Ford CEO Jim Farley Says Company Lost Billions on Sedans

[ice-capades]

Ford CEO Jim Farley Says Company Lost Billions on Sedans

https://fordauthority.com/2024/06/ford-ceo-jim-farley-says-company-lost-billions-on-sedans/

 

 

Ford’s decision to discontinue its sedans in the U.S. a few years ago was one that was met with universal shock at the time, along with plenty of criticism – though some have since defended it. Now, years later, many still question this move, even as hard sales data seems to support it and Americans continue to show a preference for crossovers, SUVs, pickups, and profitable specialty models like off-road-focused trims and variants. In addition to that, it seems as if Ford also lost a good bit of money when it was selling sedans in the U.S., too.

 

 

“The reason is very simple – we lost billions on them, and we are not in a position to lose billions on vehicles anymore,” Farley told The Smoking Tire’s Matt Farah during a recent podcast. “As a business leader, I don’t believe that the company should allocate capital to vehicles that I know we are going to lose money on, and so we decided to create Mavericks, Broncos, Bronco Sports, and all sorts of other vehicles like the (Mustang) GTD that will make money. Raptors, Tremors, Transit vans, electric vehicles that will make money over time. That is what we do at Ford. It was a judgement call to move out of the commodity part of the market into vehicles that our company wakes up in the morning and does well.”

 

Ford has remained adamant that it killed off sedans in the U.S. due to declining sales, which makes sense from a business perspective as the company has a finite amount of resources to dedicate to its products. As fellow Blue Oval exec Kumar Galhotra told Ford Authority in an interview back in 2020, “do we want to invest it in a declining segment or do we want to invest it in a growing segment?”

 

Regardless, it’s unclear if Farley is talking about a specific model here or the automaker’s sedans as a whole, which previously included the Fiesta, Focus, Fusion, and Taurus. However, while Farley recently dismissed the idea that Ford has considered bringing sedans back to the same market, but also admitted that a four-door version of the Ford Mustang may one day come to fruition, too.

Edited June 12, 2024 by ice-capades
Additional Content

[DeluxeStang]

Interesting how Farley in that interview indicated if/when they brought sedans back, they would be wildly different than current offerings. He mentioned how sedans are a great option for EVs due to their areo benefits, so maybe they're planning something there. A Ford sedan with futuristic styling inspired by the gen 1 Tarus or something could make for an interesting offering. Would certainly be attention grabbing, especially with 80s nostalgia booming. 

[Sherminator98]

11 hours ago, DeluxeStang said:

Interesting how Farley in that interview indicated if/when they brought sedans back, they would be wildly different than current offerings. He mentioned how sedans are a great option for EVs due to their areo benefits, so maybe they're planning something there. A Ford sedan with futuristic styling inspired by the gen 1 Tarus or something could make for an interesting offering. Would certainly be attention grabbing, especially with 80s nostalgia booming. 

 

Apparently that is what the 3 row EV was/is supposed to be like. 

 

The thing is that Fiesta and Focus sedans didn't seem to sell as well as their hatchback counterparts. I think something that is similar to the Chevy Trax-which looks like a quasi wagon/SUV shape would be a good contender for a small/entry level vehicle. 

[akirby]

1 hour ago, silvrsvt said:

 

Apparently that is what the 3 row EV was/is supposed to be like. 

 

The thing is that Fiesta and Focus sedans didn't seem to sell as well as their hatchback counterparts. I think something that is similar to the Chevy Trax-which looks like a quasi wagon/SUV shape would be a good contender for a small/entry level vehicle. 

I will keep saying this - people buy family sedans because they’re cheaper than hatchbacks and utilities.  No other reason to buy a fiesta or focus sedan over the hatchback.  Therefore it’s a commodity and price is the only factor.  There is a little more to midsizers as far as features, style or performance but high volume is based mostly on pricing and Nissan and the Koreans own low pricing.

 

Any sedan would have to be unique in some way to set it apart from the mass market.  A 4 door Mustang sedan or hatchback would fit that mold and production at FR would be easy.  Zephyr with a hybrid or PHEV would also fit and help Lincoln dealers.  Mondeo would be a tougher sell compared to other midsizers but maybe the cool dash would set it apart.

 

It’s just so much tougher to make a car unique compared to trucks and utilities.  And far less opportunity for add on packages.

[ANTAUS]

For over 2 decades, Toyota has admitted they lost money on the Camry. Still, they believe they will upgrade to other Toyota products or Lexus if they have a good reliable experience with that vehicle.  And that's with Toyota making incremental small changes each generation.  I can imagine how much Ford invested each time they had a revolutionary change.

 

Meanwhile, across the table, you had Chrysler with the 300, which had tiny changes throughout the year on a product whose roots date back to the 1995 E-Class, essentially making it the Panther, of our time. 

[rmc523]

1 hour ago, akirby said:

I will keep saying this - people buy family sedans because they’re cheaper than hatchbacks and utilities.  No other reason to buy a fiesta or focus sedan over the hatchback.  Therefore it’s a commodity and price is the only factor.  There is a little more to midsizers as far as features, style or performance but high volume is based mostly on pricing and Nissan and the Koreans own low pricing.

 

Any sedan would have to be unique in some way to set it apart from the mass market.  A 4 door Mustang sedan or hatchback would fit that mold and production at FR would be easy.  Zephyr with a hybrid or PHEV would also fit and help Lincoln dealers.  Mondeo would be a tougher sell compared to other midsizers but maybe the cool dash would set it apart.

 

It’s just so much tougher to make a car unique compared to trucks and utilities.  And far less opportunity for add on packages.

 

I still think they could leverage the Evos (Mondeo Sport now) and offer that as their "sedan" offering while offering the added utility of the hatch.....the work is already done, why not use it?  And/or do a Mustang sedan that can target a different buyer/higher price and be more profitable.

I also think they should've brought Zephyr over.

 

And follow the Toyota path of keeping the same platform and making minor tweaks, not expensive massive redos.

Edited June 13, 2024 by rmc523

[ice-capades]

2 hours ago, akirby said:

I will keep saying this - people buy family sedans because they’re cheaper than hatchbacks and utilities.  No other reason to buy a fiesta or focus sedan over the hatchback.  Therefore it’s a commodity and price is the only factor.  There is a little more to midsizers as far as features, style or performance but high volume is based mostly on pricing and Nissan and the Koreans own low pricing.

 

Any sedan would have to be unique in some way to set it apart from the mass market.  A 4 door Mustang sedan or hatchback would fit that mold and production at FR would be easy.  Zephyr with a hybrid or PHEV would also fit and help Lincoln dealers.  Mondeo would be a tougher sell compared to other midsizers but maybe the cool dash would set it apart.

 

It’s just so much tougher to make a car unique compared to trucks and utilities.  And far less opportunity for add on packages.

 

I agree with most of your comments and Ford could have introduced a Mustang 4-Door Sedan years ago and did nothing, even with the excess capacity at the Flat Rock plant. I do have to disagree with your comment about it being tougher to make a car unique compared to trucks and utilities. Agree on the trucks but as far as SUV's and Crossovers, but other than front end treatments, they all look alike basically. 

[morgan20]

17 hours ago, ice-capades said:

“The reason is very simple – we lost billions on them, and we are not in a position to lose billions on vehicles anymore,” Farley told The Smoking Tire’s Matt Farah during a recent podcast. “As a business leader, I don’t believe that the company should allocate capital to vehicles that I know we are going to lose money on, and so we decided to create Mavericks, Broncos, Bronco Sports, and all sorts of other vehicles like the (Mustang) GTD that will make money. Raptors, Tremors, Transit vans, electric vehicles that will make money over time. That is what we do at Ford. It was a judgement call to move out of the commodity part of the market into vehicles that our company wakes up in the morning and does well.”

 

Ford can sell only pickup trucks, Broncos, Transits, race cars, and electric vehicles and be in a good position

[akirby]

5 minutes ago, ice-capades said:

 

I agree with most of your comments and Ford could have introduced a Mustang 4-Door Sedan years ago and did nothing, even with the excess capacity at the Flat Rock plant. I do have to disagree with your comment about it being tougher to make a car unique compared to trucks and utilities. Agree on the trucks but as far as SUV's and Crossovers, but other than front end treatments, they all look alike basically. 

That may be true for Escape but look at Bronco Sport and Explorer.  Off road versions, bigger wheels and tires, lifted suspensions, appearance packages, camping accessories, 4wd.  ST models.  Tremor.  There is just way more stuff you can do to a SUV that people will pay extra for than you can do to a car.

[akirby]

18 minutes ago, morgan20 said:

 

Ford can sell only pickup trucks, Broncos, Transits, race cars, and electric vehicles and be in a good position

They dropped all cars except Mustang and they’re almost at the same market share but far more profitable.  

[morgan20]

12 minutes ago, akirby said:

They dropped all cars except Mustang and they’re almost at the same market share but far more profitable.  

 

Yea, goes to show what Fords customers really want. They aren't sedans.

[DeluxeStang]

7 hours ago, akirby said:

Any sedan would have to be unique in some way to set it apart from the mass market.  A 4 door Mustang sedan or hatchback would fit that mold and production at FR would be easy.  Zephyr with a hybrid or PHEV would also fit and help Lincoln dealers.  Mondeo would be a tougher sell compared to other midsizers but maybe the cool dash would set it apart.

 

It’s just so much tougher to make a car unique compared to trucks and utilities.  And far less opportunity for add on packages.

Exactly, I've said it before, but it's not enough to just bring back a sedan. It has to have a unique selling point that makes buyers say "I have to have it". The maverick is a perfect example of this, it's actually one of the more expensive entry level vehicles you'll find across an automakers lineup, but people will gladly pay it. 

 

Not just because it's a small truck, I argue if the maverick was just a small truck, it wouldn't have sold anywhere near as well as it's selling now. It's the fact that it was a small truck with a hybrid system, and a good warranty, and some good design cues. Stacking a bunch of interesting ideas to take a mundane idea, and turn it into something remarkable. 

 

Any sedan Ford does it the future needs to be less of a box of wheels, and more like this, something compelling and desirable. Just ignore the mercury badging. 

Edited June 13, 2024 by DeluxeStang

[The Handler]

Lincoln needs something more interesting and exciting than another front-drive sedan. Maybe they need to dip their toes into performance. How about a supercharged 6.8L in the Navigator? lol

[Sherminator98]

6 minutes ago, The Handler said:

Lincoln needs something more interesting and exciting than another front-drive sedan. Maybe they need to dip their toes into performance. How about a supercharged 6.8L in the Navigator? lol

 

In the grand scheme of things, how much did the performance orientated Cadillac do to actually improve their market share? It made a good copy in car magazines, but didn't really move the needle sales wise. 

 

The Luxury market is fickle

[The Handler]

3 minutes ago, silvrsvt said:

 

In the grand scheme of things, how much did the performance orientated Cadillac do to actually improve their market share? It made a good copy in car magazines, but didn't really move the needle sales wise. 

 

The Luxury market is fickle

No, I don't want them building reskinned Bimmers. They need to be uniquely American. A souped-up Aviator and Navigator would fit the bill.

[morgan20]

1 hour ago, DeluxeStang said:

It has to have a unique selling point that makes buyers say "I have to have it".

 

Ford hasn't had a sedan like that since the 1986-1991 Taurus and Sable. Today, the Fords that make buyers say "I have to have it" are pickup trucks, Broncos, Transits, race cars, and electric vehicles.

[AM222]

Ford lost billions in sedans because they didn't handle the sedan business as well as its Asian rivals which always have the global market in their sights.

*In Asia-Pacific, the PowerShift dry dual-clutch transmission damaged the image of small Ford cars and crossovers. 








 

[Sherminator98]

14 hours ago, The Handler said:

No, I don't want them building reskinned Bimmers. They need to be uniquely American. A souped-up Aviator and Navigator would fit the bill.

 

But here is the thing-its not about you alone-its the market overall. There are lots of things I want from Ford, but I know most of them aren't practical. 

[morgan20]

7 hours ago, AM222 said:

Ford lost billions in sedans because they didn't handle the sedan business as well as its Asian rivals which always have the global market in their sights.

 

That's right. Trucks, SUV, vans, race cars, and electric vehicles are what Ford takes seriously. Everything else is an afterthought.

[rmc523]

15 hours ago, morgan20 said:

 

Ford hasn't had a sedan like that since the 1986-1991 Taurus and Sable. Today, the Fords that make buyers say "I have to have it" are pickup trucks, Broncos, Transits, race cars, and electric vehicles.

 

the 2013 Fusion was a sedan buyers wanted to have.....until they didn't....but Ford also didn't help things leaving it out to dry.

[Andrew L]

15 hours ago, morgan20 said:

 

Ford hasn't had a sedan like that since the 1986-1991 Taurus and Sable. Today, the Fords that make buyers say "I have to have it" are pickup trucks, Broncos, Transits, race cars, and electric vehicles.

 

You could probably argue the 2nd gen too, it sold better than the first gen and was the best selling sedan in the US.

[brucelinc]

I understand the business case and Ford's decision to kill Ford and Lincoln sedans.   The reason that I moved to BMW was because they still make a full range of desirable (to me) sedans and coupes.   My question is how do they do it profitably if Ford or GM cannot?   I guess the same question would apply to Mercedes, Audi, and other upscale makes that offer sedans.   Is it brand loyalty, more desirable products, higher prices, what?   Or are they profitable?   In the case of BMW, one would have to think so since sedan sales are a large part of their business.

 

[akirby]

1 hour ago, Andrew L said:

 

You could probably argue the 2nd gen too, it sold better than the first gen and was the best selling sedan in the US.

As a 2013 Fusion Titanium owner I agree it was a great vehicle.  Only downside was weight and mpg compared to the imports.  The problem was not many people were willing to pay a premium for a Titanium.  I hardly ever saw another Titanium model.  They were 90% cheap SE models.  Same for Escape.  Nothing but SEs.  Cheap transportation.

 

20 minutes ago, brucelinc said:

I understand the business case and Ford's decision to kill Ford and Lincoln sedans.   The reason that I moved to BMW was because they still make a full range of desirable (to me) sedans and coupes.   My question is how do they do it profitably if Ford or GM cannot?   I guess the same question would apply to Mercedes, Audi, and other upscale makes that offer sedans.   Is it brand loyalty, more desirable products, higher prices, what?   Or are they profitable?   In the case of BMW, one would have to think so since sedan sales are a large part of their business.

 

 

BMW’s heritage is performance cars.  Lincoln’s heritage is Town Cars.  BMW and MB are mfrs.  Lincoln is a small division of Ford.  Huge difference in resources and potential buyers.  

[brucelinc]

11 minutes ago, akirby said:

BMW’s heritage is performance cars.  Lincoln’s heritage is Town Cars.  BMW and MB are mfrs.  Lincoln is a small division of Ford.  Huge difference in resources and potential buyers.  

 Yeah, I was thinking of Ford and not just Lincoln.   I suppose Ford's heritage is more geared toward value priced passenger vehicles and, of course, trucks.   That would different than the manufacturers that I mentioned.    The profit margins are likely higher on BMW and MB sedans and coupes than they ever were on high volume sedans like Ford sold.    

[morgan20]

1 hour ago, brucelinc said:

The profit margins are likely higher on BMW and MB sedans and coupes than they ever were on high volume sedans like Ford sold.    

 

When I worked at Ford & Visteon, high volume Ford, Mercury, and Lincoln sedans were considered loss leaders. Profit margins on Ford trucks, vans, and SUVs more than made up for that.

 

Ford's profit margin on F-Series is much higher than BMW and Benz on sedans and coupes.