Ford Motor Co. is streamlining its offerings by cutting its car lineup by nearly 90%, a shocking development given that the brand has long been largely synonymous with the U.S. car market.
The Dearborn, Michigan-based company made the announcement in its latest earnings report released this week. Although the company said that it had made $1.7 billion in profit in the first quarter of 2018, the automaker saw 14% less over the same quarter a year ago, when it made $2.2 billion.
Clark’s take: Ford’s new focus may have a surprising effect on its old cars
Seeing a new path to growth, Ford said it will focus on trucks, utility and commercial vehicles by 2020. The reason? People just aren’t buying cars from Ford.
“Given declining consumer demand and product profitability, the company will not invest in next generations of traditional Ford sedans for North America,” the report said.
Over the next few years, the company’s North American priorities will be devoted to just two cars: the Mustang and Focus.
They will also devote some resources to what they call “white space” vehicle silhouettes “that combine the best attributes of cars and utilities, such as higher ride height, space and versatility.”
Own a Ford car? Here’s how you may be affected by the company’s new strategy
Ford’s plans will have an interesting effect on its legacy sedan fleet owned by millions of Americans, money expert Clark Howard says.
“When [automakers] orphan a model, it will historically tend to polarize the market on that model,” Clark says. “If there’s a model that there’s any kind of excitement about among enthusiasts, the discontinuance of a model will increase the value of the used ones over the passage of time because it creates a sense of shortage.”
As for regular base model sedans, Clark says the affect may not be so rosy, but it’s all based on the market.
“For the typical run-of-the-mill passenger car, when a car becomes an orphan, it does tend to depress value somewhat,” he says. “Ford is just recognizing the reality of the marketplace — that people have come to think of Ford only for SUVs and Mustangs.”