Ford’s Better (?) Idea

By 2020, approximately 90 percent of what Ford will have in its North American dealerships will take the form of trucks, utilities and commercial vehicles.

At the Glass House in Dearborn, as the Skidmore, Owings & Merrill-designed headquarters for Ford is known around town, there are undoubtedly cadres of people who are dedicated to slicing, dicing and ricing all aspects of the automotive market in ways that would seem absolutely maddening to those of us who are generally interested in how many Fiestas or F-150s the company sold in a given period of time. 
 
And in addition to those data analysts, there are, probably, those who are either full-blown futurists or who at least are extrapolating the Now into the Future.
 
In 1956, when the Glass House was opened, Ford had a variety of cars on the market, including the Fairlane Victoria Hardtop, the Mainline sedans (the Fordor, Tudor and Tudor Business), the Country Squire Station Wagon, and the Fairlane Skyliner. Needless to say, none of these are still on offer at your local Ford dealer.
 
Tastes change and so must the products created to meet them.

When Ford announced its Q1 2018 financials, a few announcements came along with the data. For example, the company said that it is targeting an 8 percent adjusted EBIT margin in 2020, not 2022, as had previously been the plan. One way that this is conceivable is via “$11.5 billion of cost and efficiency opportunities that span the entire company and include engineering, marketing and sales, manufacturing, material cost and IT.” When someone says, “cost and efficiency opportunities,” hang on to your desk chair, especially if it’s a Steelcase Leap model.
 
And while on the subject of opportunities, it also noted that it fully intends to improve its capital efficiency, which is a sophisticated way of saying “getting more bang for its buck.” In this case, they’re expecting to get, between 2019 and 2022, $34-billion worth of bang for $29-billion bucks. Or said another way, the $34-billion that had previously been announced for that period is being cut by $5-billion.
 
While those announcements ought to give anyone who works at Ford—especially those in engineering, marketing and sales, manufacturing, material cost and IT—pause (and possibly an excuse to make a Maalox run), some other announcements made by Jim Hackett, Ford president and CEO, have set consumers and the industry abuzz.
 
Particularly the point that by 2020, approximately 90 percent of what the company will have in its North American dealerships will take the form of trucks, utilities and commercial vehicles.
 
Or 10 percent will be cars as we know them. Cars—with the exceptions of the venerable Mustang and a new variant of the Focus, the Focus Active—will be phased out. (Strangely, the Focus Active is described by Ford as a “crossover,” so the car-ness of that vehicle is in some question, at least definitionally.)
 
There is a third category of sorts, perhaps. They’re talking about exploring  “white space” vehicles, things that would combine the characteristics of cars and utilities. (Have they looked at the Ford Edge?) Let’s face it: the Mustang is being kept because it is one of two “iconic” vehicles that Ford has on the market, with the other icon being the F-Series pickup. In terms of U.S. sales, the Mustang isn’t all that significant from a numbers perspective, with 81,868 of them having been sold in 2017. Yet it has resonance overseas in a way that the F-Series doesn’t. In 2017 Ford sold—including the U.S. units—125,809 Mustangs; the car is on sale in 146 countries.
 
And the Focus Active is going to be put on the market because at least compared to everything else in the showroom, Mustang notwithstanding, it will at least be “car-ish.”
 
Ford is also going to be increasing the number of vehicles with hybrid powertrains, and it intends to have 16 battery-electric vehicles on the market by 2022.
 
There are a couple of points the company made in terms of autonomous vehicles (AVs), though there was no timeline associated with either. For the AVs, it says it is going to create a “business” that will be “viable and profitable,” a business that will offer “the most trusted and human-centered ride-hailing and goods delivery experience.” Presumably, there are not going to be Mustang AV editions at Ford stores.
 
Then, going beyond building mere vehicles, “Ford is targeting to become more than just a provider of mobile solutions. Its ambition is to create the Transportation Mobility Cloud of choice for cities and being an orchestrator of all digital connections from vehicle to street to business to home.”
 
While this may be vastly understating the case, it seems that Ford wants to become a software-as-a-service provider for all things that move in and around cities rather than remaining a company that designs, engineers and builds those things that are on wheels and networked.