Ford aims to prioritise SUVs and Trucks over Cars to cut cost

When it comes to manufacturing trucks, SUVs and cars in general, Ford has always been on the fore front with other car makers for decades.

But it seems there has been more sales of SUVs and Trucks recorded by Ford, compared to its cars. And it seems the company is also having a tough time keeping up with motor industry trends like electric cars, autonomous and self-driving cars for instance, hence the urgent need to invest more in that area. Wadap Tesla!. 

So, the new chief of Ford plans to make the company "lean and flexible" by taking money away from car production and other cost reduction programs and pumping them back into electric car manufacture.

In a meeting with its investors in New York just recently, Jim Hackett Ford’s CEO, says the company needed to make some changes in line with the motor industry trends, car-sharing to self-driving vehicles, shift to electric cars.

Outlining his plans, he said that he aims to make the company lean and flexible. Jim took over as CEO in May 2017 after former CEO Mark Fields was ousted in May.

Here are some of the highlights for his meeting;

• Reallocate $7 billion of capital from cars to SUVs and trucks, including the Ranger and EcoSport in North America and the all-new Bronco globally;
• Continue to leverage partnerships, remain active in M&A and collaborate to accelerate R&D. The company recently announced it was exploring a strategic alliance with Mahindra Group as it transforms its business in India, and Zoyte with the intention of developing a new line of low-cost all-electric passenger vehicles in China. When it comes to autonomous vehicle development, the company recently announced a relationship with Lyft to work toward commercialization and a collaboration with Domino’s Pizza to research the customer experience of delivery services;
• Cut $4 billion in engineering costs through 2022 by making fewer prototypes and reducing product-development time
• Reduce automotive costs by 50 per cent (approximately $14 billion) through 2022. As part of this, the company is targeting $10 billion in incremental material cost reductions. The team also is reducing engineering costs by $4 billion from planned levels over the next five years by increasing use of common parts across its full line of vehicles, reducing order complexity and building fewer prototypes
• Expand electric vehicle revenue opportunities. The company recently announced a dedicated electrification team within Ford, focused exclusively on creating an ecosystem of products and services for electric vehicles and the unique opportunities they provide. This builds on Ford’s earlier commitment to deliver 13 new electric vehicles in the next five years, including F-150 Hybrid, Mustang Hybrid, Transit Custom plug-in hybrid, an autonomous vehicle hybrid, Ford Police Responder Hybrid Sedan, and a fully electric small SUV.

“When you’re a long-lived company that has had success over multiple decades the decision to change is not easy – culturally or operationally,” Hackett said. “Ultimately, though, we must accept the virtues that brought us success over the past century are really no guarantee of future success.”

What do you think of this move by Ford?