Ford to stop making sedans for North America by 2022

Ford to stop making sedans for North America by 2022

New CEO Jim Hackett has been trying to convince investors that betting on a rebound is a worthwhile wager by laying out plans to get rid of slow-selling, low-margin auto models and refocusing the company around more lucrative sport utility vehicles and trucks.

"Given declining consumer demand and product profitability, the company will not invest in next generations of traditional Ford sedans for North America", the OEM wrote in the release.

Ford, which made its name on the Model T, will phase out production of sedans for the North American market and will instead focus its efforts on building trucks and SUVs.

"We are committed to taking the appropriate actions to drive profitable growth and maximize the returns of our business over the long term", said Jim Hackett, president and CEO, in a statement. That is on top of about $14 billion in efficiencies the company had already promised to achieve in the next several years.

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Bob Shanks, Ford chief financial officer, told reporters Wednesday that he expects one-third of the cuts to be achieved by the end of 2020.

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"It's pretty hard to make that prediction today based on volumes", Dias said from Washington, D.C., where trade talks were being held between Canada, the United States and Mexico. What might seem like a radical departure for Ford has, in fact, been years in the making. That includes a 10 percent pretax margin in North America. Ford's automotive revenue increased to $39 billion, exceeding the average projection for $37.2 billion in a Bloomberg survey.

Investors reacted favorably to the earnings.

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The cost savings will come by optimizing digital marketing and discounts on vehicles, as well as putting multiple vehicles on five flexible global architectures in the next few years. Initially, those cars were built by hand and later were produced on the world's first moving assembly line, an advance that allows the company to mass produce their vehicles, according to History.com.

Shanks said Ford is “unleashing the creativity of the teams to challenge norms, challenge conventions.” Cuts and efficiencies are not done yet, he said.

Ford said it expected to reduce sales, marketing, engineering and other costs by $11.5 billion between 2019 and 2022. The company will spend less on low-performing areas such as cars. It also wasn't clear if the move will impact Ford's Lincoln brand.

In addition, the driving experience of light trucks has become more refined, and customers now place a greater value on space and utility.

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