Last year Ford announced they would no longer be producing compact, small, mid-size, and large cars. They were changing their long term plan to only produce cross over, SUVs, and pickup trucks. Not long after that announcement, the electric Mach E Mustang was introduced, and that vehicle seems to be the kick off of a new large vehicle line up.
But, this plan might be in serious peril before it even gets started. Let’s break down a few elements that might make Ford’s plan very challenging. Many of these things can change quickly though, as they all are very recent themselves in some regard, so this is my opinion and speculation.
First, the world wide COVID-19 pandemic is absolutely destroying the global economy. Auto manufacturers are taking a beating and sales are almost non existent. With people out of work, it makes it hard to entice people to buy a shiny new expensive pickup truck.
Second, the factory that supplies parts for Ford, Ram, and Toyota trucks was recently damaged by a tornado. While this will hurt Ram and Toyota as well, it made most headlines as interrupting Ford’s production. Since Ford’s entire lineup is mostly large trucks and SUVs and the parts supplier that provides the transmissions for those vehicles is damaged, all the eggs are in one basket and about to break.
Third, oil prices are deep in the red in trading value. While that is great for consumers because prices at the pump are very low, this unfortunately isn’t the time to take advantage of it. A thirsty F-150 can be filled for cheap at the moment, but with all shelter in place guidelines and people out of work, it is unlikely that people are going to be wanting a vehicle that is expensive to fill up in the future.
Fourth; very recently Ford announced that they are wanting to achieve 10 percent profit margins, even through this current circumstances. They have placed Lisa Drake in charge to accomplish that goal. She was in charge of the 2004 launch of the 11th generation F-150. That particular skill is what they are desiring her to perform on because she is also tasked her with increasing awareness of new products being launched, something Ford has struggled with for the past few years. Most notable the newest Ford Explorer botched release.
The next blog will be about the fifth and final blow to the Ford fiasco that is brewing. But with all the issues mentioned above, Ford has put all their chips on the table. SUV’s and trucks that with gas prices low but a worldwide pandemic not facilitating using those vehicles, a damaged factory, and the need to produce and profit within all of these circumstances, it is going to be a tough year for the automotive industry in general but I think Ford will really be feeling a pinch. Although Ford has weathered a lot over the years, so I should stop being so negative. The American spirit will prevail.