Ford Motor Company (NYSE:F) Accelerates Cost-Cutting Plan, Will Drop Most U.S. Sedans


Ford Motor Company (NYSE:F) has unveiled a plan aimed at cutting costs and improving profit margins much faster than previously announced. The strategy involves doing away with some of its traditional sedan model in the North America market which have increasingly become very unpopular.

The second largest automaker by market share has announced that the plan is geared at cutting $25.5 billion in cost by 2022. This is a big increase from the $14 billion which the company had announced previously. Jim Hackett, the Chief Executive of Ford while addressing investors said the company is currently shifting its focus in its operations and may drop unprofitable businesses. He added that the company will restructure and start focusing on profitable businesses only.

The company noted that it hopes to post pretax profit margins of 8% from its global business and 10%in North America by 2020, ahead of the initially issued target of 2022.

Following the announcement, company’s stock rose 2.6 %at $11.40 in after-hours trading.

In the response to a shift in consumer demand for SUVs and pickup trucks, the company has announced that it intends to trim its car portfolio in North America to just two models: the sporty Mustang, which was introduced 50 years ago this month, plus the new compact crossover referred to as Focus Active effective 2019.

The company said that it will not invest in next generations of Ford sedans in North America.


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Ford has come under immense pressure from several Wall Street investors to improve its product offering and improve its profit margins. Last year, the company’s pretax profit dropped to $8.4 billion from $10.3 billion.

Early this year, the company’s executives launched ambitious plans to change the product portfolio from passenger cars and adopt SUVs, bring on board more hybrid as well as pure electric vehicles, and cut on manufacturing and development costs. The move was developed as to help boost profits plus the company’s share price.

While addressing reporters as the company announced its first-quarter results, Bob Shanks, the Chief Financial Officer said they have carefully looked and considered every part of the business


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