Ford Drives Sedans Out of their Showrooms

I had the Mercury Version of this Taurus Station Wagon.
It was the Ford same color and looked exactly like this.

     Ford Motor announce earlier this week that it was basically getting out of the car business in the US. The market has changed. There has been a decline for demand of traditional cars i.e. sedans. The marketplace is shifting to SUVs and Light Trucks, and that is where Ford will focus their future product development and offerings. They will continue to produce two cars: the Mustang and an about to be launched Ford Focus Active which is small SUV.
     There are several reasons for this. First and foremost is the shift in the market. As gasoline prices dropped, the market has shifted from 60% cars and 40% light trucks and SUVs to the compliment of that mix. Add to the gasoline price drop the fact millennials are aging and starting families and today we are seeing a marketplace that is 40% cars and 60% light trucks and SUVs. Ford announced this when people around me are beginning to complain that gasoline is again $3/gallon. It is reported that Ford can mitigate higher gasoline prices by leveraging and advancing their EcoBoost engine technology to make the light trucks and SUVs have better fuel economy.
     Fiat Chrysler has already done this. The only sedans they now offer are the Challenger and Charger. These are muscle cars like the Mustang. They are focusing on their RAM and Jeep lines along with their Chrysler Pacifica minivan. There are articles that say GM is not far behind.
     Another reason for this shift is that Ford’s financial performance has not been impressive. Last year, CEO Mark Fields was let go because the stock price dropped 40% during his tenure. Jim Hackett took his place and made this call:
It's been easy to identify what's wrong and what we need to do about it. The handwringing maybe that has been around our business is gone. We're starting to understand what we need to do and make clear decisions there.
     My first real full-time job was at Ford. I started there in 1975. I was delighted to be part of the auto industry. I grew up in Detroit and loved it when the new models were announced each fall. I could name every car on the road at an early age. Our church was in Dearborn which is the heart of Ford country, many people we knew worked at Ford or GM, and I went to college at Michigan’s Dearborn campus which stood on Henry Ford’s Fairlane Estate. My maternal grandfather, Levon, worked in the foundry at Ford’s Rouge facility. Henry Ford and the Ford Motor Company loomed large in my life. I was delighted to be part of Ford Motor Company at the beginning of my career.
     I thought that I would work there until I retired. As it turned out, that was not the case. I left to work automotive supply industry for a decade and then left the auto industry entirely moving to consumer-packaged goods for the bulk of my career. I still followed the auto industry intently because of my Detroit and Ford roots.
     When I started at Ford I thought, when we put our minds to it, we would be able to beat the Japanese at their own game which was to produce high quality and reliability cars at lower prices. Toyota and Honda were indeed producing higher quality and reliability cars than Ford, GM, and Chrysler were, and they were selling them for less. As it turned out, this was not the case either. It was not so easy to do. The Japanese had dramatically changed the game and the US companies had become bloated in terms of staff and layers of management. This resulted in slow and politically dominated product development. Customer focused design and engineering, with the exception of the looks of the cars, fell along the wayside. If you combine with this a completely misguided sense of superiority and overconfidence, especially at GM, the industry was headed for a rough period. That rough period lasted for decades.
     Ford did embrace quality as Job 1. They did transform themselves and prove that they could design a best-selling sedan, the Ford Taurus which was launched in 1986. Lew Veraldi led a team that created a better process for customer focused, quality driven, new product development. It was a great success for that one model. The Taurus was the best-selling sedan in the US. Ford did not sustain what Veraldi created. Instead Toyota upped their game and became the best-selling sedan in the US for most of the 1990s and 2000s.
     All of the articles I read are giving Ford kudos for dropping their sedan offerings and focusing on light trucks and SUVs. They call it a “brilliant” and “a logical idea”. Yet, the stock price did not immediately tick up.  This move is probably overdue. Analysts and reporters that follow the automotive industry have been predicting or suggesting this for awhile as Detroit has not been able to make money from smaller cars for years.
     This move by Ford? It is probably the right thing to do.
     To me, well the part of me that is still a kid smitten by the auto industry, it is sad. Ford and GM to me have always been car companies. I thought they always would be. Of course, and I know this, nothing lasts forever.