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Ford to Cease Production of Sedans as it Looks to Boost Profits

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【Summary】Ford Motor Company, one of the most storied automotive brands, said it will stop producing full and mid-size sedans, as it shifts towards battery-powered SUVs, crossovers and light trucks.

Eric Walz    Apr 25, 2018 3:49 PM PT
Ford to Cease Production of Sedans as it Looks to Boost Profits

Ford Motor Company, one of the most storied automotive brands, said it will stop producing full and mid-size sedans, as it shifts towards battery-powered SUVs, crossovers and light trucks.

On Wednesday, Ford outlined a plan to cut costs and boost profit margins at a faster pace than previously announced, which includes dropping traditional sedan models in North America that have become increasingly unpopular with consumers.

Ford "will not invest in next generations of traditional Ford sedans for North America," including the midsize Fusion and full-size Taurus, the company said. However, Ford will continue to produce the legendary Mustang.

Responding to a shift consumer demand in favor of SUVs, crossovers and pickup trucks, Ford said it planned to trim its North American car portfolio down to just two models: the Mustang, and a new compact crossover called Focus Active that is scheduled to debut in 2019.

Declining Sedan Sales in the U.S.

Sales for mid-size and large sedans has dropped significantly in the U.S. since March of last year. Ford's sedan sales dropped 8.1 percent in the past year, while General Motors saw its sedan sales slip by 11.3 percent. Foreign automakers did not fare any better. Hyundai's midsize sedan sales fell 26.3 percent in the U.S. since March of last year.

For comparison, Ford's light truck sales rose 7.2 percent, while GM's light truck sales jumped 26.1 percent. The F Series pickup is the best selling light truck in the U.S.

2019-ford-fusion-energi-titanium.jpg

The 2019 mid-size Ford Fusion will be eliminated

Ford plans to cut $25.5 billion in costs by 2022, up from a total of $14 billion the company announced to investors last fall.

The automaker has been under pressure from Wall Street investors to improve its product lineup and lift its profit margins. In 2017 the company's pretax profit fell to $8.4 billion from $10.3 billion.

In March, Ford executives unveiled ambitious plans to shift the struggling automaker's product portfolio from passenger cars to SUVs, add more hybrid and pure electric vehicles, and reduce development and manufacturing costs - aimed at boosting profits and the automaker's share price.

Speaking to reporters on Wednesday as the company reported first-quarter results, Chief Financial Officer Bob Shanks said "we have looked at every single part of the business."

"We are driven to turn this business around."

The bulk of Ford's quarterly profit was driven by high-margin pickup trucks and SUVs in North America. Europe was the only region to turn a profit for Ford.

Earlier this month, Ford unveiled five new models for China as part of a business revitalization effort centered around a plan to launch over 50 new or redesigned vehicles by 2025, including the electrification of its model lineup. The shift may be a good move for Ford, China is the world's largest market for electric vehicles.

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