Ford considering all options for loss-making areas

The automotive world is still digesting Ford's bombshell announcement that Ford will axe all traditional passengers cars from its US range, except for the Mustang and the upcoming Focus Active pseudo-crossover.

According to Automotive News, Bob Shanks, Ford chief financial officer, said the company is considering all options for parts of the company which are destroying value. This includes traditional passenger cars, "most Lincoln products", and sections of Ford's non-American business.

Last year, Ford made a pre-tax profit of US$7.3 billion ($9.6 billion). The company turned a profit in North America (US$7.5 billion or $9.9 billion), Europe (US$234 million or $309 million), and the Asia Pacific (US$561 million or $740 million).

Regions where Ford lost money include South America (US$784 million or $1 billion), and the Middle East and Africa (US$263 million or $347 million).

The automaker is looking to find US$25.5 billion ($33.6 billion) in savings by 2025, up from an earlier target of US$14 billion ($18.5 billion).

Dealers in the US have voiced their concerns about ceding large swathes of the vehicle market, as well as a lack of product to keep buyers away from still-popular small cars, such as the Honda Civic and Toyota Corolla, and mid-size vehicles, like the Honda Accord and Toyota Camry.

Analysts have also expressed concern going all-in with crossovers, SUVs and trucks leaves Ford highly exposed to any change in consumer taste, a downturn in the economy, or a surge in the price of oil.

Jim Farley, Ford's head of global markets, told the industry publication Ford intends to serve the same buyers, and at same price points as today.

"What's changed here is just the format of the vehicle. Our dealers will have just as much opportunity to grow, just with a different portfolio," Farley said.

"We think we can tempt some of those [traditional passenger car] customers with an image upgrade. Where Ford does best is where we play to our strength of emotional products."

The company's critics have pointed out how previous CEO Alan Mulally added the Fiesta, Focus and other fuel efficient models to the US range as Detroit's Big Three automakers suffered in the late noughties from the combined blow of an economic slow down, high petrol prices, and a decade or so of over-reliance on the profits from thirsty SUVs and pickup trucks.

Both GM and Chrysler had to go through government-funded bankruptcy proceedings, and Ford skirted close to the edge.

In his interview with Automotive News, Farley countered the industry has "fundamentally changed" since then. Not only are crossovers and SUVs a larger proportion of the market now, but they're also far more efficient than before.

As an example, Farley calls out the similarly priced 1.5-litre turbocharged variants of the Fusion and Escape. According to the United States' EPA, the Fusion has a fuel economy rating of 8.7L/100km, while the Escape drinks 9.0L/100km.

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