Ford CEO Jim Farley Says Company Lost Billions on Sedans

[Gurgeh]

16 hours ago, akirby said:

I don’t think that’s really accurate.  I don’t think Ford drew a line in the sand and said stop building vehicles with lower profit margins.  
 

They set a corporate goal of either 8%-10% but we know some will be higher and some lower.

 

What they do is what all corporations do with their budget planning.  They make a list of all the projects currently in progress and new ones that have been approved and they rank them in a spreadsheet based on strategic importance, regulatory compliance, level of effort and amount of funding required and ROI potential.

 

Then you start a running total of expense and capital and when you run out of money you draw the line.  Anything below the line is not funded for that year.  If you want to fund something below the line you have to kill or move something above the line.  Which is what they did with Fusion and Maverick/BS.

 

If there was no Maverick or BS they’d still be building Fusions even at low margins because it would cost more to idle the plant.

Understood. You've made this point before, and it is a good reminder. Your final comment is also well made, which underscores the series of bonehead decisions that is going to leave their huge Oakville assembly complex idle for up to 3 years.

[silvrsvt]

16 minutes ago, Gurgeh said:

 Your final comment is also well made, which underscores the series of bonehead decisions that is going to leave their huge Oakville assembly complex idle for up to 3 years.

 

I really think this whole debacle is just a case of really bad timing with everything. Looking back 2 years ago, EVs seemed like they would continue their parabolic growth, but interest rates, inflation and the economy got in the way of that. I'm guessing that it is cheaper to delay and not make product for a few years to come out with something that will (hopefully) be profitable 12 months after launch, going by Ford's plan. 

[akirby]

2 hours ago, silvrsvt said:

 

I really think this whole debacle is just a case of really bad timing with everything. Looking back 2 years ago, EVs seemed like they would continue their parabolic growth, 

Yes and no.

 

Yes the plateau in EV sales was a bit unexpected and they did have to plan for continued rise in sales.

 

However, it was poor planning to go with large expensive 3 rows with questionable styling and to completely discontinue Edge and move Nautilus to China to do it.

 

Had they instead targeted smaller cheaper EVs for Louisville from the get go we’d have new C2 Edge and Nautilus in Oakville with the possibility of other C2 products if volume allowed.

 

You can go after new stuff without burning the bridge behind you in the process.  You just have to be a little more conservative and keep options open.

[silvrsvt]

34 minutes ago, akirby said:

You can go after new stuff without burning the bridge behind you in the process.  You just have to be a little more conservative and keep options open.

but that goes against spreading your self too thin because of costs of developing these products.

 

From what I understand-Ford of China was in desperate shape (most likely still is) before 2020 or so with sales shrinking.

 

That forced Ford to spend money on three different C products, in the shape of the Mondeo/Evos, Edge and Nautilus.

 

The EV program was more NA/EU focused then CN market....not to mention being started after the debacle above. 

[akirby]

They could have extended Nautilus and Edge a year or two and delayed the EVs to get a better handle on what the EV market was going to do.  In the meantime they could have also designed the Chinese Edge with NA in mind like they did with Nautilus.  Then they would have had the option to kill them early and push forward with EVs or kill the EVs and bring the C2 replacements over here from China.  It costs more and might delay getting the EVs to market but that’s probably better than idling an entire factory for 3 years, losing Edge completely and having to import Nautilus from China.

 

There are always contingencies if you plan right but Ford seems to prefer to keep walking the tightrope without a safety net and hope they make it to the other side.

[rmc523]

1 hour ago, akirby said:

They could have extended Nautilus and Edge a year or two and delayed the EVs to get a better handle on what the EV market was going to do.  In the meantime they could have also designed the Chinese Edge with NA in mind like they did with Nautilus.  Then they would have had the option to kill them early and push forward with EVs or kill the EVs and bring the C2 replacements over here from China.  It costs more and might delay getting the EVs to market but that’s probably better than idling an entire factory for 3 years, losing Edge completely and having to import Nautilus from China.

 

There are always contingencies if you plan right but Ford seems to prefer to keep walking the tightrope without a safety net and hope they make it to the other side.

 

I'm skeptical how the Chinese Edge would do here, to be honest - it's completely different than what our Edge has been.

Nautilus, however, looks fantastic on the roads.

[akirby]

2 hours ago, rmc523 said:

 

I'm skeptical how the Chinese Edge would do here, to be honest - it's completely different than what our Edge has been.

Nautilus, however, looks fantastic on the roads.

I agree but what I meant was they should have designed a new c2 edge for North America whether it was the same one for China or two different top hats.  The current one is a non starter for NA.  A hybrid edge with the gee whiz dash would sell great here and maybe avoid being a commodity.

[tbone]

On 6/26/2024 at 6:40 PM, akirby said:

I agree but what I meant was they should have designed a new c2 edge for North America whether it was the same one for China or two different top hats.  The current one is a non starter for NA.  A hybrid edge with the gee whiz dash would sell great here and maybe avoid being a commodity.

There are certainly some styling cues on the Chinese edge that are questionable, which tend to be emphasized by chrome trim, but I think they could address some of those pretty easily.  I think they need to figure something out with this model. I still think Ford is short on product.

I have said it before, Evos would work here, as is as far as I’m concerned. I think it could spawn a Lincoln coupe SUV as well.

 

 

 

[jpd80]

On 6/26/2024 at 5:39 AM, akirby said:

I don’t think that’s really accurate.  I don’t think Ford drew a line in the sand and said stop building vehicles with lower profit margins.  
 

They set a corporate goal of either 8%-10% but we know some will be higher and some lower.

You do realise that those two statements can be true at the same time,

everything depends on prices and the actual trim mix, the latter becomes

critical to the longevity of the product.

 

On 6/26/2024 at 5:39 AM, akirby said:

What they do is what all corporations do with their budget planning.  They make a list of all the projects currently in progress and new ones that have been approved and they rank them in a spreadsheet based on strategic importance, regulatory compliance, level of effort and amount of funding required and ROI potential.

 

Then you start a running total of expense and capital and when you run out of money you draw the line.  Anything below the line is not funded for that year.  If you want to fund something below the line you have to kill or move something above the line.  Which is what they did with Fusion and Maverick/BS.

 

If there was no Maverick or BS they’d still be building Fusions even at low margins because it would cost more to idle the plant.

The issue with Fusion is that around 2016, Fields cheapened out on the refresh

and after that, all the high series Titanium buyers abandoned it. After that,

Fusion became a liability and branded a commodity/ price driven purchase 

price vehicle. Who else but Ford would complain about its own vehicle

being able to be built 13,000 ways…..those customers never asked for that.

 

I understand why Ford does certain things but Ford said a while back that

its no interested in building much more than about 2.2 million vehicles until

or unless it could get a better average profit per vehicle. To that end, I think

COVID gave Ford and many other carmakers the opportunity to see how

buyers would react in a constricted market with increased prices. Most 

buyers yielded and paid higher prices but now we see an unwinding of

that as manufacturers start overproducing and swelling inventories.

 

And Ford has every right to command higher prices for vehicles that can

justify it, the thing they need to stop doing is undermining that by sneaky

decontenting on items they thing buyers will never notice are gone.

 

Edited June 28 by jpd80

[akirby]

2 hours ago, jpd80 said:

You do realise that those two statements can be true at the same time,

everything depends on prices and the actual trim mix, the latter becomes

critical to the longevity of the product.

 

The issue with Fusion is that around 2016, Fields cheapened out on the refresh

and after that, all the high series Titanium buyers abandoned it. After that,

Fusion became a liability and branded a commodity/ price driven purchase 

price vehicle. Who else but Ford would complain about its own vehicle

being able to be built 13,000 ways…..those customers never asked for that.

 

I understand why Ford does certain things but Ford said a while back that

its no interested in building much more than about 2.2 million vehicles until

or unless it could get a better average profit per vehicle. To that end, I think

COVID gave Ford and many other carmakers the opportunity to see how

buyers would react in a constricted market with increased prices. Most 

buyers yielded and paid higher prices but now we see an unwinding of

that as manufacturers start overproducing and swelling inventories.

 

And Ford has every right to command higher prices for vehicles that can

justify it, the thing they need to stop doing is undermining that by sneaky

decontenting on items they thing buyers will never notice are gone.

 

I don’t think people ever bought a lot of Titanium Fusions even in 2014.  I think I was in the minority.

 

What I was trying to say is that Ford did not just stop building low profit vehicles - they replaced them with other vehicles.  They did not kill Fusion and close Hermosillo.  They did not kill Focus and close MAP.  They’re replacing Edge with some type of EV.  There is a difference.

[Joe771476]

On 6/13/2024 at 9:03 AM, ANTAUS said:

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. 

There's no way Toyota lost money on Camry! They've been pumping out those vehicles cheaply like Hellman's whips up mayonaise!

[92merc]

3 minutes ago, Joe771476 said:

There's no way Toyota lost money on Camry! They've been pumping out those vehicles cheaply like Hellman's whips up mayonaise!

They probably haven't lost money, but I'm betting it's no where near a cash cow like the F150 is.

 

I'm betting it's more like Costco's rotisserie chickens, if you know what I mean....

[ANTAUS]

36 minutes ago, Joe771476 said:

There's no way Toyota lost money on Camry! They've been pumping out those vehicles cheaply like Hellman's whips up mayonaise!

Autoweek

 

Before the redesign, the Camry was a loss-leader for Toyota dealers; dealers ordered them to become eligible for hotter, more profitable models. The cars often sold for below dealer invoice.

"There were years in the not-distant past when you were content to lose a grand a unit on Camry, because you'd make it up on other products," says Fritz Hitchcock, a multiline dealer in Puente Hills, Calif.

 

 

[rmc523]

On 6/26/2024 at 7:40 PM, akirby said:

I agree but what I meant was they should have designed a new c2 edge for North America whether it was the same one for China or two different top hats.  The current one is a non starter for NA.  A hybrid edge with the gee whiz dash would sell great here and maybe avoid being a commodity.

 

Yup, I agree.

 

3 hours ago, akirby said:

I don’t think people ever bought a lot of Titanium Fusions even in 2014.  I think I was in the minority.

 

What I was trying to say is that Ford did not just stop building low profit vehicles - they replaced them with other vehicles.  They did not kill Fusion and close Hermosillo.  They did not kill Focus and close MAP.  They’re replacing Edge with some type of EV.  There is a difference.

 

....maybe........in 2047..........if Ford keeps its current plan....

 

...wait, I'm hearing it was pushed back to 2065 just while typing.....check that, 2073....

 

...but yes, Edge being replaced.

 

[jpd80]

15 hours ago, akirby said:

I don’t think people ever bought a lot of Titanium Fusions even in 2014.  I think I was in the minority.

 

What I was trying to say is that Ford did not just stop building low profit vehicles - they replaced them with other vehicles.  They did not kill Fusion and close Hermosillo.  They did not kill Focus and close MAP.  They’re replacing Edge with some type of EV.  There is a difference.

Of course and I agree with that, Ford making better product decisions.

 

Sorry not expressing myself clearly and Ford completely right to change its mind

with products it sees as not aligned with enough buyers, things like that happen.

To be fair, the CD4 Fusion/MKZ/Mondeo was begun way back in 2008 as a way of

eliminating the CD3 Fusion/MKZ and consolidating on the evolved Euro Mondeo, that

was a good thing because it was not developed in isolation, as were the other CD4s

like Edge/Nautilus/S-Max/Galaxy, all of those were seen as necessary at the time but

yes, buying tastes began changing away from them. So even if they were right

decisions at the time of development, they soon became less desirable products to

buyers (Ford tried everything even AWD V6 EB engine).

 

What really irks is that C1 and C2 were right decisions that Ford now sees as valuable,

pits a shame that a few of the Chinese developed vehicles didn’t make their way to

North America - understandable considering Ford full commitment to BEVs but then,

Ford could change its mind if the situation warranted a product cycle of other types 

of vehicles that would attract the kinds of buyers Ford wants (thinking HEV/PHEV).

[Gurgeh]

17 hours ago, rmc523 said:

 

Yup, I agree.

 

 

....maybe........in 2047..........if Ford keeps its current plan....

 

...wait, I'm hearing it was pushed back to 2065 just while typing.....check that, 2073....

 

...but yes, Edge being replaced.

 

Yeah, he had me until Edge. Edge is in fact the perfect example of a discontinued product with no plan to replace it, at least in the North American market, anytime in the near (or intermediate) future.

[AM222]

20 hours ago, Joe771476 said:

There's no way Toyota lost money on Camry! They've been pumping out those vehicles cheaply like Hellman's whips up mayonaise!

I think they didn't lose money on the Camry.
The smart thing Toyota did is sell it in many different regions. Its sold in Asia-Pacific, Europe, and North America. That's how you spread the development cost of a vehicle.

[AM222]

On 6/28/2024 at 7:36 PM, jpd80 said:

You do realise that those two statements can be true at the same time,

everything depends on prices and the actual trim mix, the latter becomes

critical to the longevity of the product.

 

The issue with Fusion is that around 2016, Fields cheapened out on the refresh

and after that, all the high series Titanium buyers abandoned it. After that,

Fusion became a liability and branded a commodity/ price driven purchase 

price vehicle. Who else but Ford would complain about its own vehicle

being able to be built 13,000 ways…..those customers never asked for that.

 

I understand why Ford does certain things but Ford said a while back that

its no interested in building much more than about 2.2 million vehicles until

or unless it could get a better average profit per vehicle. To that end, I think

COVID gave Ford and many other carmakers the opportunity to see how

buyers would react in a constricted market with increased prices. Most 

buyers yielded and paid higher prices but now we see an unwinding of

that as manufacturers start overproducing and swelling inventories.

 

And Ford has every right to command higher prices for vehicles that can

justify it, the thing they need to stop doing is undermining that by sneaky

decontenting on items they thing buyers will never notice are gone.

 

I think 2010s to 2020s was Ford's transition from reasonably priced vehicles (with premium features) to just expensive. I think this is more obvious for North American and European models.

Looking at the bigger picture, Ford didn't utilize its regional plants. For example, in Australia, I think the Mondeo I believe was imported from Europe. This put it at a disadvantage over its Asian-sourced rivals.

Edited June 29 by AM222

[akirby]

1 hour ago, Gurgeh said:

Yeah, he had me until Edge. Edge is in fact the perfect example of a discontinued product with no plan to replace it, at least in the North American market, anytime in the near (or intermediate) future.

But there was/is a plan to replace it.  First there were 5 new EVs slated for Oakville, the the 2 three rows.  Remember we’re not talking about a like for like replacement, just that the engineering, marketing and production resources would be reassigned to new products as opposed to just shutting them down.

[akirby]

1 hour ago, AM222 said:

I think they didn't lose money on the Camry.
The smart thing Toyota did is sell it in many different regions. Its sold in Asia-Pacific, Europe, and North America. That's how you spread the development cost of a vehicle.

Toyota probably makes a small profit on Camry - say 2%.  It’s the dealers that were taking the loss selling below invoice.

[morgan20]

Even Nissan and Jaguar can't figure out how to profitably keep sedans in their product lineup. Sedans have been the bread and butter for both brands, but not much longer.

 

More here; might require subscription:

https://www.autonews.com/cars-concepts/why-nissan-pulling-back-sedans

https://www.autonews.com/automakers-suppliers/jlr-cut-5-jaguar-cars-its-lineup-boost-income

 

 

[Andrew L]

1 hour ago, morgan20 said:

Even Nissan and Jaguar can't figure out how to profitably keep sedans in their product lineup. Sedans have been the bread and butter for both brands, but not much longer.

 

More here; might require subscription:

https://www.autonews.com/cars-concepts/why-nissan-pulling-back-sedans

https://www.autonews.com/automakers-suppliers/jlr-cut-5-jaguar-cars-its-lineup-boost-income

 

 

 

Taking a sedan out of Jaguar's lineup seems like a sin to the brand.  A lot of folks are saying Jaguar is on life support though so they have to do what they have to do I guess. 

[rmc523]

2 hours ago, morgan20 said:

Even Nissan and Jaguar can't figure out how to profitably keep sedans in their product lineup. Sedans have been the bread and butter for both brands, but not much longer.

 

More here; might require subscription:

https://www.autonews.com/cars-concepts/why-nissan-pulling-back-sedans

https://www.autonews.com/automakers-suppliers/jlr-cut-5-jaguar-cars-its-lineup-boost-income

 

 

 

Jaguar is shifting to pie in the sky prices, and the first model of that is rumored to be a 4-door GT type model.

 

I'm highly skeptical that charging astronomical prices for Jags will work.

[jpd80]

On 6/27/2024 at 9:40 AM, akirby said:

I agree but what I meant was they should have designed a new c2 edge for North America whether it was the same one for China or two different top hats.  The current one is a non starter for NA.  A hybrid edge with the gee whiz dash would sell great here and maybe avoid being a commodity.

Exactly, all of what you’ve said in your last two posts is spot on in my books.

 

The Chinese versions of Equator and Territory Sport have a lot of region specific parts and suppliers which doesn’t work for Ford’s North American supplier network.

 

woulda coulda shoulda but in another situation, Ford could have used one or both of them globally to fill holes in products not available from Ford Europe. It’s maddening that ROW markets only get limited access to these as they are LHD only.

[Joe771476]

Americans aren't going to be able to afford SUV's etc. much longer! The electricity supplier Eversource is charging customers an exorbitant PUBLIC BENEFITS fee to pay for non-paying customers including illegal immigrants. Mine is only $29 because I figured out ways to keep my bill at $65/mo. for two people.  But most people are paying $100 to $200 or more a month for this fee alone!  That could go toward a monthly car payment!  I'm glad they did it BEFORE the election so now people know what to do in November! Anyway, if Toyota sold almost 300K Camrys in 2023, it's not that bad of a segment to be in! If Ford wants to save money, stop continuing to make EV's!!