Bob Shanks, said that the company’s 2017 pretax profits fell 19 percent to $8.4 billion. That reduced the company’s operating profit margin to five percent from 6.7 percent in 2016. In addition, the company’s fourth-quarter adjusted pretax profits also fell 19 percent to $1.7 billion, a product of higher of steel and aluminum prices, as well as adverse currency rates. The company’s fortunes in Europe weren’t all that different as its pretax profit dropped by an incredible 66 percent to just $56 million in the fourth quarter. The numbers are worse for the entire year as the company’s pretax profit fell by a staggering 81 percent to just $234 million.

Some things needed to change for Ford to reverse the negative momentum. It just so happened that small cars will pay the price for that. Ford’s new direction adds weight to persistent rumors of the demise of Ford’s sedans. Last month, rumors surfaced that Ford was seriously considering cutting the Fusion sedan from its U.S. lineup. Sales of the sedan are still strong, but they’ve dropped significantly relative to its sales volume in past years. The Fusion example is a small sample of a growing trend throughout the industry. Sedans are losing their appeal because more customers now prefer crossovers and SUVs.

2014 Ford Fusion Exterior
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The numbers are worse for the entire year as the company’s pretax profit fell by a staggering 81 percent to just $234 million.

That said, small cars aren’t going to be completely extinct from Ford’s global lineup. The Fusion, for example, will still be sold in the Chinese market. The European market will also still get its share of small cars, beginning with the new Focus hatchback, which is scheduled to debut later this year. But for the most part, these small cars will likely play supplementary roles to crossovers, SUVs, and self-driving cars that Ford’s planning to turn into the foundation of its vehicular lineup.

References

Ford Taurus

2013 Ford Taurus High Resolution Exterior
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Read our full review on the 2017 Ford Taurus.

Ford C-Max

2013 Ford C-Max Exterior
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Read our full review on the 2017 Ford C-Max.

Ford Fusion

2014 Ford Fusion High Resolution Exterior
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Read our full review on the 2017 Ford Fusion.

Lincoln MKZ

2017 Lincoln MKZ
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Read our full review on the 2017 Lincoln MKZ.

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Read more Ford news.

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