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Thread: Ford Phasing out Sedans in North America

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    Ford Phasing out Sedans in North America

    Source: AutoVerdict
    April 25, 2018
    by Nick Saporito


    Ford Motor Company has officially announced plans to dismantle nearly its entire car lineup from North America. The announcement, buried in the company's first quarter earnings, confirms recent speculation that stalwarts such as the Ford Fusion and Taurus are dying off.*

    The automaker was very blunt in its confirmation of its plans, saying simply "[will] not invest in next generations of traditional Ford sedans for North America. The statement confirms the death of the Ford Fusion and Taurus, in addition to the already-announced death of the Ford Fiesta.*

    Ford has since also confirmed that only the next-generation Focus Active will arrive stateside, meaning the sedan and hatchback versions of the car will not make their way to the U.S. market.*

    For those keeping count, Ford will be left with only two car models after the current generation Fusion, Fiesta and Taurus die off. Ford dealerships will be left only with the Focus Active and Mustang. The rest of the Blue Oval stable will be filled with utility vehicles and trucks.*

    While on the surface this move appears drastic, it comes as little surprise. Sedan sales across the industry have been falling off the proverbial cliff in the last two years as consumers flock to utility vehicles. Ford and other automakers have been left to make very difficult decisions regarding their future car lineups.*

    In Ford's case, these difficult decisions mean killing off nearly ever car nameplate.*

    Read full article at AutoVerdict

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  2. #2
    Senior Member Tone's Avatar
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    The internet seems to be panicking about this, but not only does this seem rational to me -- I think people aren't necessarily reading it right. Really, Ford is getting out of the low-margin product business in North America (as are FCA and GM) and there's several longer-term trends driving that: particularly demographics and the current EPA rules.

    First: demongraphics. For eons, we had a population pyramid, with lots of young people at the bottom, and people slowly dying off, leaving fewer and fewer old people. The post-war baby boom created a pyramid on steroids, with a huge generation (the baby boomers) who shaped the car market for the last 60 years.

    In the 1960s as Americans became more prosperous and boomers came of driving age, the auto market changed from selling large volumes of predominantly one kind of car (large, RWD, body-on-frame, in couple, sedan, wagons and convertibles) to selling a whole range of cars to meet different wants/needs in growing, multi-car families. Among them were a lot of new variants aimed at the growing youth markets. Yes, that included high margin muscle and pony cars. But, young people generally don't have a ton of money. And, carmakers wanted to earn the business of this growth market early. So, a lot of small, cheap, low-margin cars came to market. US carmakers didn't make money on them. But, they needed to capture the business of these young people and the high volume made even small margins viable.

    In the mid-1970s the US created fuel economy regulations -- CAFE -- that meant that carmakers needed to hit average fuel economy goals for their fleets. To sell high-margin, high fuel consumption vehicles, they also needed to sell low-margin, low fuel consumption vehicles. Given the number of young people in the market (and the rising price of gas) that was an acceptable trade-off. Chevettes, Pintos and Champs may not have made much money, but they enabled the no-fine sale of Corvettes, Trans Ams, Continentals and New Yorkers that did.

    Thus, the US industry go used to making small cars that didn't make much money -- an otherwise odd thing for a business to spend much time on!

    When the time came to update the EPA rules, the Obama administration wanted to deal with an industry complaint: that CAFE forced automakers to produce cars that Americans didn't want to buy. So, they came up with a fairly complex regulation that put in place fairly ambitious fuel economy targets, but based them on the size of the platform of the vehicle. Larger vehicles needed to get much better fuel economy in the future too, but the average an automaker needed to hit changes depending on what they sell. So, there is less of a need today to sell a bunch of low-margin Fiestas so you can sell high-margin Explorers. Under the new rules, as long as the Explorer was also efficient (according to the targets) you can sell as many Explorers (and as few Fiestas) as the market wants. The argument was that it would force automakers to make ALL their vehicles more efficient and allow people to buy a (more efficient) vehicle that suited their needs.

    At the same time, better health care, and awareness of diet and exercise, allowed people to live longer. And, the average number of children in each family fell. The consequence: right now, we are in the middle of a demographic shift from a pyramid (inverting as the baby boomers age) to a cylinder, with a fairly even number of people in each age bracket. There are no longer an outsized number of young people who need/want small, cheap cars. If trends continue, millennials will age and behind them will be a 'demographic cylinder'.

    So, the regulatory reason for building smaller, more fuel efficient cars had fallen by the wayside. Instead, automakers are focused on making vehicles they think they can sell more efficient, meaning we are entering the world of the mid-20 mpg, 5000 lb pickup. And, there is no longer a huge, growing market of young people looking for cheap cars. To succeed, cars now have to appeal to a broader group of people. And, all of that frees up US automakers to focus their attention only on markets where they think they can make money. Right now, that's not mass-market sedans and hatchbacks.

    But, notice that the Mustang, a relatively low volume car (compared to the Fusion) and on its own (probably expensive) platform managed to survive. I'm guessing that's because the overall margins on the Mustang are probably pretty decent. Sure, there are $26K Mustangs, but these are emotional buys and most seem pretty optioned out. And, unlike the Fusion, people are willing to pay nearly $60K for a special Mustang (the Shelbys, for example). So, even though it sells about half of Fusion, the Mustang gets to stay.

    Enthusiast cars in general seem to offer pretty decent margins. We're car people and we'll pay to get something we want. Platforms are getting very flexible -- the new Focus platform can apparently cover a pretty significant range of sizes. And, Ford supposedly has a mid/large size platform that can accommodate FWD, RWD or AWD. So, I suspect that some of the potential 'white spaces' might be vehicles that enthusiasts might like.

    We'll see if I'm right :-)
    Last edited by Tone; 04-25-2018 at 10:13 PM.

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    Senior Member 2b2's Avatar
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    I have a couple qualms^
    - about the post-WWII baby boom VS the post-Aquarius falling birth rate = more complex
    - about the Mustang surviving ...simply[or mainly] cuz a FORD likes them, imho

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    Junior Member jgill16's Avatar
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    But isn’t the Ford Fusion one of their best sell sedan.

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    Senior Member 2b2's Avatar
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    Dec & Full 2017 [sorry just partly formatted - crashing]
    Fiesta ---- 3,657 --- 3,772 -3.0 --- 46,249 --- 48,807 -5.2
    Focus -- 11,237 - 10,242 +9.7 -- 158,385 - 168,789 -6.2
    C-MAX--1,416 2,184 -35.2 18,390 19,834 -7.3
    Fusion - 17,444 - 19,132 -8.8 -- 209,623 - 265,840 -21.1
    Taurus--2,719 3,435 -20.8 33,242 34,626 -4.0
    Police Interceptor Sedan--675 666 +1.4 7,994 9,472 -15.6
    GT -- 90 N/A 890 N/A
    Mustang - 7,714 -- 7,064 +9.2 -- 81,866 -- 105,932 -22.7
    Ford Cars-44,871 - 46,495 -3.5 - 555,838 - 653,300 -14.9

  6. #6
    Senior Member Tone's Avatar
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    Quote Originally Posted by 2b2 View Post
    I have a couple qualms^
    - about the post-WWII baby boom VS the post-Aquarius falling birth rate = more complex
    - about the Mustang surviving ...simply[or mainly] cuz a FORD likes them, imho
    Regarding demographics and the shift from a youth-heavy to a more evenly distributed population:


  7. #7
    Senior Editor arutherford's Avatar
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    I think the Fusion will come back and bite them.

    They could easily make it in Mexico and export to Mexico now with their new trade agreement.

  8. #8
    Senior Member Tone's Avatar
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    Quote Originally Posted by arutherford View Post
    I think the Fusion will come back and bite them.

    They could easily make it in Mexico and export to Mexico now with their new trade agreement.
    My sense is that the NA auto market is starting to shift away from looking like TV in the 1990s -- when there were a lot of people watching blockbuster sitcoms like Friends or Seinfeld (the Fusion, in this metaphor) and more like today's viewing environment, where smaller groups of passionate viewers binge-watch Game of Thrones or The Handmade's Tale (what Ford might start peppering it's line with). With the new flexible platform under the Focus and the rumoured CD6, Ford with have the ability to make a wide range of cars -- and potentially sell them profitably in smaller numbers.

    Their volume base will come from the F150, the Escape and Explorer. The rest will need to be high-margin and attract a passionate buyer. That's clearly going to include ST models of some of the CUVs -- I'm trying to keep an open mind on those. But, given the platform flexibility, one could imagine some pretty interesting niche vehicles: a Stinger competitor/companion for the Mustang? A Focus Active RS that is a true rally car for the street: think Raptor meets Subaru STi? Some kind of electric performance car (the rumoured Mach 1). If they can pepper their line up with a range of high-margin, interesting cars, they might make more profit AND have more to offer enthusiasts. Yes, I'm being an optimist here; it's just as likely that Ford will be all-trucks/CUVs, all the time (+Mustang).

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    Senior Member 2b2's Avatar
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    Quote Originally Posted by Tone View Post
    ...With the new flexible platform under the Focus and the rumoured CD6, Ford with have the ability to make a wide range of cars -- and potentially sell them profitably in smaller numbers...
    I've been waiting a long time for "computerization" to lead to easy-customization during the production process
    [Yes, we CAN]

    Quote Originally Posted by Tone View Post
    ...Their volume base will come from the F150, the Escape and Explorer. The rest will need to be high-margin and attract a passionate buyer...
    ...given the platform flexibility, one could imagine some pretty interesting niche vehicles: a Stinger competitor/companion for the Mustang? A Focus Active RS that is a true rally car for the street: think Raptor meets Subaru STi? Some kind of electric performance car (the rumoured Mach 1). If they can pepper their line up with a range of high-margin, interesting cars, they might make more profit AND have more to offer enthusiasts. Yes, I'm being an optimist here; it's just as likely that Ford will be all-trucks/CUVs, all the time (+Mustang).
    I'd find it very interesting if a only very-small number of base-trim models were available ... leading to HUGE dealer mark-ups on the Least-desirable, just due to rarity

  10. #10
    Senior Member megeebee's Avatar
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    Quote Originally Posted by arutherford

    They could easily make it in Mexico and export to Mexico now with their new trade agreement.
    "Good afternoon and thank you for calling The White House. How may I direct your call..."

    Think they'll leave a hole big enough in "THE WALL" for a few sedans to get through?

    Or they' can build in China like the next Focus.

    The next "Continental" will likley be CHY-NEE .......(Was that racist?) and imported to the US.

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