Ford: New plant in Mexico cancelled; existing Mexican plant to make next-generation Focus
Projecting moderate slowdown in U.S. market for 2017 and 2018; focusing on reducing costs.
|The Ford Super Duty, which uses an aluminum body, was released in the fall of 2016.|
In September 2016 Ford outlined its mid- to long-term growth plan. The automaker plans to strengthen both its core businesses of production and sales of passenger vehicles and trucks; and its expansion into the areas of electrification, autonomous operation, and mobility services (see the related reports below). This report will focus on the OEM's core businesses.
Although Ford had been planning to build a new plant in Mexico to produce small cars there from 2018, it decided to cancel construction in consideration of the policies of President-elect Donald Trump. At the same time, it announced that production of the next Focus would be transferred to its existing Hermosillo Plant in Mexico (announced in January 2017). Underlying this decision is the rapid decline in U.S. sales volume for the small vehicles (the Fusion, Focus, and Fiesta) that are scheduled to have their production concentrated in Mexico. The OEM intends to fully utilize its existing facilities before constructing a new plant.
The U.S. light vehicle market in 2016 totaled 17,539,052 units to increase for a 7th consecutive year and set a record high. However, the increase from the previous year was only 56,000 units (0.3%), and automakers have been rapidly increasing sales incentives. Ford is predicting a moderate slowdown in the U.S. market from 2017.
In 2015, the automaker recorded an adjusted pre-tax profit of USD 10.8 billion, which is the highest ever. It predicts that the adjusted pre-tax profit for the full year of 2016 will be USD 10.2 billion. However, quarterly results have continued to decline every period. The OEM presented a cautious view on the future of the industry and announced that it would make a USD 3 billion reduction in its annual average cost during 2016 - 2018.
The latter half of this report will focus on plans for the introduction of new models. In 2014 - 2015, Ford updated leading models including the F-150. Although there will not be as many new models introduced in 2016 - 2017, there will be introduced significant number launched in 2018-2020. In response to the expansion of the SUV market in the U.S., the automaker will launch 4 new SUV models (including revived models) such as a new Bronco. The OEM will also invest USD 4.5 billion in electrified vehicles by 2020 and introduce 13 new models.