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Ford shows 2020 vision as it slashes 2014 profit projections

Ford Motor Company wants to grow its global sales by about 50 per cent from 6.3 million units in 2013 to 9.4 million units by 2020 and charge ever harder down a path of platform-sharing and increased vehicle commonality. 


The company 2020 Vision plan revealed overnight — about three months into Mark Fields’ tenure as Ford president and CEO — also lays down a need to improve its operating margin, yield more balanced geographic profitability, and push its ailing Lincoln brand into China. 

Lincoln, like GM’s Cadillac, has had some hard times. Ford wants this potential profit centre to triple sales to 300,000 by 2020, push hard into China and grow its number of offerings with two entirely new models. 

While already in a fairly strong financial position, the world’s fourth-biggest car maker behind Toyota, GM and Volkswagen AG envisions a product-led growth spurt. The company plans to refresh its global product portfolio one-and-a-half times through the end of the decade.

Ford is currently on plan to have 99 per cent of its global sales volume built on nine platforms by 2016 and is furthering its strategy by consolidating its long-term product plan to eight platforms.

However, in the here and now, the company has been dealt a blow and has had to slow down for a proverbial speed hump.

The Vision plan also included a section in which Ford scaled back its forecast 2014 pre-tax profits to about $6 billion (was previously $7-8 billion) due to US recalls, weakened volume in South America and sanctions in Russia, causing its shares to close about 8.0 per cent lower on the day.

The company spun this as a result of circumstance, therefore, but projects it will bounce back in a big way next year,  a year in which it bares fewer costs from the launch of new models. 

Ford is launching a significant 23 new models globally this year — headlined by the Mustang and F-150 — compared with 16 in 2015, a year in which it expects to reap the benefits of the groundwork laid this year with a projected profit forecast before tax of up to $9.5b.  

The Blue Oval expects industry sales volumes to grow overall in 2015. The company projects US industry sales between 16.8 million and 17.5 million. In Europe, sales are expected between 14.8 million and 15.3 million. In China, they are expected to increase to between 24 million and 26 million.

“Those vehicles will target a diverse set of customers, from value buyers in developing regions to luxury customers in the US and China and truck and utility customers globally,” the company claims.

The company unsurprisingly projects its small vehicles such as the Fiesta, Focus, EcoSport, Figo, Ka and (Australian-developed) Escort will grow in earnest, but also expects strong growth from its global crossovers such as the Edge (likely our Territory replacement) and Explorer

Interestingly, Ford says it will expand its use of military-grade aluminium, which it controversially uses on its new F-150, to its US-market Super Duty ute line from next-generation.

Ford will additionally continue to grow its presence in Silicon Valley by expanding its Palo Alto Research and Innovation Centre, saying it wants to lead the “research and development of in-car connectivity and automated driving technologies”.

Crucially, Ford outlined the importance of lifting the rest of its global divisions to match the US, its major profit centre in recent times. Decisions such as the shuttering of the Ford Australia plant in 2016 are designed to streamline each region outside it homeland. 

At present, the vast bulk of its global profit comes from the US and its Ford Credit finance arm. Ford of Europe, South America, Middle East and Africa, and Asia Pacific (including Australia) need to pull their weight a little better, the company says. 

“Ford anticipates that, by 2020, all five automotive business units and Ford Credit will contribute to the company’s profitability,” the company said in a statement. 

“Today, the company’s profits are more than explained by North America and Ford Credit, with growing profits in Asia Pacific, while it continues transforming its Europe, South America and Middle East & Africa operations.”

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