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14th May 2018, 02:27 AM | #1 |
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Ford: Ending Production on Most Sedans
So, it looks like Ford is making a major change to its vehicle lineup.... Dropping most of its sedans in favor of Trucks, SUVs and similar vehicles.
From: https://www.detroitnews.com/story/bu...dans/34755947/ plans to cut its North American passenger car lineup by more than 80 percent, eliminating the Taurus, Fiesta, Fusion, C-Max and Focus sedans within a few years. Only the Mustang and a crossover version of the Focus will survive the cuts....The company plans for nearly 90 percent of its vehicles sold in 2020 to be a truck, SUV or commercial vehicle. Now, they're not the only ones... Chrysler and GM have out some of the smaller cars from their product lines, but Ford seems to have the most extreme plans. On one hand, it is understandable... people are just buying more SUVs/Trucks these days, and profit margins are higher on the larger vehicles. On the other hand, I'm really thinking this might really be a problem in the future. It reminds me of the time around the start of the recession, when the North American car companies had significant problems, and part of it was because they put so much effort into producing their large vehicles that they couldn't handle it when people at the time decided to switch to smaller cars. Plus, there are 2 major problems that may greatly change the markets that should happen in the next few years (both of which can be traced back to a racist orangutan who happened to be made president thanks in part ot the Russians): - Trump's cancelling of the Iran deal may cause oil prices to rise - Trump had lowered emission/fuel economy standards, but in 2020 he is likely to lose the white house, and the Democrats will probably restore standards (if not make the more stringent) |
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14th May 2018, 03:12 AM | #2 |
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There are echoes of the 1970s, where a US auto industry with a set of gas-guzzling vehicles was completely unprepared for a shift in customer demand to smaller, more fuel efficient vehicles. I think that Ford at the very least will be better placed this time around.
The increase in globalisation and global standards means that it will be less difficult to re-introduce other models than 45 years ago (GM OTOH would have greater challenges). I also think that there have been major advances in fuel efficient engines so that the US could still have enormous vehicles but that they won't be as woefully inefficient. |
14th May 2018, 08:39 AM | #3 |
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yes, they could take models designed for the European or Asian markets and begin to sell them here. There are a couple of problems with that:
- It assumes that Ford will be quick enough to react if/when public demand for smaller cars suddenly spikes (or will they simply hold on to the higher-margin Trucks/SUVs until the bitter end, thinking "People will go back to SUVs eventually... we just have to wait a bit longer") If Trump starts bombing Iran and gas goes up $1/gallon, how long do you think it will take for Ford to start marketing sedans again in the United States? 6 months? A year? How many sales will they lose in the mean time? - They are turning their back on a large segment of the market who want sedans NOW. Granted, as I pointed out, consumer demand has drifted towards larger vehicles. But even now, Ford does sell 10s of thousands of sedans in a year. They're basically giving up that market to other manufacturers. And while drivers are not always loyal to car brands, there will be at least a few entry-level drivers who buy low-end sedans out of necessity (because they can't afford anything else) and decided to stick with the brand (even when they go to higher-end models) simply because they were happy with the first purchase. I myself drive a Hyundai Accent. My last car was a Civic. (I did look at other vehicles the last time I bought a car, including Toyotas, Chevs, Kias, Fords, etc.) I do not like driving big cars. Not only do I prefer smaller cars for the fuel efficiency, I also like their maneuverability (my Accent can fit into some pretty tight spaces) and their responsiveness (the car stops faster when I step on the breaks.) Plus, I do not see cars as some sort of "status symbol", and I do not get any pleasure out of buying some sort of high-end luxury car with features that I don't need. Give me basic, reliable transportation at a decent price. What Ford has done is guaranteed that the next time I shop for a car, I can avoid my local Ford dealership because they won't have what I want.
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Now, perhaps Ford will manage to do well with electric cars (which almost negates the whole "fuel efficiency" issue). But, there are many parts of the world where the technology isn't feasible now and probably won't be for some time. (I could not use an electric vehicle for example... I live in Canada, with a cold climate, and regularly have to drive 4 hours to see family along a stretch of road which has no places where late-night charging stations are feasible.) Plus, lets face it: North American manufacturers haven't always been that great when dealing with new automotive technology. |
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14th May 2018, 09:42 AM | #4 |
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Well, I probably wouldn't buy a Ford sedan now, knowing support will likely end in a couple years.
I bought my 5.7L V8 powered 4X4 Grand Cherokee when gasoline was over $4 a gallon. I got a nice discount as no one wanted the V8's. I still have it 10 years later. |
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14th May 2018, 09:53 AM | #5 |
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14th May 2018, 09:56 AM | #6 |
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Whats so weird is I see Ford Fusion's all over the place here. In fact they might be the most common sedan I see. They're very common fleet vehicles.
ETA: I guess sales have been tapering off since 2015 though. http://fordauthority.com/fmc/ford-mo...sales-numbers/ |
15th May 2018, 08:28 AM | #7 |
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Makes sense... Looking back at a few charts, gas prices spiked in 2014, so in comparison 2015 gas prices must have looked pretty good. Furthermore, the recovery from the 2008 recession was slow, but it was happening... and thus by 2015 people had a little more money to spend on larger vehicles.
Of course, both factors could change rapidly depending on what happens with Iran and the economy in general. |
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15th May 2018, 08:33 AM | #8 |
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15th May 2018, 08:58 AM | #9 |
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15th May 2018, 09:15 AM | #10 |
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Ford is in a tough spot. They make popular trucks and large vehicles, but the small vehicle market is hard to enter. Kia makes some decent small cars with small price tags, and Honda and Toyota's legendary reliability is available for not too much more. You also have Mazda and Hyundai making cars that span the price range. Lots of coverage here, hard to find an entry point for Ford.
I was looking for a small, inexpensive, reliable car when I bought my Corolla. Honestly, it feels kinda big. I would have bought a Yaris or Fit, but I didn't see any good condition ones near me with manual transmissions. I was intrigued by the small cars made by Chevy in theory, but their well known history of quality problems wouldn't let me consider them. Not a lot of options in the US for truly compact cars. It's a shame! My fiance had one of the notorious Ford Fiestas that had the terrible transmissions. Three warranty rebuilds on the same transmission with less than 50k miles on a new car. She traded it in for a Honda. People looking for small cars are usually driven by budget and reliability concerns. Ford doesn't look very attractive compared to it's peers. Confirmation bias alert. I was behind a Chevy Equinox in traffic yesterday that was burning oil like no tomorrow. Steady stream of blue/white smoke while idling and huge belches when it started forward. Couldn't have been more than 5-7 years old, by appearance. Imagine paying 20k for that heap of crap! |
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15th May 2018, 09:25 AM | #11 |
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Not just popular trucks, really good ones. I compared the Tundra to the F-150 because I was planning on keeping the truck for some time. Frankly, the Ford was just better in almost every measure and comparable when it came to reliability and resale.
As you point out, they are not as successful in the small car game. I looked at the Focus ST before I realized I would need a truck and it was designed for a teenager. It felt more like a game console than a vehicle. Really, I was considering a GTI even though I had been burned previously by VW's idea of reliability. |
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15th May 2018, 09:42 AM | #12 |
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The thing is, Ford is a pretty fantastic truck manufacturer. Their truck models compete on price and quality and are hugely popular. I don't see how it's a mistake to focus on that line of business (which really isn't going away), and not dilute that effort with a car market they don't necessarily need.
I guess a lot of people are filtering this news through the assumption that they understand the automobile manufacturing industry in general - - and Ford's lines of business in particular - - to pass judgement on Ford's decision. I tend to assume that the people running Ford know their business somewhat better than anyone commenting on it here. Bluntly speaking: Anyone saying that Ford has made a mistake is probably talking out their ass. That Ford has reached a contrary conclusion is in my opinion a more than sufficient rebuttal. |
15th May 2018, 09:46 AM | #13 |
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Fair enough, but it's certainly noteworthy that a major US car company is basically surrendering the battle over the small car in its native markets. I wonder if this will leave them a bit exposed if the price of gas skyrockets again. Lots of people in this country drive trucks that really don't "need" them and would dump them if costs got too high.
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15th May 2018, 09:59 AM | #14 |
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I am under the impression that the majority - strong majority, of the sales of U.S. branded sedans has been to rental companies, with corporate and government (federal, state, and local) fleet vehicles coming in at second.
Direct sales of sedans and small cars to consumers has been peripheral to the American companies for a long time now. That makes me think that the thing driving this is really the rental companies making decisions based upon reliability and cost. |
15th May 2018, 10:07 AM | #15 |
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Around 2008, the "big three" automakers received billions in loans from the U.S. government. GM and Chrysler were looking at bankruptcy. While ford was in better shape, it still needed assistance to make changes to certain technologies.
If car manufacturers are requiring government loans to stay in business, I think its fair to say the executives may not understand the business that well themselves. |
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15th May 2018, 10:35 AM | #16 |
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Ah, yes, the mysterious anomaly of aught-eight! What was I thinking?
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15th May 2018, 11:08 AM | #17 |
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There are approximately 2 million cars available for rental in the United States. Rental companies replace cars after approximately 1 year. So, 2 million vehicles are purchased by rental companies. Now, not all of those are going to be sedans... rental companies rent SUVs and trucks too. Plus, they rent foreign cars as well as North American.
Ford/Chrysler/GM sold around 8 million vehicles total in 2016. The total market was (I think) around 17 million vehicles. So, rental companies do make up a significant part of the market for cars, but I don't think it accounts for anywhere near a majority of sales. https://www.statista.com/statistics/...united-states/ http://www.latimes.com/business/auto...104-story.html |
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15th May 2018, 11:15 AM | #18 |
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Not really sure what your point is.
Gas prices fluctuate. The economy as a whole (including disposable income and availability of credit) fluctuates. Car companies in the past have had problems when those things happened because they didn't plan for or expect it. Any company who thinks "The good times will never end! SUVs for all!" may run into trouble when conditions change. We have historical precedent of that happening. Those who cannot remember the past are condemned to repeat it and all. |
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15th May 2018, 11:46 AM | #19 |
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And its not like they don't have a good affordable small car. They do pretty damn well in Europe.
https://www.fool.com/investing/2018/...e-in-2017.aspx |
15th May 2018, 01:23 PM | #20 |
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I think it's a smart move concentrating on their strengths in the face of crazy competition both foreign and domestic. Ford has made, in my view, very boring cars. They can't compete with Toyota, Honda and Hyundai in the affordable sedan/coupe segments and forget the luxury segment. On the other hand, their Trucks/SUVs are pretty strong. I think history has shown that enough people are going to buy large/utility vehicles no matter what happens with gas prices and the commercial vehicle segment will always be strong.
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16th May 2018, 09:10 AM | #21 |
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I always wondered how a car could be considered 'boring'.
Now, there are cars (such as high-end sports cars) that do look truly unique. And there are some cars that I think look absolutely horrible (Nissan Cube for example). But apart from that, a car is just a mode of transportation to get you from point A to point B. What exactly makes a car design 'exciting' to accomplish that?
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There are 2 issues at play here: can ford maintain its current market share in the SUV/truck market, and will the market remain stable or grow. The SUV market HAS grown, but history has shown that that may not always be the case. And while they have been successful selling Trucks/SUVs, there is always a chance that Honda/Toyota/Hyundai may end up taking over those markets as they did with the small car market. So the concern is that Ford may eventually start to sell fewer gas guzzlers, and they won't have the small car market to fall back on. |
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16th May 2018, 11:28 AM | #22 |
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16th May 2018, 11:31 AM | #23 |
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Except in Europe they do. Ford Fiesta was the best selling car in the UK in 2017 for example, and the Ford Focus was 3rd.
https://www.carmagazine.co.uk/car-ne...rs-and-losers/ ETA: gotta do some scrolling to get to the relevant chart. ETA2: and over there they are competing with European made stuff that isn't even sold in the USA. |
17th May 2018, 02:19 PM | #24 |
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A combination of looks and features. They look boxy and the interiors are cheap looking. The sound systems are basic and better ones are a lot more. The technology options are behind the curve. I did say “in my view.” Example: I just did bought a Fiat 500 for my son, a fun little car with nice looks, great features and a low price. Ford just doesn’t have a fun, sporty small car; isn’t even in the same ballpark. It’s subjective of course, but obviously a lot of people agree.
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17th May 2018, 06:17 PM | #25 |
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In the 2000's, Chrysler, then owned by Daimler-Benz, was pushing performance to the exclusion of anything else. Hemi, Hemi, Hemi! Then 2008 arrived and they had no efficient or cost-effective cars at all, which left them by far the worst-off of the American big three.
Ford was the best-off of them. They should be thinking about that. |
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18th May 2018, 09:28 AM | #27 |
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Are you suggesting that their withdrawl from the North American car market is only temporary and that they'll eventually return with new car lines?
Apart from the fact that Ford has never given any indication that that's what they plan to do, I can see several major problems with that: - Economic downturns/oil price spikes can happen suddenly. If their plan was to come out with new cars later, they may run into problems if the downturn happens before their planned re-entry into the market - new car lines often have new problems. By re-introducing all new vehicle lines they are guaranteeing quality will suffer for at least a year or 2 until they get any bugs worked out. |
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18th May 2018, 09:32 AM | #28 |
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I know it's gotten some good reviews. Like I said, it's subjective. Obviously, Ford is not happy with the sales being generated by their car segment which would indicate that something about the cars isn't clicking with consumers. My opinion, given that I buy a car just about every year or so whether for my kids or my wife and I, is that the reason for this "lack of click" is that Ford's cars don't compare favorably to other competing cars. They aren't horrible, but they are boring in comparison and often not a good value for the money.
Just my opinion on what might be factoring into Ford's decision here. Personally, I think they would be better served by revamping their car segment and work on bringing pricing down a bit across the board. I just bought myself a pickup and I chose the Chevy Colorado because on features, looks and price, I felt it was a great deal compared to the much pricier F-150. Until they get more competitive, they won't get my business. |
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18th May 2018, 09:42 AM | #29 |
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Good points. Maybe they plan never to renter the market; I don't know but it seems foolish to completely cede the car segments to their competitors. They are either planning to roll out new models strategically or their no-cars strategy is going to have to change rapidly when the market shifts. In the short-term, it's still a smart strategy to focus on their strengths but it would seem prudent to keep car concepts in their back pocket in case the market shifts.
If I were running Ford, that's the strategy I would take: Something isn't working in our car line up, time to start over. |
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26th May 2018, 01:22 AM | #30 |
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26th May 2018, 03:52 AM | #31 |
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29th May 2018, 06:04 AM | #32 |
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Are the UK versions not plagued with the transmission flaws that are notorious in the US versions? My fiance owned a Fiesta that was bought brand new. She traded it in after she had a third transmission rebuild with less than 30,000 miles on the car. Actually, I think she had two rebuilds and one brand new transmission put in, all under warranty. Apparently there was a design flaw that resulted in transmission fluid leaking onto the friction plates causing serious slipping. It was a widespread problem with the Fiesta and Focus cars that used the automatic dual clutch transmission.
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29th May 2018, 06:21 AM | #33 |
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2nd June 2018, 07:32 AM | #34 |
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Mine's a manual. I have read that the Ford auto box, at least the one they put in smaller cars, has been, not to put too fine a point on it, utterly pants. So much so, that I believe Ford are delaying launching their new small auto box so it's not tainted by the old one. (I think, I'll admit, I could have my facts wrong on this one.) |
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2nd June 2018, 11:33 AM | #35 |
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7th June 2018, 04:41 AM | #36 |
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It's a real shame too, because besides the showstopping transmission problem, I thought her Fiesta was actually a pretty decent car for the money. When she bought it, it wasn't much more than the cheapest Kia's and seemed much nicer by my estimation. Though Kia does seem to know how to make a working transmission, so maybe I shouldn't put them down.
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7th June 2018, 08:17 AM | #37 |
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A couple things to bear in mind is that Ford's range of what it calls SUVs and crossovers goes down to pretty small. Take the EcoSport, which is pretty small. And they are keeping a "crossover version" of the Focus, which probably means one of the hatchback versions which will fill the next size class down.
The way I interpret this, they believe that their smaller to mid-size SUVs cover the same market as the larger to mid-size sedans. They are the same size and get similar mileage. It's not the size/class/price market they appear to be leaving, just the sedan as a form factor. As for the small fiesta...they will likely come out with something to replace it at some point. It may have done well in Europe, but when I think of a Fiesta I think of the tiny boxy thing from the 80s that looked like a smaller imitation of a Chevy Chevette. |
7th June 2018, 08:26 AM | #38 |
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I think small cars are somewhat looked down upon in the USA? Or perhaps they just used to be. I've owned at least three Fiestas and they've all been ace (Although the first one was an ancient MK I that, I realise now, was mostly made of tin.) There are constant rumours of Ford making an RS Fiesta. If they ever do I will make very unwise financial decisions in order to be able to own one. |
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7th June 2018, 09:43 AM | #39 |
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7th June 2018, 09:53 AM | #40 |
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Depends on what you consider a small car. The Corolla I have is pretty big compared to what it used to be. It doesn't seem that the US has as many subcompacts as other parts of the world. I would have loved to pick up a Toyota Echo or something comparable, but there simply wasn't much on the used market.
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