Ford (Part 1): Collaboration with VW and targeted investment under new CEO

In North America, enhancing product lineup and launching EVs

2020/11/16

Summary

Mustang Mach-E
Mustang Mach-E (Source: Ford)

  Ford Motor Company (Ford), with the new guiding principle of “Creating Tomorrow, Together” it established in early 2019, has announced and put into practice the expansion of its profitable and growing global lineup of trucks and utility vehicles; the development of electrified vehicles, autonomous driving, and mobility services; and the rationalization of low-profit businesses and regions. In July 2019, the company announced a wide-ranging alliance with VW and based on it, set a policy to improve the efficiency of its European operations.

  In June 2020, an agreement to expand the partnership with VW was announced, and in October, the company confirmed its initiative to concretize and accelerate the implementation of its business plan, coinciding with creation of a new management structure, including a new CEO.

  In the North America market, which accounts for about half the sales volume and most of the company’s profits, along with a further resource shift to highly profitable light trucks and proceeding with the expansion of its model lineup with vehicles including off-road vehicles, the company clearly set out and put into practice its strategy of appealing to its core users by utilizing its brand assets such as the highly popular Mustang and the best-selling F-150 for electric vehicles (EV).

  However, in fiscal 2019, Ford’s global sales and earnings suffered a significant deterioration: global sales declined 10% compared to the year before and net income dropped 99% to USD 47 million after reflecting a USD 2.2 billion loss in pension-related expenses. Although 2020 showed a business recovery after the COVID-19 crisis, operations continue with a fledgling top management, and market concerns about the company’s growth potential and profitability have not been dispelled. Attention is drawn to how far the company can increase the speed of business plan execution and transformation in response to the quickly changing industry and competitive environment under the new CEO’s leadership.

  This report will focus on Ford’s corporate and U.S. product strategy as the first part of two reports to introduce the activities, announced strategies and products of Ford from the latter half of 2019. The second part of the two reports will present the situations and strategies in other regions, corporate performance, and global production volume forecasts.


Related reports:
The Impact of COVID-19 on the Automotive Industry (Nov. 2020)
Start of USMCA and Mexican automobile industry trends (Jul. 2020)
OEM Measures to Expand Sales of SUVs and Pickups in the U.S. (May 2020)
CES 2020: Electrified vehicles and technologies (Feb. 2020)
Ford's Corporate Transformation (Part 2): Restructuring and Vehicle Portfolio (Sep. 2019)
Ford’s Corporate Transformation (Part 1): Partnership with VW on CVs, AV and EVs (Sep. 2019)
U.S. OEM Electrification Strategies, Including EV Product Timelines (Sep. 2019)