Ford planning to shed most of North American car lineup

The changes include getting rid of all cars in the region during the next four years except for the Mustang sports car and a compact Focus crossover vehicle, CEO Jim Hackett said as the company released first-quarter earnings.

Posted: Apr 26, 2018 7:53 AM
Updated: Apr 26, 2018 9:56 PM

DEARBORN, Mich. (AP) — Ford Motor Co. said Wednesday it will shed most of its North American car lineup as part of broad plan to save money and make the company more competitive in a fast-changing marketplace.

The changes include getting rid of all cars in the region during the next four years except for the Mustang sports car and a compact Focus crossover vehicle, CEO Jim Hackett said as the company released first-quarter earnings.

The decision, which Hackett said was due to declining demand and profitability, means Ford will no longer sell the Fusion midsize car, Taurus large car, CMax hybrid compact and Fiesta subcompact in the U.S., Canada and Mexico.

Exiting most of the car business comes as the U.S. market continues a dramatic shift toward trucks and SUVs. Ford could also exit or restructure low-performing areas of its business, executives said.

The company has found another $11.5 billion in cost cuts and efficiencies, bringing the total to $25.5 billion expected by 2022, Chief Financial Officer Bob Shanks told reporters. Savings will come from engineering, product development, marketing, materials and manufacturing. The company previously predicted $14 billion in cuts by 2022.

One-third of Ford's belt-tightening will come by the end of 2020, Shanks said.

"We're starting to understand what we need to do and making clear decisions there," Hackett said.

Ford also promised to raise its operating profit margin from 5.2 percent to 8 percent by 2020, two years earlier than a previous forecast. That includes a 10 percent pretax margin in North America.

The company said its first-quarter net income rose 9 percent due largely to a lower income tax rate.

Ford made $1.74 billion from January through March, or 43 cents per share, compared with $1.59 billion, or 40 cents per share a year ago. Revenue rose 7 percent to $41.96 billion.

Earnings and revenue beat Wall Street estimates. Analysts polled by FactSet expected 41 cents per share on revenue of $36.78 billion. As usual, North America drove Ford's profits for the quarter with pretax earnings of $1.9 billion.

Pretax automotive earnings fell $443 million to $1.7 billion, mainly due to higher metals costs such as steel and aluminum.

Investors reacted favorably to the earnings. Ford stock rose nearly 3 percent in after-hours trading Wednesday to $11.40. Through the close of regular-session trading Wednesday, it has fallen about 11 percent so far this year.

The cost savings will come by optimizing digital marketing and discounts on vehicles, as well as putting multiple vehicles on five flexible global architectures in the next few years. The company currently builds vehicles on nine platforms that aren't as flexible.

Shanks said Ford is "unleashing the creativity of the teams to challenge norms, challenge conventions." Cuts and efficiencies are not done yet, he said.

Ford will cut $5 billion from capital spending from 2019 to 2022, reducing it from $34 billion to $29 billion. The company will spend less on low-performing areas such as cars. It identified Lincoln as a low-performing area but Shanks said sales are growing and the brand is not in jeopardy. More capital will be allocated to higher performing areas such as trucks and sport utilities, he said.

Lower-performing areas will be targeted for restructuring and some areas could be targeted for "disposition," Shanks said. Shanks defined disposition as a different business model, efficiency improvements, exiting or downsizing. "Whatever it takes," he said.

Shanks wouldn't say if employees would be cut but said nothing is off the table.

Executives talked about the need to further improve operations in Europe and South America.

"We'll restructure as necessary and we'll be decisive," Hackett said.

___

This story has been corrected to read that Ford will shed all but two car models over the next four years, not the next two years.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 755401

Reported Deaths: 8531
CountyCasesDeaths
Hennepin1513291905
Ramsey62614972
Dakota56158520
Anoka53010513
Washington33145327
Stearns27922252
St. Louis23178352
Scott21316159
Wright20879170
Olmsted17821118
Sherburne15232111
Carver1336954
Clay1006598
Rice9855131
Blue Earth949559
Crow Wing9254105
Kandiyohi819195
Chisago816662
Otter Tail7807104
Benton7363108
Beltrami633276
Mower631740
Douglas616189
Goodhue603683
Winona603653
Itasca596978
McLeod580868
Steele572425
Isanti558172
Morrison541565
Becker518762
Polk502577
Freeborn480842
Nobles477052
Lyon444456
Carlton438666
Nicollet423051
Pine419930
Cass413142
Mille Lacs403565
Brown398846
Todd389336
Le Sueur378331
Meeker350452
Waseca322629
Martin316534
Wabasha28495
Hubbard283644
Dodge26819
Roseau258924
Fillmore236312
Redwood234143
Wadena230229
Houston229017
Renville224249
Faribault214630
Pennington213227
Sibley204512
Cottonwood193027
Kanabec187130
Chippewa185839
Aitkin178442
Watonwan168711
Pope15328
Rock153219
Yellow Medicine151120
Jackson144114
Koochiching137219
Clearwater133318
Swift132619
Pipestone131627
Marshall131419
Murray131310
Stevens122311
Lake106221
Wilkin100214
Lac qui Parle95024
Mahnomen86312
Norman8459
Big Stone7874
Grant7669
Lincoln7525
Kittson59522
Red Lake5769
Unassigned528124
Traverse5005
Lake of the Woods4524
Cook2420

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 467281

Reported Deaths: 6685
CountyCasesDeaths
Polk73698716
Linn28680379
Scott24441271
Black Hawk20130355
Woodbury18854242
Johnson17800100
Dubuque15577228
Pottawattamie14073197
Dallas13894107
Story1275148
Warren763496
Webster6876111
Cerro Gordo6816107
Clinton6814100
Des Moines657893
Marshall635484
Muscatine6294113
Wapello5807136
Jasper571478
Lee560787
Sioux560276
Marion499791
Buena Vista489745
Plymouth459187
Henry378647
Jones365160
Washington362255
Bremer353867
Benton352056
Boone344837
Carroll341753
Crawford337345
Mahaska313656
Dickinson297651
Clay274631
Buchanan274239
Jackson270445
Kossuth269373
Hardin266448
Tama261476
Fayette253848
Delaware253444
Cedar246326
Page244827
Wright240945
Winneshiek230837
Hamilton228553
Floyd216744
Harrison215277
Madison214325
Clayton210058
Poweshiek206840
Iowa204229
Butler203237
Jefferson197340
Mills197227
Allamakee192952
Cherokee191943
Lyon190641
Cass190557
Winnebago185432
Hancock184739
Calhoun184115
Appanoose175950
Shelby174239
Louisa169651
Grundy167937
Emmet163842
Franklin163328
Humboldt161826
Mitchell161843
Union159437
Chickasaw156418
Sac156323
Guthrie154034
Palo Alto140831
Clarke140028
Montgomery138941
Keokuk137534
Monroe131534
Howard125422
Ida116641
Davis113825
Greene113712
Lucas112224
Pocahontas109323
Monona107436
Worth10678
Adair103634
Osceola91117
Fremont83711
Van Buren82721
Decatur81212
Taylor78612
Wayne72024
Ringgold66827
Audubon64514
Adams4984
Unassigned150
Rochester
Clear
50° wxIcon
Hi: 68° Lo: 37°
Feels Like: 48°
Mason City
Clear
45° wxIcon
Hi: 69° Lo: 36°
Feels Like: 41°
Albert Lea
Partly Cloudy
50° wxIcon
Hi: 69° Lo: 35°
Feels Like: 50°
Austin
Partly Cloudy
45° wxIcon
Hi: 68° Lo: 33°
Feels Like: 45°
Charles City
Partly Cloudy
52° wxIcon
Hi: 69° Lo: 35°
Feels Like: 52°
Plenty of sunshine through the weekend
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Our Lady of Guadalupe statue returns

Image

Breast cancer awareness walk

Image

Full Sunday Forecast 10/17/21

Image

Afghan Evacuee Coat Drive

Image

Cans For Kids Event

Image

ROCHESTER RECORD SHOW

Image

RONALD MCDONALD CANS FOR KIDS

Image

THE LANDING FOOD AND CLOTHING DRIVE

Image

Full Saturday Forecast 10/16/21

Image

Growing ghouls grab hallowing candy during "Trunk or Treat Fall Festival"

Community Events