Ford Motor Co. announced a sweeping strategy that doubles down on truck and SUV models, ramps up hybrid offerings, makes automated safety systems standard and launches a Tesla-fighting electric crossover.
The plan, outlined by Jim Hackett, Ford’s president and chief executive, and other senior managers Thursday, also addresses the Dearborn, Mich., automaker’s cost structure and manufacturing efficiency by condensing production to just five vehicle architectures.
The strategy is part of a broad initiative to rapidly reshape Ford’s product lineup with redesigned and new vehicles. These include a hybrid F-150 pickup truck with an on-board generator to operate tools, and new off-road SUVs such as the Bronco. A Mustang-inspired all-electric crossover also is in the works.
“Being frozen in the past is really a death sentence for a business,” Hackett said.
The automaker also is working to whittle the time to bring new vehicles to market by developing cross-platform body, chassis, electrical and powertrain modules. The new vehicle development structure and other changes will create $4 billion in engineering efficiencies within five years, said Joe Hinrichs, Ford’s president of global operations.
Such a system allows the company to shave manufacturing expenses. Ford, for example, has had seven moonroof architectures. It is cutting that to two or three, he said.
Ford’s new and redesigned model offerings will drop the average model age of its showroom vehicles to 3.3 years by 2020 from 5.7 years now.
The company is looking to reassure investors and provide a clearer roadmap for its future following a series of management changes.
Former Chief Executive Mark Fields was fired by Ford’s board of directors last year because it was dissatisfied with the company’s profits, stock performance and what was perceived to be a lack of a clear technology strategy. Hackett was chosen to replace Fields. Last month, Ford fired Raj Nair, executive vice president and president, North America, for what it called “inappropriate behavior.” Ford did not elaborate on Nair’s actions.
“The company has made significant changes to senior management, but investors lack confidence in Ford’s ability to address chronically loss-making businesses and its potential to pivot into areas of growth,” Adam Jonas, an analyst with Morgan Stanley & Co., wrote in a report for investors this week.
“Our discussions with investors suggest low confidence in Ford’s earnings visibility and strategic vision,” Jonas said. “The product portfolio is seen as dated and overexposed to passenger car segments. The company’s Auto 2.0 strategy is not seen as cohesive and consistent.”
Ford shares have fallen 12 percent this year to close at $11.09 Thursday.
As it rolls out new vehicles Ford will use five flexible vehicle architectures. They are body-on-frame for trucks and large SUVs, front-wheel-drive unibody and rear-wheel-drive unibody. The unibody architectures are used for sedans and crossovers. Ford will also have a commercial van unibody and a battery-electric vehicle platform.
The company also is slashing the number of option combinations that could be ordered for an individual model to simplify its build process. It has already reduced the number of orderable configurations by 60 percent on the latest version of the Expedition SUV.
“We know that 80 percent of our sales fall into just 10 to 20 percent of the orderable configurations,” Hinrichs said.
Hackett said trucks, SUVs and hybrid powertrains are the centerpieces of Ford’s product strategy. The company sees fuel-efficient hybrids as way to protect owners of the type of large vehicles it sells from gasoline price spikes.
A full 86 percent of Ford’s North American product mix will be trucks and SUVs by 2020.
Ford is reallocating $7 billion in capital from cars to SUVs because it estimates SUVs will account for 50 percent of U.S. industry auto sales to consumers — rather than fleets — by 2020.
By shifting away from sedans, Ford is playing to its strengths.
Ford sold nearly 900,000 F-Series pickup trucks in the U.S. last year, more than any other vehicle of any type from any manufacturer. The pickup truck line accounted for $41 billion in revenue last year, according to Jim Farley, Ford’s president of global markets.
“Trucks and utilities are going to fuel our growth and profitability,” Farley said.
The F-150 franchise is worth over a third more than Ford’s current $44-billion stock market value, Jonas said.
Ford is working on a redesign of its flagship F-150. The company did not provide details except to say that one version will have a hybrid powertrain.
“Hybrids for years have been mostly niche products but are now on the cusp of a mainstream breakout,” Farley said.
Hybrid technology has become more powerful at the same time that it has come down in price, making it feasible to roll out across a wide product range, Hackett said. Ford estimates it will sell more hybrid vehicles in the U.S. by 2021 than Toyota Motor Corp., the current leader.
“We are going to do this by making hybrids mainstream with our highest-volume, most-profitable vehicles,” Farley said.
The F-150 hybrid will use the partially electric powertrain to add low-end torque for extra pulling power and to be used as a mobile generator, he said.
Within two years, Ford will offer eight different SUVs, including a new Explorer and Escape. Five of the models will offer hybrid powertrains and one battery electric. The company did not provide details about the electric crossover but plans to use styling cues from its iconic Mustang sports car and has given the vehicle a working title of Mach 1.
There will be two new models targeted at off-roading. One is the already announced Bronco. Teaser photos show that it leans more to Range Rover off-road styling rather than the military lines of the Jeep Wrangler. It will have a smaller, yet-to-be-named sibling.
“Both will be true off-road vehicles that will be as comfortable at high speeds on the road as they are on sand,” Farley said.
The automaker’s strategy also includes continuing to target the commercial vehicle market.
Ford is the only automaker to offer a full line of commercial vehicles from Class 1 pickups to Class 7 heavy-duty trucks in the U.S.
“They take care of everybody from small businesses to huge corporate fleets,” Farley said.
It plans to debut a new Transit cargo van with 4G LTE connectivity in 2019. Connectivity has become an important feature of commercial vehicles.
“Connectivity allows fleet customers to monitor driver behavior and fleet maintenance needs,” Hinrichs said.
Ford will extend production of its aging E-Series cutaway and stripped chassis into the 2020s. It also plans to add safety features, including automatic emergency braking and lane-departure warning to future E-Series, F-650, F-750 and F59 chassis vehicles.
The addition of more safety features will eventually extend to its light vehicles also.
It will start to make a new Ford Co-Pilot360 suite of features standard on some models later this year. The package includes automatic emergency braking with pedestrian detection, blind-spot information system, lane-keeping system, rear backup camera and auto high-beam lighting.