Ford’s Corporate Transformation (Part 1): Partnership with VW on CVs, AV and EVs

The automaker aims to reduce passenger models, while increasing truck and utility vehicles

2019/09/17

Summary

Ford Explorer
The new Ford Explorer slated for release in the second half of 2019
(Exhibited at the 2019 Detroit Auto Show)

  In January 219, Ford announced “Creating Tomorrow, Together” as the theme of the new direction in its corporate transformation. Ford’s transformational imperative was the result of stagnation in the world’s major markets such as China, the U.S., and Europe, as well as the massive amounts of capital required to develop CASE technologies.

  Ford’s profitability in recent years peaked in 2017. In 2018, the OEM’s vehicle wholesale figures declined year-over-year (y/y) by 625,000 vehicles (5.982 million vehicles), its automotive segment’s EBIT decreased by 33.3% (USD 5.4 billion), and its net income dropped by 52.4% (USD 3.7 billion). Moreover, while the automaker earned an EBIT of USD 7.6 billion in North America, its EBIT was in the red in other regions totaling to a loss of USD 2.2 billion (in 2017 the regions barely broke even). Most notably, the OEM saw major losses in its European and Chinese businesses.

  Ford aims to do the following: (1) Reduce costs by cutting jobs, slimming down the company entirely to increase efficiency, (2) convert its product plans and reduce the number of passenger vehicle models while placing emphasis on trucks and utility vehicles to increase profitability, and (3) hold a broad alliance with VW in the field of commercial vehicles, autonomous driving vehicles, and EVs (electric vehicles).


 This report will be presented in two parts, and will cover the following content:

(Part 1)
・The direction of Ford’s corporate transformation
・Alliance with VW regarding commercial vehicles, autonomous driving, and EVs
・Product plans in North America, in particular the plans to reduce passenger vehicles and further expand trucks and utility vehicles

(Part 2)
・Ford’s regional performance in recent years
・Downsizing and improving business efficiency, plans to reorganize in Europe, China, and South America
・LMC Automotive sales forecasts

 

Related reports:
North American International Auto Show 2019: U.S. and European OEMs (Feb. 2019)
OEM Operations in the U.S. in 2018 (Dec. 2018)
GM: Halting production at 5 plants in N. America, cutting 14,000 workers (Jan. 2019)
Increased use of CASE technology on recent U.S. OEM models (Nov. 2018)
Ford to launch sixteen EVs by 2022; add partnerships for mobility and autonomous vehicles (Jul. 2018)