Interface News Reporter | Zhou Shuqi
For those classic traditional car models that have brought years of sales honor and profit returns to the company, Ford CEO Jim Farley is no longer interested. He mentioned in an interview with a British car magazine that Ford is getting rid of its boring car model business and instead launching iconic products.
These 'boring models' refer to Ford's discontinued Ford Focus, Mondeo, and others in the domestic market of the United States. Farley believes that Ford has been competing in the core area of the passenger car market in the past, but its performance in launching models has not been ideal, and continuing to invest more resources is not worth it.
Although products such as Fox and Carnival are also popular in Europe, Ford has decided to discontinue these products in Europe as well.
Last summer, Ford stopped producing the Fiesta at its Cologne factory in Germany and instead spent $1 billion on a renovation to produce electric vehicle products Explorer and Capri. Fox will also "retire" in 2025, and its production factory Sal Louis will be closed in the same year.
Fox has been discontinued in the Chinese market. This product was introduced by Changan Ford in 2005 and won the annual sedan sales championship from 2012 to 2014, surpassing models such as the Sylphy, Lavida, and Corolla. But after Changan Ford's three cylinder strategy and Ford's reduced investment in the sedan market, Fox's sales plummeted. Even if Changan Ford returns to four cylinder engines in the future, it still cannot solve the sales dilemma of the Focus.
The monthly sales of the mid size sedan Mondeo in the domestic market have remained around 4000 units, only about half of its peak period, and its price has dropped from nearly 300000 yuan for the top configuration back then to 230000 yuan now.
The discontinuation and slow update speed of the main models directly led to a decline in sales of Ford's joint venture in China, Changan Ford. In 2016, Changan Ford's sales reached a peak of 959000 vehicles, contributing 90% of Changan Automobile's profits. However, sales declined for three consecutive years. In 2023, Changan Ford's sales have dropped to 233100 units, less than 30% of its peak period.
Due to strategic contraction, Ford's product line has shifted from a diversified combination of small hatchbacks, compact cars, mid size sedans, crossovers, SUVs, and pickups to only consisting of pickups, SUVs, crossovers, and sports cars.
In Farley's view, the rugged off-road models Bronco, Mustang, and Raptor are the company's current "iconic" models. And these products usually have higher profit margins.
Ford has never heavily invested in 'enthusiast' products in the past - they are usually side businesses, but now products such as Mustang, Raptor, and Wrangler have become our main business. Farley believes that Mustang sports cars can challenge Porsche's position, and in order to achieve this, Ford will invest more financial support.
In the first half of this year, Ford Mustang has been introduced to the Chinese market, operated by another joint venture brand of Ford Motor in China, Jiangling Ford. This product mainly helps Ford find more accurately positioned niche markets and consumer groups, achieving maximum sales growth and profit returns in niche tracks.
Ford Motor Company is still investing heavily in its electric vehicle business. This traditional manufacturer has announced that it will invest over $50 billion globally from 2022 to 2026 in the research and development of electrified vehicle models and battery technology. The grand goal set by Ford Motor Company is to achieve an annual production of over 2 million electric vehicles by 2026 and achieve full electrification of European models by 2030.
However, due to the sluggish demand in the global electric vehicle market and high product prices, Ford's electrification transformation process has not been smooth. Financial report data shows that Ford's electric vehicle business will incur losses of between $5 billion and $5.5 billion this year. As of June, Ford incurred a loss of approximately $44000 for every electric vehicle sold.
Due to disappointing second quarter profit performance, Ford Motor's stock price plummeted 18% on the second day after the financial report was released, marking the largest daily decline in over 15 years.
Ford Motor Company has adjusted its investment plan for electric vehicles, reducing capital expenditures for its pure electric vehicle business from 40% of the budget to around 30%. It also postponed the release time of the new electric pickup truck and canceled the release plan of the electric three row SUV. The reason for the latter is that various domestic manufacturers in the United States offer price discounts for selling electric vehicles, which puts enormous price pressure on Ford Motor Company.
In the past 18 months, Farley has visited China several times to experience Chinese domestic brand new energy vehicle products. He found that Chinese domestic car manufacturers have already taken the lead in the competition of electric vehicles, and these manufacturers have the advantage of low-cost supply chains. Ford needs to learn and find cost reduction methods to compete with them.
Farley mentioned to British media, "Chinese car brands are entering Europe and becoming strong market participants. In the electric vehicle business, Tesla and Chinese companies are our main competitors