Ford to discontinue all except two cars from the U.S. market

26 April, 2018, 12:44 | Author: Lora Ball
  • Ford Motor Company - F - Stock Price Today - Zacks

Specifically, Ford said that it will cut its North American auto offerings to two vehicles: the Mustang and Focus Active crossover, which presumably spells the definitive end of the Focus sedan in the United States.

Ford's North American pretax profit fell 9.2 percent to $1.94 billion, with commodity costs accounting for more than the entire decline.

Ford's shares traded up about 2.2% in after-hours trading Wednesday at $11.35 after closing at $11.11, in a 52-week range of $10.14 to $13.48.

President Donald Trump's announcement to impose a tariff of 25% on steel and 10% on aluminum comes at a tough time for US automakers, which have faced flattening sales in recent months.

It will go forward with only two cars in its lineup: the Mustang and a new hatchback called the Focus Active that will take the place of the current Focus compact. Its global profit margin was 5.2 percent in the quarter, as higher commodity costs reduced earnings in North America.

Ford is pretty serious about trimming its United States lineup in the coming years, and that's bad news for anything that isn't a truck or SUV. "We are driven to turn this business around". Crossovers and SUVs have quickly come to represent more than half of the total industry's USA sales, while sedans and small cars have been sinking.

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Shanks said the automaker is focused on building great new products to maximize revenue while reducing incremental cost.

Shanks suggested that Ford could reduce investment in certain geographic regions or exit them completely if it did not see adequate returns on the horizon.

Ford said it has found another $11.5 billion in cost cuts and efficiencies, bringing the total to $25.5 billion expected by 2022. The company previously predicted $14 billion in cuts by 2022.

But the market in the USA has shifted to larger vehicles that consumers perceive as safer; Ford's decision to pare down their model offering to trucks and sports cars appears to be servicing the demand it sees directly ahead of it.

Shanks said Ford is "unleashing the creativity of the teams to challenge norms, challenge conventions". It lost $149 million in South America, 37 percent less than in the first quarter of 2017, and earned $119 million in Europe, down 43 percent. Ford is choosing the "much higher-performing" [in terms of profitability] utilities and not "traditional-silhouette sedans that tend to be commoditized".

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