Here’s how Ford justifies phasing out sedans: 'Silhouettes are changing'
#1
Here’s how Ford justifies phasing out sedans: 'Silhouettes are changing'
Concerned dealers hear the reasoning straight from Ford brass
LAS VEGAS — Ford raised eyebrows — and no doubt some concern among its dealers — with its announcement earlier this year that it would phase out its remaining sedans and double-down on hot-selling utility vehicles. But top executives offered further rationale behind their thinking during a conference for Ford dealers here this week.
Ford in April announced its plans to do away with the Fiesta, Focus, Fusion and Taurus in the U.S. market. They're all set to sunset, with Focus production already now discontinued but the Fusion living on at least through 2019.
Through September, Ford had sold a not-insignificant 378,533 cars, which was down 17.4 percent from the prior-year-to-date figure. But Ford has carefully studied the larger trends and says sedans have plummeted from making up 57 percent of the North American market in 2010 to an expected 30 percent by 2019, while utility vehicles have gone the other way, up from 36 percent to an anticipated 52 percent next year. Pickups have also grown share, but more modestly, from 14 percent to a projected 18 percent over the same period.
"We're not getting out of passenger cars, we're getting out of sedans," said Kumar Galhotra, Ford's group vice president and president of Ford North America. "It's language, but it's a very important distinction. I learned this from my boss, (CEO) Jim Hackett: Silhouettes are changing. The data is compelling that silhouettes are changing."
Galhotra said Hackett served up to him the example of the Model T, asking him what happened to that automobile silhouette. It's a line of thinking that suggests we may be on the cusp of a major revolution in automotive styling alone, to say nothing of electrification or other technologies. And like any company with limited capital and human resources, "We want to deploy them in segments that are growing and segments where we are strong," Galhotra says. "I don't think we need to apologize for that."
Ford is also quick to add that pivoting away from traditional sedans doesn't mean a shrinking number of vehicle nameplates. The company currently has 20 nameplates, will have 21 next year and will rise to 23 by 2023. Future products include the 2019 Ranger midsize pickup, 2019 Transit and Transit Connect vans, the Mustang Shelby GT500, plus all-new versions of the Super Duty pickup, Escape and Explorer, the revised Bronco nameplate, and a battery-electric utility vehicle for 2020, plus other planned products that have yet to leak from Dearborn.
"I feel better after seeing the product," said Jim Seavitt, owner of Village Ford in Dearborn, Michigan, near the company's headquarters.
After Morgan Stanley on Friday cut its price targets for Ford and General Motors Co due to slumping industry demand in China, Ford's stock dipped to $8.19 - its lowest price since November 2009 - before recovering to $8.47. Ford is expected to report a decline in third-quarter profits on Oct. 24.
Dealers said the most important aspect of the meetings in Las Vegas was that Hackett laid out his vision for the company and explained to dealers how they fit in those plans — reassurances they said were long overdue.
"His (Hackett's) first slide was a McKinsey-type slide and I was like, 'Oh great, this is going to be like a consulting session here,' but I found him to be very genuine," Pete DeLongchamps, senior vice president with Group 1 Automotive, told Reuters. DeLongchamps' Houston-based company owns 17 Ford stores.
Seavitt said what Hackett lacked in the "wow factor," he made up for in sincerity and credibility.
One large dealer, who asked not to be identified, said Ford's October sales were down double digits at his stores and criticized Ford's product line and lack of aggression with incentives and advertising.
Meanwhile, Ford says it's mindful of the need to retain offerings priced below $25,000, like the EcoSport, for entry-level car buyers, even if they aren't technically sedans.
"I don't wanna say it's a concern," said Mike Pallotta, owner of Pallotta Ford Lincoln in Wooster, Ohio, who attended the conference, about the demise of sedans. But he emphasized the importance of having affordable entry-level options in order to achieve Ford's goal of building on its customer loyalty. "It's very important come 2020 ... what's going to fill that gap. The price point is probably most important, rather than the silhouette of the vehicle."
Ford in April announced its plans to do away with the Fiesta, Focus, Fusion and Taurus in the U.S. market. They're all set to sunset, with Focus production already now discontinued but the Fusion living on at least through 2019.
Through September, Ford had sold a not-insignificant 378,533 cars, which was down 17.4 percent from the prior-year-to-date figure. But Ford has carefully studied the larger trends and says sedans have plummeted from making up 57 percent of the North American market in 2010 to an expected 30 percent by 2019, while utility vehicles have gone the other way, up from 36 percent to an anticipated 52 percent next year. Pickups have also grown share, but more modestly, from 14 percent to a projected 18 percent over the same period.
"We're not getting out of passenger cars, we're getting out of sedans," said Kumar Galhotra, Ford's group vice president and president of Ford North America. "It's language, but it's a very important distinction. I learned this from my boss, (CEO) Jim Hackett: Silhouettes are changing. The data is compelling that silhouettes are changing."
Galhotra said Hackett served up to him the example of the Model T, asking him what happened to that automobile silhouette. It's a line of thinking that suggests we may be on the cusp of a major revolution in automotive styling alone, to say nothing of electrification or other technologies. And like any company with limited capital and human resources, "We want to deploy them in segments that are growing and segments where we are strong," Galhotra says. "I don't think we need to apologize for that."
Ford is also quick to add that pivoting away from traditional sedans doesn't mean a shrinking number of vehicle nameplates. The company currently has 20 nameplates, will have 21 next year and will rise to 23 by 2023. Future products include the 2019 Ranger midsize pickup, 2019 Transit and Transit Connect vans, the Mustang Shelby GT500, plus all-new versions of the Super Duty pickup, Escape and Explorer, the revised Bronco nameplate, and a battery-electric utility vehicle for 2020, plus other planned products that have yet to leak from Dearborn.
"I feel better after seeing the product," said Jim Seavitt, owner of Village Ford in Dearborn, Michigan, near the company's headquarters.
After Morgan Stanley on Friday cut its price targets for Ford and General Motors Co due to slumping industry demand in China, Ford's stock dipped to $8.19 - its lowest price since November 2009 - before recovering to $8.47. Ford is expected to report a decline in third-quarter profits on Oct. 24.
Dealers said the most important aspect of the meetings in Las Vegas was that Hackett laid out his vision for the company and explained to dealers how they fit in those plans — reassurances they said were long overdue.
"His (Hackett's) first slide was a McKinsey-type slide and I was like, 'Oh great, this is going to be like a consulting session here,' but I found him to be very genuine," Pete DeLongchamps, senior vice president with Group 1 Automotive, told Reuters. DeLongchamps' Houston-based company owns 17 Ford stores.
Seavitt said what Hackett lacked in the "wow factor," he made up for in sincerity and credibility.
One large dealer, who asked not to be identified, said Ford's October sales were down double digits at his stores and criticized Ford's product line and lack of aggression with incentives and advertising.
Meanwhile, Ford says it's mindful of the need to retain offerings priced below $25,000, like the EcoSport, for entry-level car buyers, even if they aren't technically sedans.
"I don't wanna say it's a concern," said Mike Pallotta, owner of Pallotta Ford Lincoln in Wooster, Ohio, who attended the conference, about the demise of sedans. But he emphasized the importance of having affordable entry-level options in order to achieve Ford's goal of building on its customer loyalty. "It's very important come 2020 ... what's going to fill that gap. The price point is probably most important, rather than the silhouette of the vehicle."
#2
Lexus Fanatic
I don't buy at least part of the explanation. IMO, they seem to be trying to push future customers out of sedans because they consider SUVs more profitable.
#4
Lexus Fanatic
People simply were not buying Ford sedans, that is why they "phased them out". They ended up mainly selling to rental fleets. If Ford put more effort into the sedans or built better ones they would have sold, Ford dominated sedan sales with the late 80's "Robocop" Taurus/Sable generation and then it went all downhill from there.
#5
Lexus Fanatic
Lincoln has been mum on that lately, but from what I understand, and the sources I've seen (though those sources go back as far as May) the Continental will likely be axed from poor sales, though the MKZ is more likely to stay in production. If GM drops the Lacrosse and Impala, I myself would be a good prospect for a (non-Black-Label) MKZ the next time around....they are not going to force me into an SUV if I don't feel like buying one. The Black Label MKZ looks ritzy inside, and has some nice customer-friendly dealership perks, but the front seats are more narrow and confining than on the lower-line versions, and simply too narrow for my torso and rump. If Ford drops the MKZ, then I guess it's a Kia Cadenza, Genesis G80 (AWD), or Lexus ES350...but the latest ES may be too sport-oriented.
#6
Lincoln has been mum on that lately, but from what I understand, and the sources I've seen (though those sources go back as far as May) the Continental will likely be axed from poor sales, though the MKZ is more likely to stay in production. If GM drops the Lacrosse and Impala
I myself would be a good prospect for a (non-Black-Label) MKZ the next time around....they are not going to force me into an SUV if I don't feel like buying one. The Black Label MKZ looks ritzy inside, and has some nice customer-friendly dealership perks, but the front seats are more narrow and confining than on the lower-line versions, and simply too narrow for my torso and rump. If Ford drops the MKZ, then I guess it's a Kia Cadenza, Genesis G80 (AWD), or Lexus ES350...but the latest ES may be too sport-oriented.
Before you call the new ES 'too-sport oriented', I implore you to drive one. The car feels far more quiet and refined than the outgoing 6th generation. The doors close with a better thud sound now than the rattle can the last two have been. Just because there is an F-Sport version doesn't mean the ES is too sporty. In looks perhaps, but I'd argue the AVS option on the new ES is better than the static suspension on non AVS equipped ES's, even if they still don't offer a 'comfort' mode like the LS, LC, GX, LX.
#7
Lexus Fanatic
The car feels far more quiet and refined than the outgoing 6th generation. The doors close with a better thud sound now than the rattle can the last two have been.
The MKZ doesn't have the crazy 30-way adjustable seats the Continental has, but it does have 22-way power seats. You might not of adjusted the 'hugging' side bolsters
Before you call the new ES 'too-sport oriented', I implore you to drive one
The car feels far more quiet and refined than the outgoing 6th generation. The doors close with a better thud sound now than the rattle can the last two have been.
Last edited by mmarshall; 10-20-18 at 04:04 PM.
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#8
Lexus Fanatic
Originally Posted by article
Through September, Ford had sold a not-insignificant 378,533 cars, which was down 17.4 percent from the prior-year-to-date figure. But Ford has carefully studied the larger trends and says sedans have plummeted from making up 57 percent of the North American market in 2010 to an expected 30 percent by 2019, while utility vehicles have gone the other way, up from 36 percent to an anticipated 52 percent next year. Pickupshave also grown share, but more modestly, from 14 percent to a projected 18 percent over the same period.
#9
Lexus Champion
Originally Posted by article
Through September, Ford had sold a not-insignificant 378,533 cars, which was down 17.4 percent from the prior-year-to-date figure. But Ford has carefully studied the larger trends and says sedans have plummeted from making up 57 percent of the North American market in 2010 to an expected 30 percent by 2019, while utility vehicles have gone the other way, up from 36 percent to an anticipated 52 percent next year. Pickupshave also grown share, but more modestly, from 14 percent to a projected 18 percent over the same period.
Through September, Ford had sold a not-insignificant 378,533 cars, which was down 17.4 percent from the prior-year-to-date figure. But Ford has carefully studied the larger trends and says sedans have plummeted from making up 57 percent of the North American market in 2010 to an expected 30 percent by 2019, while utility vehicles have gone the other way, up from 36 percent to an anticipated 52 percent next year. Pickupshave also grown share, but more modestly, from 14 percent to a projected 18 percent over the same period.
If market share of hybrids is only one-tenth that of sedans, why isn't Ford stopping sales of its hybrids? Why is Ford considering selling a Mustang Hybrid?
#10
Lexus Fanatic
While a 27% drop in market share is not insignificant, one-third (30%) market share is not insignificant either and still a fair share. What is the market share of electrified vehicles (hybrids and plug-in hybrids) -- 2% or 3%?
If market share of hybrids is only one-tenth that of sedans, why isn't Ford stopping sales of its hybrids? Why is Ford considering selling a Mustang Hybrid?
If market share of hybrids is only one-tenth that of sedans, why isn't Ford stopping sales of its hybrids? Why is Ford considering selling a Mustang Hybrid?
Full-Electrics, though, to their credit, do have a number of built-in advantages. No oil changes/filters, no engine-coolant/radiators/leaks, simple engine design, simple transmission, quiet (lack of noise), no fuel/plumbing systems to leak gas or cause a fire hazard, no emissions or emission-tests (in places that require the tests), no engine warm-up needed for cabin heat/defrost in the winter, and no exhaust systems/mufflers to rust out or need replacing. The down side, of course, is cruising range and the need for recharge-outlets.
#11
People simply were not buying Ford sedans, that is why they "phased them out". They ended up mainly selling to rental fleets. If Ford put more effort into the sedans or built better ones they would have sold, Ford dominated sedan sales with the late 80's "Robocop" Taurus/Sable generation and then it went all downhill from there.
#12
^^^^ My thoughts exactly. And we know that, at least up to now, EVs and plug-in hybrids, even with their elevated prices over comparable gas-powered vehicles, are not profitable. I think the reason that they aren't getting the ax is that they are a comparably easy (though expensive) way to meet the high CAFE requirements...though the Trump Administration is rolling some of those standards back.
Full-Electrics, though, to their credit, do have a number of built-in advantages. No oil changes/filters, no engine-coolant/radiators/leaks, simple engine design, simple transmission, quiet (lack of noise), no fuel/plumbing systems to leak gas or cause a fire hazard, no emissions or emission-tests (in places that require the tests), no engine warm-up needed for cabin heat/defrost in the winter, and no exhaust systems/mufflers to rust out or need replacing. The down side, of course, is cruising range and the need for recharge-outlets.
Full-Electrics, though, to their credit, do have a number of built-in advantages. No oil changes/filters, no engine-coolant/radiators/leaks, simple engine design, simple transmission, quiet (lack of noise), no fuel/plumbing systems to leak gas or cause a fire hazard, no emissions or emission-tests (in places that require the tests), no engine warm-up needed for cabin heat/defrost in the winter, and no exhaust systems/mufflers to rust out or need replacing. The down side, of course, is cruising range and the need for recharge-outlets.
#13
A PHEV version of the upcoming Lincoln Aviator is supposed to debut at some point. Maybe the new Explorer will also get a version also. As to the Mustang, a hybrid makes sense to dip their toes into electrification for the line-up. The turbo 4 can only do so much to improve economy vs the traditional V8. The hybrid route allows them to give you an exhaust note, while still having efficiency gains in certain conditions like city driving. I think it simply prepares us for one day when Ford potentially goes full BEV on some of their cars which who knows if the Mustang could be destined which will be another challenge in itself.
#14
People simply were not buying Ford sedans, that is why they "phased them out". They ended up mainly selling to rental fleets. If Ford put more effort into the sedans or built better ones they would have sold, Ford dominated sedan sales with the late 80's "Robocop" Taurus/Sable generation and then it went all downhill from there.
#15
Lexus Fanatic
Last edited by mmarshall; 10-20-18 at 06:14 PM.