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Ford ends manufacturing in Brazil


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8 minutes ago, passis said:

It seems Mexico wants to attract BX755, BX784 and BX785

 

(In Portuguese: https://motor1.uol.com.br/news/467462/ford-mexico-negociacao-producao-brasileira/)

 

 

Apparently the BX784/785 might be that coupe/wagon thing we have seeing

 

https://www.autotimesnews.com/ford-will-release-a-crossover-to-compete-with-the-jeep-compass/

 

 

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17 minutes ago, silvrsvt said:

 

 

Apparently the BX784/785 might be that coupe/wagon thing we have seeing

 

https://www.autotimesnews.com/ford-will-release-a-crossover-to-compete-with-the-jeep-compass/

 

 

I thought about that too... but it seems too low (for Brazilian roads at least lol)... Then I remembered readng that the Fusion will have an Active version and an Evos version, so maybe that's that...

Edited by passis
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1 hour ago, rmc523 said:

I thought it looked bigger than a b-segment based product.

BX784/BX785 were developed exactly to address the problem of little interior space in the B segment but keeping costs down - similar to what FCA cleverly did with the B-based (they call it Small platform) Jeep Compass.

 

PS: Believe it or not, this duo was to scheduled to replace Ka/Figo hatch and sedan in their production line...

 

PPS: I wonder if this decision to take BX to Mexico was made a while ago and was responsible for CX758 being shelved.

Edited by passis
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2 hours ago, passis said:

BX784/BX785 were developed exactly to address the problem of little interior space in the B segment but keeping costs down - similar to what FCA cleverly did with the B-based (they call it Small platform) Jeep Compass.

 

PS: Believe it or not, this duo was to scheduled to replace Ka/Figo hatch and sedan in their production line...

 

PPS: I wonder if this decision to take BX to Mexico was made a while ago and was responsible for CX758 being shelved.

 

Given that Mach E plant seems to have alot of excess capacity there...I think that is where they will wind up. I can maybe see the Mach E selling 100K units world wide. 

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On 1/21/2021 at 11:13 AM, silvrsvt said:

 

Given that Mach E plant seems to have alot of excess capacity there...I think that is where they will wind up. I can maybe see the Mach E selling 100K units world wide. 

Now there's a second vehicle planned on Mach E's platform, a more affordable vehicle.

 

Guys, if you look at Ford's stated goal of 8% return globally, it's obvious that all of  the

low cost, low return vehicles have to go. Profitability begins with Ranger and larger utilities

as the foundation and build from there. Ford is pulling the plug on vehicles  that  either can't

 or won't make a profit in the near future, I don't think that Ford has any intention in following

through with own designed smaller vehicles for South America, the best we can hope for is 

outsourcing to VW.

 

All of this sounds smart and logical until some other calamity comes along to knock Ford off its pins,

then they will go off tilting at another windmill....

 

 

 

Edited by jpd80
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I'm all up for the company's financial health - please, don't get me wrong.

However, I wonder that if this 8% goal is taken too abruptly, well, Ford will become essentially a NorthAmerica-only company... Is that viable?...

Even outsourcing production to VW, that will hardly reach the 8% they are interested in; maybe that could true for the EV and some vans, but definitely not for the European line up (Fiesta, Ecosport, Puma, Focus, Kuga, Mondeo, S-Max, Galaxy...). Are they just going to close plants and import vehicles too?

To me this goal should be reached by good product planning, like Toyota does - and not by keep pulling out of segments and regions.

And I don't know how the $4.1 bi loss they are willingly going for here are going to help much their finances...

Edited by passis
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2 hours ago, passis said:

I'm all up for the company's financial health - please, don't get me wrong.

However, I wonder that if this 8% goal is taken too abruptly, well, Ford will become essentially a NorthAmerica-only company... Is that viable?...

Even outsourcing production to VW, that will hardly reach the 8% they are interested in; maybe that could for the EV and some vans, but definitely not for the European line up (Fiesta, Ecosport, Puma, Focus, Kuga, Mondeo, S-Max, Galaxy...). Are they just going to close plants and import vehicles too?

To me this goal should be reached by good product planning, like Toyota does - and not by keep pulling out of segments and regions.

And I don't know how the $4.1 bi loss they are willingly going for here are going to help much their finances...

 

I think perhaps the other factor in play is that Ford are internally projecting high costs for ongoing product development and plant updates/retrofits to put itself in place for the late 2020's and 2030's when the make up of its fleet will be dramatically changed (due to government regs (EV's) and perhaps an element of market demand). If this is true, Ford are looking at it's projected profits/costs for Brazil, and reached the conclusion that a $4 billion hit now is better than what its forecasts showed for the rest of the decade. And those projected savings will be plowed into addressing the costs I mentioned above.

 

A potential example of this might be the investment in OAC later this decade (keeping in mind that the investment is far more than what has been announced for the plant, since other costs for things such as product development, etc. are also linked to what happens at OAC). Repeat this at multiple plants around the globe, and it adds up. 

 

Also factor in Ford's nascent interest in potentially jointly investing in battery production, and there's yet another high cost endeavor that requires capital. 

 

When all is said and done, Ford are in a race to create as much capital velocity as it can, as it will need as much as possible to finance itself going forward. This also enhances Ford's ability to borrow as the capital markets and banks will look more favorably upon Ford and give Ford better terms if Ford can demonstrate improving operations and profitability.

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Thanks very much for this great explanation. I understand all points you have raised and even agree, to good extent, with the reasoning brought here.

 

However, the first point I'd like to add is that Ford is struggling more than, say, VWAG to invest in new technologies partially because of its relative small size. For a larger auto group it is more efficient to dilute investments throughout a variety of models and Ford doesn't seem to scale very well. And by shrinking the company this weakness will only be stressed.

 

Also, if there is one plant where I do not see large electrification investments needed in the foreseeable future is Camaçari. Firstly, because infrastructure in South America is poor. Secondly, in some markets like Brazil, biofuel is seen as a very competitive technology to improve overall CO2 emissions. So, if automakers can keep on running existing ICE platforms in one place in order to maximize the use of technology already developed, this place is here.

 

Having said that, to my limited perception, it would make more sense to keep on milking B2 and C2 architectures with relatively low investment for as long as possible in these underdeveloped economies. As a by product, this would allow them to hold foot on their non negligible 10% market share in Brazil. Instead they are going for enormous losses and a laughable 0.5-1.0% slice of the pie - if that. Ford had the Ka as the second best selling vehicle and I'm sure the lack of confidence in the brand will undermine any long term aspirations the Blue Oval might have regarding the large Brazilian market. Too bad Ford managers cannot make money like GM, FCA and VW do down here.

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The problem is keeping a market alive requires continued investment which requires capital and other resources.  By exiting a market or market segment those resources can be diverted to BEVs and other new vehicles and technologies.  It’s likely faster and cheaper to exit now, revamp the business while enjoying more profits which should accelerate the transformation, then re-enter markets with new products where it makes sense.  
 

It’s like buying a really old house - sometimes it’s better to tear it down and rebuild from scratch than to try and fix it up.

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How does investing to make a $10,000 vehicle that never makes profit make sense when the global market is moving towards EVs and you need to invest in that new technology?

 

It is not like Ford is ending all South American production. They are still investing in the Ranger plant and the new Transit plant. Those make money...

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1 hour ago, ausrutherford said:

How does investing to make a $10,000 vehicle that never makes profit make sense when the global market is moving towards EVs and you need to invest in that new technology?

 

It is not like Ford is ending all South American production. They are still investing in the Ranger plant and the new Transit plant. Those make money...

 

Your first point is very valid.  I was told GM was working on a 'real' Blazer as a fully capable off-road Wrangler competitor, not the small CUV that was introduced with the Blazer name.  The 'real' Blazer was going to be an expensive program, but was predicted to be a profitable one.  Nonetheless, the program was dropped to conserve capital for GM's BEV and battery programs.

 

As for your second point, the cynic in me says the Ranger and Transit do not overlap with VW's South American products..... 

Edited by 7Mary3
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54 minutes ago, ausrutherford said:

Ford will make more money selling 50,000 units of Ranger, Transit, Bronco Sport, Maverick, Territory, Mach-E in Brazil than selling 200,000 units of Focus, EcoSport, Fiesta, and Ka. 

 

Yeah, more profits for Ford.  But less jobs at Ford, suppliers and dealers if you only make & sell 50K vs 200K.

 

HRG

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3 hours ago, HotRunrGuy said:

 

Yeah, more profits for Ford.  But less jobs at Ford, suppliers and dealers if you only make & sell 50K vs 200K.

 

HRG

Ford isn’t a charity.  Those jobs will likely go to other manufacturers.  Dealers will have some tough decisions about their future plans....scale back and only sell Ford or add other brands to fill in the products Ford is no longer selling.  In the end it will work out.  

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I'm just saying that Ford is relying on the fact that the volumes lost in underperforming segments will not affect the scale of their business. 

 

In the particular case of Brazil, around 85-90% of total sales (~150k/year) came from that closed plant. So within this month dealers volumes are dropping by the same amount. Most will close doors and Fords will be sold in limited 50 showrooms around the whole country - that's 2 dealers per state. You now have Ford dealers angry and Ford owners angry. As a consequence, Ranger sales will plummet, just when the company is investing money in Argentina for NG Ranger. Without Brazil can Argentina production survive? And without Camaçari, won't Argentina suffer similar consequences? This domino effect will drag the whole region and Ford will lose money in the Pacheco plant. Then, in a few years South América will continue to be a money pit. On top of the 2021 massive loss from Camaçari. And when it is time to develop replacement for NG Ranger, the bill will not be split with South América. But GM and Toyota will, so their products will have lower costs and will be more competitive in global markets. 

Edited by passis
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