The Motley Fool has a disclosure policy.Also, check out which comebacks are possible. The $16,122 Social Security Bonus You Cannot Afford to Missīitcoin's Biggest Competitor Isn't Ethereum - It's ThisĪdam Levine-Weinberg owns shares of General Motors. Instead, it risks exiting a substantial slice of the market just as rising fuel prices and higher interest rates may push consumers back toward affordable, fuel-efficient cars.ĥ Expected Social Security Changes in 2018Ħ Years Later, 6 Charts That Show How Far Apple, Inc. market - Ford should have been able to keep selling one or two sedans in the U.S. Still, given that Ford will continue making cars for other global regions - and will build the car-derived Focus Active crossover for the U.S. It can keep those models alive for several more years without making major investments. GM is somewhat better-positioned than Ford because it updated the high-volume Chevy Cruze and Chevy Malibu models a couple of years ago. (Higher interest rates will make it even harder for consumers to afford the rising cost of buying a new vehicle.) Adding hybrid or battery-electric crossover models can address fuel-efficiency concerns, but at the cost of making those vehicles even more expensive. Entry-level crossovers can't rival the fuel efficiency of a compact or subcompact car, and the difference in price is meaningful for cost-conscious buyers. However, eliminating traditional car models doesn't seem sustainable. GM has also been suffering from weak demand for traditional sedans. Two Chevy Malibu cars in a desert setting Falling demand for traditional sedans and hatchbacks has undermined the already-tenuous business case for these models. It's clear that Ford has been building far too many car models in recent years. If gas prices continue rising, the superior fuel efficiency of traditional compact cars could become a key selling point again. For example, the new EcoSport gets an EPA-estimated 29 miles per gallon (mpg) on the highway, compared to 34 mpg for the Focus and 35 mpg for the Fiesta. But the added height of a crossover carries an automatic fuel efficiency penalty. It's true that today's crossovers are far more fuel efficient than the SUVs of a decade ago. However, the national average gasoline price has risen by more than $0.40/gallon over the past year. Cheap gas has certainly fueled the market shift toward crossovers over the past few years. Rising fuel prices potentially represent an even bigger risk to Ford's strategy. However, its starting price is nowhere near the Ford Fiesta's base price of $14,205. The arrival of the EcoSport means Ford will still have an affordable entry-level model to fill this role. Historically, one reason automakers like Ford and GM built small cars was to draw potential customers into dealerships with cheap cars and then "upsell" them to more profitable models. car market entirely, it is likely to discontinue at least two models in the next few years: the Chevy Sonic and the Chevy Impala. And while GM doesn't plan to exit the U.S. It is working to broaden its crossover lineup with an ever-expanding array of models. sales volume.Ĭrosstown rival General Motors (NYSE: GM) is moving in a similar direction. This was down 12.2% year over year, but it still represented 17.5% of the Ford brand's U.S. across the five models that will be discontinued. During the first three months of 2018, Ford sold 100,956 vehicles in the U.S. The segments Ford is abandoning have been declining, but they still represent a significant piece of the market. (Indeed, Ford CEO Jim Hackett described it as a crossover last week.) The iconic Mustang is a high-performance pony car, while the Focus Active will feature higher ground clearance than the current Ford Focus, making it closer to a crossover. Neither is a traditional sedan - or hatchback, for that matter. The end of the Ford sedanīy 2020, Ford will sell just two car models in North America: the Mustang and the forthcoming Focus Active. Let's take a look at some of the key arguments on both sides. Some view it as a smart move to eliminate unprofitable lines of business, while others see the shift away from cars as shortsighted. This radical decision has received mixed reviews from investors and auto industry pundits. In conjunction with its first-quarter earnings report, the automaker announced that by 2020, almost 90% of Ford's North American model lineup will consist of trucks, utilities, and commercial vehicles.Īs part of this transition, Ford will discontinue five key models in the domestic market: the Fiesta, C-MAX, Focus, Fusion, and Taurus. Ford Motor (NYSE: F) is getting out of the car business in the United States.
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