Would Ford Be In Trouble IF $4 - 5 Gas Comes Back

[emu steve]

Dead U.S. company walking?

http://money.cnn.com/2018/04/25/auto...ica/index.html

[Dan Wesson]

Ford? More like the whole shebang.
Don't believe the hype. Things aren't that solid for a lot of people and sectors.

[Cincinnati_Kid]

I think they're making a huge mistake, cutting back on cars. At least keep the Fusion. I understand nobody is buying the Taurus, it's sales have really tanked. The Detroit 3, makes huge profit margins on trucks and SUV's, but, gas is already approaching $3 dollars a gallon, and with all the turmoil with the markets fluctuating, and potential interest rate increases, you never know what uncertainy lies ahead. Those same people who bought them will be trading them in, if gas prices climb back to recession levels. This movie has been played before. Just my take.

[401don]

It's really sad. I was shocked when Chrysler exited the compact and mid-size mkt just last year and now Ford won't produce one 4-door sedan? Who wants to go to an auto show and look at boring crossovers that are all the same?

[emu steve]

I'm going to try to go 'outside the box' [[or outside the vehicle).

Would 4 - 5 buck gas lead to a motor vehicle 'revolution' [[not evolution) which would favor electric vehicles and everyone scrambles with the new market place with a relatively small number of electric vehicles.

[aj3647]

The Detroit 3, makes huge profit margins on trucks and SUV's, but, gas is already approaching $3 dollars a gallon, and with all the turmoil with the markets fluctuating, and potential interest rate increases, you never know what uncertainy lies ahead.

There's also the very real and increasing possibility that we may be at war with Iran sometime in the next 12 months. If that happens, Iran can essentially shut down the flow of oil out of the Persian Gulf and gas prices will effectively double.

[Shai_Hulud]

I was shocked when I heard this on the radio. Seems like memories are short. Last time gas prices spiked the big 3 got slammed when the SUVs stopped selling and were caught with their pants down because the cars were noncompetitive.

Although, I imagine many of the new crossovers, which are scarcely more than taller cars, aren't materially worse on gas than sedans and they certainly are popular. Ford knows better than I do, and I know they can't just "reduce production" on a bunch of vehicles and keep plants running.

[Johnnny5]

Ford has an easy [[And kind of shady) ulterior motive/backup plan. Ford still plans on designing, building and marketing small cars such as the Focus and Fiesta for overseas markets. If gas prices do rise to the point where Americans show interest in them again it's as easy as making some minor changes for U.S safety codes and then importing them in masse.

They're killing two birds with one stone here. They are eliminating the production of low margin vehicles here in the U.S and at the same time they are prepping for a mass transfer of vehicle production to low wage countries such as China when buyer sentiment changes. By doing it this way they are lessening the public backlash they would receive by directly moving production on a particular model from here to China.

[mikeg19]

Ford is so late to the small truck/SUV/crossover party it's insane. If this was 5-6 years ago I'd go, yea, I get it. But getting rid of Fusion? I see that as a big mistake.

[Cincinnati_Kid]

Ford has an easy [[And kind of shady) ulterior motive/backup plan. Ford still plans on designing, building and marketing small cars such as the Focus and Fiesta for overseas markets. If gas prices do rise to the point where Americans show interest in them again it's as easy as making some minor changes for U.S safety codes and then importing them in masse.

They're killing two birds with one stone here. They are eliminating the production of low margin vehicles here in the U.S and at the same time they are prepping for a mass transfer of vehicle production to low wage countries such as China when buyer sentiment changes. By doing it this way they are lessening the public backlash they would receive by directly moving production on a particular model from here to China.

Good observation. Read somewhere GM is thinking about killing some of their car brands as well, a few Cadillac models, the Impala and Buick Lacrosse are a few of the names mentioned.

[EGrant]

The Escape is essentially a Fusion that sits a little higher, for what its worth. They get about the same MPG, although there is no electric Escape yet, but I think it's in the works for next year.

[Richard]

Ford has an easy [[And kind of shady) ulterior motive/backup plan. Ford still plans on designing, building and marketing small cars such as the Focus and Fiesta for overseas markets. If gas prices do rise to the point where Americans show interest in them again it's as easy as making some minor changes for U.S safety codes and then importing them in masse.

They're killing two birds with one stone here. They are eliminating the production of low margin vehicles here in the U.S and at the same time they are prepping for a mass transfer of vehicle production to low wage countries such as China when buyer sentiment changes. By doing it this way they are lessening the public backlash they would receive by directly moving production on a particular model from here to China.

I agree with that,maybe long term it was best to solve the trade and tafiffs aspect,proactive.

I think the writing was on the wall when in the past they announced that production start up in Mexico of the smaller body vehicles.

Last time that the gas went that high you could hardly give a large SUV away,but on the other hand because the trucks and SUVs are more expensive does it drive up the costs on the used car market.

Other then that I am sure the Honda and Toyota manufacturers in the south will love the switch.

[catch22]

The Escape is essentially a Fusion that sits a little higher, for what its worth. They get about the same MPG, although there is no electric Escape yet, but I think it's in the works for next year.

The Escape is built off of the Focus platform. The Edge is built off the same platform as the Fusion.

[Cincinnati_Kid]

The Escape is essentially a Fusion that sits a little higher, for what its worth. They get about the same MPG, although there is no electric Escape yet, but I think it's in the works for next year.

C-Class [[compact)	Worldwide	Focus / Escape / Kuga / C-Max / Grand C-Max / Transit Connect / Lincoln MKC
C/D-Class [[midsize)	Worldwide	Fusion / Mondeo / Taurus 7G / Edge / S-Max / Galaxy / Lincoln Continental / Lincoln MKX / Lincoln MKZ

They are built on different platforms, but I kinda get what you meant.

[JonWylie]

I mean realistically Crossovers/Vans get almost as good of gas mileage as a lot of cars, and if gas really goes up that high again, the push is going to be hard for electric cars, not just sedans. Ford is cutting costs, hopefully, to put more money towards technology and innovation. Seems like a unpopular but sensible idea

[EGrant]

C-Class [[compact)	Worldwide	Focus / Escape / Kuga / C-Max / Grand C-Max / Transit Connect / Lincoln MKC
C/D-Class [[midsize)	Worldwide	Fusion / Mondeo / Taurus 7G / Edge / S-Max / Galaxy / Lincoln Continental / Lincoln MKX / Lincoln MKZ

They are built on different platforms, but I kinda get what you meant.

Yep! Thanks for clarifying.

[ndavies]

This is Fords way of skipping ahead an entire generation of cars by killing off the internal combustion engines[[ICE) in their cars.

I think this was caused by the fuel economy rules.

The Fuel economy rules are based on vehicle size. Larger vehicles are allowed to burn more fuel. If you know your small ICE cars can't meet the rules why continue developing them? Ford believes the next set of passenger cars will have to be electric to meet emission standards. The electric cars will need to be ground up redesigns.

Ford has already announced it's building a Hybrid mustang for 2022. We've heard the rumors of them buying the Michigan train Depot for automated/electric cars. It will be easier to package that technology in larger vehicles.

If they kill off their ICE cars now, they could put the engineers and freed resources into building the next generation of electric cars now. They can put the technology into the larger vehicles and then downsize it to fit new ground up small car designs when fuel prices rise.

All of their cars need redesigns. Why not save the cost of the redesign cycle, if you know it won't be profitable? It could be a smart move that lets them jump well ahead of their competitors.

[Jason]

My understanding from reading is that they're sort of but not really killing off their sedans. They're replacing them with cars that have some of the popular features of SUVs [[higher ride and more storage) while still being on the small side. They said they did this after doing a lot of market research about what people really want. Hopefully this will result in a popular product.

[Richard]

They did not give us what we really wanted in the 80s,but what people really want can vary from small and sporty to big and slide in comfortable which would cover a wide range of vehicles,I am thinking it is going to be about what they tell us we want.

Not a Ford fan but the new incoming retro Bronco and police interceptor 4x truck look pretty cool,maybe this will push the PD into useing Prius in the interest of economy.

Leo is really running out of options other then trucks and SUVs.

[401don]

I thought the Focus car, especially the hatch, was a big seller in Europe, particularly Great Britain. Are the Europeans moving to crossovers at a similar pace?

[Jason]

This is only for our market, they're still going to sell sedans in other countries.

[Pat001]

We’ve seen this scenario before. Under CEO Jac Nasser, Ford turned away from domestic sedans and put all their eggs in the SUV and pickup basket. Ford bought up upscale European nameplates like Jaguar, Land Rover, Volvo, Aston Martin and a controlling stake in Mazda under the name Premiere Auto Group [[PAG). Ford put Lincoln in the PAG group.

The PAG group strategy was supposed to produce billions in revenue but instead produced billions in losses because those European nameplates were money pits - Jaguar being the biggest money-loser. At the same time, Ford was intentionally neglecting Taurus, once America’s most popular car until sales dropped off and it went out of production in 2007. [[How you go from being the most popular car in America in 2000 to going out of production in 2007 has to be the biggest collapse in automotive history, but I digress.)

When gas prices spiked to over $4.00/gallon [[around SE Michigan), sales of high profit margin pickups and SUV’s cratered. At the same time, thousands of used pickups and SUVs were coming off lease that no one wanted. Ford had little to offer in the way of economical cars other than the Focus. Insiders say Ford was making less than $100/per Focus built in Michigan but needed a high mileage car for CAFÉ purposes. Ford lost $13 billion in 2006 and nearly went bankrupt.

So, is Ford setting itself up for a repeat? Predictions are hard to make, especially about the future.

[emu steve]

Yogi agrees with you...

“It's tough to make predictions, especially about the future.”


― Yogi Berra

[Pat001]

Yogi agrees with you...

“It's tough to make predictions, especially about the future.”


― Yogi Berra

When you come to a fork in the road - take it.

[Honky Tonk]

We’ve seen this scenario before. Under CEO Jac Nasser, Ford turned away from domestic sedans and put all their eggs in the SUV and pickup basket. Ford bought up upscale European nameplates like Jaguar, Land Rover, Volvo, Aston Martin and a controlling stake in Mazda under the name Premiere Auto Group [[PAG). Ford put Lincoln in the PAG group.

The PAG group strategy was supposed to produce billions in revenue but instead produced billions in losses because those European nameplates were money pits - Jaguar being the biggest money-loser. At the same time, Ford was intentionally neglecting Taurus, once America’s most popular car until sales dropped off and it went out of production in 2007. [[How you go from being the most popular car in America in 2000 to going out of production in 2007 has to be the biggest collapse in automotive history, but I digress.)

When gas prices spiked to over $4.00/gallon [[around SE Michigan), sales of high profit margin pickups and SUV’s cratered. At the same time, thousands of used pickups and SUVs were coming off lease that no one wanted. Ford had little to offer in the way of economical cars other than the Focus. Insiders say Ford was making less than $100/per Focus built in Michigan but needed a high mileage car for CAFÉ purposes. Ford lost $13 billion in 2006 and nearly went bankrupt.

So, is Ford setting itself up for a repeat? Predictions are hard to make, especially about the future.

You're absolutely correct in your story. The issue is there is a far greater demand for over-sized, gas guzzling vehicles, then there is for econo-boxes. Ford is merely providing what the consumer demands.