Ford will abandon the Focus and Fusion sedans in North America



NEAL E. BOUDETTE

News Service of the New York Times,

10:49 AM

DEARBORN, Mich. – Ford Motor Co. replaced its executive director a year ago, handing over the job to Jim Hackett. But it may be another year before the company begins to show clear signs of a rebirth under the new boss.

On Wednesday, the automaker said it was accelerating efforts to reduce costs and planned to stop manufacturing the Focus, Fusion and other sedans for the US market in an attempt to change its fortunes both at home and abroad. Foreign.

Ford said it expected to reduce sales, marketing, engineering and other costs by $ 11.5 billion between 2019 and 2022. That's above about $ 14 billion in efficiencies the company had already promised to achieve in the next years.

The company is also considering leaving or selling operations with monetary losses in Europe and South America, said CFO Robert L. Shanks, reporters. Ford expects the measures will allow it to achieve a global profit margin of 8 percent by 2020, two years ahead of what it previously predicted, he said.

"We are undergoing a profound transformation," Shanks said, "and we are committed to taking decisive action."

He cautioned, however, that measures to save costs would not have much effect on the bottom line until the second. half of 2019, when new sport utility vehicles are expected to arrive to help drive profits.

Ford has been criticized by Wall Street analysts for offering few details about Hackett's strategy for the company. In a conference call on Wednesday, the chief executive said Ford will describe a complete restructuring plan for investors and analysts on September 26.

News of the restructuring plans came when Ford reported new signs of difficulty in the first quarter of 2018.

Net income amounted to $ 1.7 billion, an increase of $ 100 million with respect to the same last year's period, and earnings increased to 43 cents per share, an increase of 3 cents. But the company's profit margin fell to 5.2 percent from 6.4 percent the previous year. Earnings before taxes fell to $ 2.2 billion from $ 2.5 billion. And in every region of the world, Ford reported either a decrease in profits or a loss.

In North America, the pre-tax profit of Ford's largest and most important region was $ 1.9 billion, $ 200 million less than a year earlier. Its margin in North America fell to 7.8 percent from 8.9 percent.

Shanks said that operations in North America were affected by the rising costs of commodities such as steel and aluminum.

Ford has planned cost reductions to revitalize its operations in North America The company expects its profit margin in North America to increase to 10 percent by 2020, Shanks said. In additional savings, Ford now plans to reduce its capital expenditures between 2019 and 2022 to $ 29 billion; I previously expected to spend $ 34 billion at that time.

The demise of the sedan business in the United States is a momentous change for Ford. Just a decade ago, the compact Focus and median Fusion spearheaded an effort to provide elegant and fuel-efficient cars as gasoline prices rose.

But Americans are abandoning sedans and choosing trucks and SUVs. Shanks said the lines of business that lose money were mainly smaller vehicles. Within a few years, Ford will offer just two cars in the United States: the Mustang sports car and a new Focus variant in the shape of an SUV, Hackett said. Fiat Chrysler dropped its small and mid-size cars in North America two years ago, and has thrived by increasing truck and Jeep sales.

Ford plans to introduce several new trucks and SUVs in the next three years. They will be available in both gasoline and battery versions.

"Ford realized that it can not be everything for everyone, and in the current market that could be fine," said Jessica Caldwell, senior analyst at Edmunds.com, a self-reporting website. While SUVs and trucks generate profits richer than cars, Ford will likely lose part of the market when it leaves the car business, he said.

Just two years ago, Ford was one of the most profitable companies in the global automotive industry, thanks to part of the solid sales of its aluminum body F-Series trucks. But since then, Ford has been slow to launch the new types of SUVs that have gained favor among American consumers, and allowed costs to rise.

Last May, Ford's board called Hackett, former chief executive of the office, furniture maker Steelcase, which had been directing Ford's new business related to autonomous vehicles, to put the company in shape . He has presented plans to introduce several new SUVs, as well as a wide range of electric vehicles, and so far had given few details about the financial goals he planned to achieve, and how.

Ford took action on Wednesday to strengthen its operations in China, a key overseas market, where sales have been declining. Instead of maintaining two dealer networks that sell separate lines of Ford vehicles, their dealers in China will now sell all Ford products available in the country.


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