Ford to Accelerate Lineup Shift to Fuel-Efficient Cars After $8.67 Billion 2Q Loss
By Scott Doggett, Contributor
Ford Motor Co. today announced plans to accelerate its transformation away from gas-guzzling pickups and SUVs to fuel-efficient vehicles with the addition of new small cars to its North America lineup and unprecedented production changes as the automaker reported a record-high total net loss for the second quarter of $8.67 billion.
In addition to bringing six small vehicles to North America from the company's European lineup, Ford is accelerating the introduction of fuel-efficient EcoBoost and all-new four-cylinder engines, increasing hybrid production and converting three existing truck and SUV plants for small-car production, beginning this December.
Ford President and CEO Alan Mulally said the company is more focused than ever on its transformation plan, which calls for:
• Aggressively restructuring to operate profitably at the current demand and changing model mix.
• Accelerating the development of new products that customers want and value.
• Financing the plan and improving the balance sheet.
• Working together effectively as one team, leveraging Ford's global assets.
Aggressive Restructuring
Ford will convert three existing North American truck and SUV plants for small car production, with the first conversion beginning this December.
The moves are in addition to Ford's announcements in May and June that it is reducing its North American production plans for large trucks and SUVs for the remainder of 2008, as well as increasing production of smaller cars and crossovers.
"We are adding four-cylinder engine capacity to meet the growing consumer demand, while expanding production of our new EcoBoost engines, six-speed transmissions and other fuel-saving technologies," said Mark Fields, Ford president of the Americas.
Among the manufacturing realignment actions:
• Michigan Truck Plant in Wayne, which currently builds the Ford Expedition and Lincoln Navigator full-size SUVs, will be converted beginning this December to production of small cars derived from Ford's global C-car platform in 2010.
• Production of the Ford Expedition and Lincoln Navigator will be moved to the Kentucky Truck Plant in Louisville early next year.
• Cuautitlan Assembly Plant in Mexico, which currently produces F-Series pickups, will be converted to begin production of the new Fiesta small car for North America in early 2010.
• Louisville Assembly Plant, which builds the Ford Explorer mid-size SUV, will be converted to produce small vehicles from Ford's global C-car platform beginning in 2011.
• Twin Cities (Minnesota) Assembly Plant, which was scheduled to close in 2009, will continue production of the Ford Ranger through 2011 to meet consumer demand for the compact pickup.
• As previously announced, Kansas City Assembly Plant this year will add a third crew to its small utility line for the Ford Escape, Escape Hybrid and Mercury Mariner and Mariner Hybrid.
Buyouts to Continue
In tandem with the realignments, Ford will continue to offer targeted hourly buyouts at its U.S. plants and facilities. Ford also said it remains on track to reduce salaried-related costs by 15 percent in North America by Aug. 1.
Ford North America still expects to reduce annual operating costs by $5 billion by the end of 2008 - at constant volume, mix and exchange, and excluding special items - compared with 2005. In addition, the company said it plans to continue to reduce structural costs beyond 2008.
The company also confirmed Ford, Lincoln and Mercury will remain in its North American brand portfolio. Ford said it will work with its dealers to broaden and accelerate its dealer consolidations, which will result in a dealer network that reflects the changing industry size and model mix.
Ford also updated its current North American planning assumptions, which include:
• U.S. economic recovery to begin by early 2010.
• U.S. industry sales to return to trend levels as the economy returns to health.
• Product mix changes are permanent, but some recovery will occur from the current share-of-industry for full-size pickups as the economy and housing sector recover.
• Oil prices to remain volatile and high.
• No near-term relief from current level of commodity prices.
• About 14 percent U.S. market share for Ford, Lincoln and Mercury brands.
Accelerating New Products
Ford is adding several new North American products in the near- and mid-term, and shifting from a primary emphasis on large trucks and SUVs to smaller and more fuel-efficient vehicles. By the end of 2010, two-thirds of spending will be on cars and crossovers, up from one-half today.
The new products include six European small vehicles to be introduced in North America by the end of 2012.
"We are creating a new Ford in North America on a foundation of small, fuel-efficient cars and crossovers that will set new standards for quality, fuel economy, product features and refinement," Fields said.
The Ford, Lincoln, Mercury line will be almost completely upgraded by the end of 2010, including:
• 2009 Ford F-150, on sale in late fall with the most capability, most choice and most smart features of any full-size pickup, and with more than a 7 percent fuel economy improvement.
• 2010 Ford Fusion, Mercury Milan, Lincoln MKZ sedans, on sale in early 2009, with Fusion's and Milan's four-cylinder fuel economy expected to top Honda Accord and Toyota Camry.
• 2010 Ford Fusion Hybrid and Mercury Milan Hybrid, beginning production late this year and on sale in early 2009, with fuel economy expected to top the Toyota Camry hybrid.
• New Ford Mustang - coupe, convertible, and glass-roof models - in early 2009.
• New Ford Taurus sedan - with EcoBoost engine and even more advanced safety and convenience technologies - in mid-2009.
• New European Transit Connect small multi-purpose van in mid-2009.
• New Lincoln seven-passenger crossover - with EcoBoost engine - in mid-2009.
• New European Ford Fiesta, in both four- and five-door versions, in early 2010.
• New European Ford Focus, in both four- and five-door versions, in 2010.
• New Mercury small car in 2010.
• New European small vehicle that will be a "whitespace" entry in North America in 2010.
• Next-generation Ford Explorer - with unibody construction, EcoBoost, six-speed, weight savings and improved aerodynamics for up to 25 percent better fuel economy - in 2010.
With every new product, Ford said it expects to be the best or among the best for fuel economy. This is aided by one of the most extensive powertrain upgrades ever for Ford. By the end of 2010, nearly all of Ford's North American engines will be upgraded or replaced.
In addition, within two years, nearly all of Ford's North American lineup will offer fuel-saving six-speed automatic transmissions.
Building on Leaders
The improvements build on several Ford fuel economy leaders today, such as:
• 2009 Ford Flex, which is the most fuel-efficient standard seven-passenger vehicle on the market, topping the 2009 Honda Pilot.
• 2009 Ford Focus, with highway fuel economy of up to 35 mpg - better than the smaller 2008 Honda Fit and 2009 Nissan Versa SL and a key reason Focus retail sales are up 50 percent.
• 2009 Escape, with a new 2.5-liter four-cylinder engine and six-speed transmission delivering best-in-class highway fuel economy of 28 mpg - ahead of Toyota RAV4 and Honda CR-V.
• 2009 Ford Escape Hybrid, delivering 34 mpg in the city and 31 mpg on the highway, making it the most fuel-efficient utility vehicle available.
Coming in 2009 are the first applications of Ford's new EcoBoost engines. EcoBoost uses gasoline turbocharged direct-injection technology for up to 20 percent better fuel economy, up to 15 percent fewer carbon-dioxide emissions and superior driving performance versus larger-displacement engines.
EcoBoost V-6 engines will be introduced on several vehicles next year, beginning with the Lincoln MKS and Ford Taurus sedans, and Ford Flex crossover. Four-cylinder EcoBoost engines will debut in 2010 in both North America and Europe. Ford will offer EcoBoost on more than 80 percent of its North American lineup by the end of 2012.
Ford also plans to double capacity for North American four-cylinder engines to more than 1 million units by 2011, to meet the consumer trend toward downsized engines for fuel economy. The smaller engines will deliver significant fuel savings.
In addition, Ford plans to double its hybrid volume and offerings next year - and is looking to expand further going forward. Production of the all-new 2010 Ford Fusion Hybrid and Mercury Milan Hybrid begins in December, with fuel economy expected to top the Toyota Camry hybrid.
With these new models, the Ford Escape Hybrid - now in its fifth year of production - and the Mercury Mariner Hybrid, Ford will offer four hybrid vehicles. That will make Ford the largest domestic producer of full hybrid vehicles in North America, second only to Toyota in sales volume.
Ford also is introducing six-speeds with PowerShift that offers the fuel economy of a manual transmission and convenience of an automatic; start-stop engines that shut off when the vehicle stops; electric power steering; direct injection, and Twin Independent Variable Cam Timing engines. These technologies will be progressively introduced within the North American lineup by 2012.
"One Ford"
Driving Ford's product transformation is the company's "One Ford" global product development vision, which will deliver more vehicles worldwide from fewer core platforms, further reduce costs and allow for the increased use of common parts and systems.
In the next five years, Ford will build more than 1 million vehicles a year worldwide off its global B-car platform and nearly 2 million units worldwide off its global C-car platform.
"Ford is investing most where consumer growth is taking place, and that's in highly fuel-efficient global small cars," said Derrick Kuzak, Ford group vice president of Global Product Development. "One of every four vehicles in the world today is a 'C' or Ford Focus-sized vehicle, and we expect the segment to grow more than 20 percent to 6 million units in North America and 25 million worldwide by 2012. We see similar strong growth in the B-segment, where the Fiesta competes."
With Ford's global product development plan, all of the company's vehicles competing in global segments will be common in North America, Europe and Asia within five years. In addition to B- and C-sized small cars, the company's Fusion- and Mondeo-sized C/D cars and utilities will be common globally. The same will be true for commercial vans.
- Posted by
- Scott Doggett July 24, 2008, 7:55 AM
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- Emissions, Flex-Fuel, Ford, Fuel Economy, Honda, Hybrid, Lincoln, Toyota
YES! YES! YES!
You are finally getting it, Ford. Carry through on this stuff. Stand and deliver, and I will buy one of your vehicles. I've just needed a good excuse to buy domestic, and I'm finally getting one.
Great job. The Fiesta looks fantastic. Give it an ecoboost sporty model option and I will gladly take one.