Ford to launch sixteen EVs by 2022; add partnerships for mobility and autonomous vehicles

Dropping all but two car models from its North American lineup

2018/07/04

Summary

 Ford CEO Jim Hackett, who assumed the post in May 2017, has been working hard to redesign company operations. Ford is suffering from stagnating share prices due to low profitability and a delay in launching initiatives for emerging areas including electrification and autonomous vehicles. Hackett revealed a new five-year business plan to reallocate capital from unprofitable regions and products to high-margin segments, as well as electrification, autonomous driving technology, and mobility businesses. The plan is targeted at increasing the automotive operating margin from 6.1% to 8% through cost reductions of USD 25.5 billion and a saving of USD 5 billion in capital spending by 2022.

 In North America, along with the demand shift from cars to SUVs, Ford decided to stop producing next generation versions of its entire passenger car lineup, excluding the Mustang and the Focus Active that will be launched in 2019. The company intends to ramp up sales of high-margin pickup trucks and SUVs with a goal for them to constitute 86% of its total sales in the region.

 Ford plans to invest USD 11 billion in electrification by 2022 to introduce forty new electrified vehicles globally, including sixteen all-electric vehicles. Among them, a plug-in hybrid version of the Transit Custom commercial van will be released in 2019; an all-electric performance SUV is slated to roll out in 2020; and hybrid versions will be added to high-volume vehicles such as the F-150, Mustang, and Explorer from 2020 to 2022. In addition, Ford plans to produce affordable compact all-electric vehicles through its joint venture with China’s Zotye Auto.

 For mobility businesses, Ford formed a partnership with Lyft, an on-demand transportation company, to conduct research on introducing autonomous vehicles into the market. The company also enhanced its technology through acquisition of new start-ups, including Autonomic and TransLoc. As for an autonomous vehicle business, Ford is collaborating with Argo AI, an artificial intelligence company, to develop autonomous driving software. The automaker is also working with Domino’s Pizza and Postmates to conduct trials of goods delivery services using autonomous vehicles.

 Ford’s revenue in 2017 increased by 3.3% year-over-year (y/y) to USD 156.8 billion while its adjusted pre-tax profit decreased by 18.7% y/y to USD 8,437 million due to higher commodity costs and unfavorable exchange rates. Its net income increased to USD 7,602 million, up by 65.4% y/y, owing to revision of pension costs and medical benefits for retirees and tax planning. Ford’s 2018 guideline predicts that revenue will be modestly higher than 2017; its adjusted EPS is projected to be USD 1.45-1.70, down from USD 1.78 in the previous year.

Fordの連結業績 Focus Active
Focus Active to be launched in North America in 2019 (Photo: Ford)


Related reports:
OEM Electrification Strategies: Strengthening HVs and diversifying into EVs, PHVs, and FCVs (May 2018)
North American International Auto Show 2018: U.S. OEMs (Feb. 2018)
OEM Investments in the U.S. in 2017 (Dec. 2017)

 



Ford’s five-year business plan (2018-2022)

 CEO Jim Hackett, who assumed the post in May 2017, revealed Ford’s new five-year business plan (2018-2022) in October of the same year. The plan includes improving efficiency; re-deployment of capital into high-margin regions, products, and services; cost reductions; cutting capital spending; as well as dropping car models and increasing the number of SUVs and pickup trucks in the North American lineup. According to the plan supplemented and revised in January and April 2018, Ford is targeting an 8% adjusted operating margin (or adjusted EBIT margin) in 2020, two years ahead of initial plans. Cost reductions will be expanded to USD 25.5 billion with an additional reduction of USD 11.5 billion. Capital spending for 2019-2022 will be reduced by USD 5 billion to USD 29 billion. At the same time, investment in electrification will be raised from USD 4.5 billion to USD 11 billion and sixteen new all-electric vehicles will be launched by 2022.

 

Five-year business plan (released on October 3, 2017)

Operating margin Ford is targeting an 8% automotive operating margin in 2022. (The average automotive operating margin for the past seven years was 6.1%.)
Connectivity By 2018, 55% of Ford’s new U.S. vehicles will be built with connectivity systems, and by 2019, 100% will come with the systems. The company has similar plans for China and other markets, as 90% of Ford’s new global vehicles will feature connectivity systems by 2020.
Cost reductions The OEM intends to reduce automotive cost growth by 50% through 2022. As a part of this, Ford is targeting USD 10 billion in material cost reductions. The company is also reducing engineering costs by USD 4 billion by increasing use of common parts across its full line of vehicles, reducing order complexity, and building fewer prototypes.
Capital reallocation The automaker plans to reallocate USD 7 billion of capital from cars to SUVs and trucks. Ford is also reducing internal combustion engine capital spending by one-third and redeploying that capital into electrification.
Partnership Ford will continue to leverage partnerships, remain active in M&A, and collaborate with other companies in development of products designed for each region as well as new segments including mobility and autonomous vehicle businesses.
Electrification As a part of the previously announced investment of USD 4.5 billion, Ford will launch thirteen new electrified vehicles by 2022. The company established a dedicated electrification team within Ford called Team Edison whose mission will be to think big and make quicker decisions to develop battery electric vehicles with a “human-centric” design.
Reducing orderable combinations The automaker is planning a ten-fold reduction of orderable combinations in the next-generation Escape.
Review of product development The OEM intends to reduce new vehicle development time by 20% by 2022 with new tools and fewer orderable combinations. Through the use of virtual assembly lines, Ford will reduce new model changeover time by 25%.

Source: Ford Press Release dated October 3, 2017

 

Revision and supplements to the five-year plan (announced in January and April 2018)

Operating margin (EBIT margin) Ford is targeting an 8% adjusted EBIT margin in 2020, two years earlier than previously anticipated.
Return on investment (ROI The automaker aims to increase its return on investment (ROI) to 15-19% in 2020.
Capital spending Ford had previously expected to spend USD 34 billion in capital from 2019 to 2022 and has now cut that estimate by USD 5 billion to USD 29 billion over the same period. The company plans to spend USD 7.5 billion in capital in 2018.
Cost reductions The automaker intends to reduce additional USD 11.5 billion in material, engineering and product development, marketing and sales, and manufacturing and IT costs from 2019 to 2022. One-third of that will be reduced by 2020. In addition to USD 14 billion announced previously, total of cost reductions through 2022 will amount to USD 25.5 billion.
Electrification Ford increased planned investments in electrification from USD 4.5 billion to USD 11 billion by 2022 to launch forty new electrified vehicles globally, including sixteen full battery electric vehicles.
Autonomous vehicle The OEM will build a viable and profitable autonomous vehicle business, including ride hailing and goods delivery services.
Mobility The automaker is creating a mobility platform and experience for customers and partners. Ford aims to become more than just a provider of mobile solutions. Its ambition is to create a Transportation Mobility Cloud for cities and to be an orchestrator of all digital connections betweem vehicles, roadside infrastructure, companies, and homes.

Source: Ford Press Releases dated January 16 and April 25, 2018

 

Ford and VW to explore strategic alliance including joint development of commercial vehicles

 On June 19, 2018, Ford and VW announced that they are exploring a strategic alliance designed to strengthen each company’s competitiveness and better serve customers. The two companies are investigating several joint projects including joint development of a range of commercial vehicles. Ford and VW said any strategic alliance would not involve equity arrangements.

 



86% of North American sales to be pickup trucks and SUVs

  In April 2018, Ford announced a plan to cut most of its North American passenger car lineup. The company will not invest in next generation versions of cars including the Fiesta, Fusion and Taurus. The only cars Ford will keep in North America beyond their current generations are the Mustang and the all-new Focus Active crossover wagon, which will be produced in China and imported to North America in 2019. At the same time, Ford plans for 86% of its vehicles sold in 2020 to be light trucks including pickup trucks and SUVs (up from 77% in 2017). The company will sell eight SUVs, up from six today. New light trucks to be launched include the Ranger mid-size pickup truck and the Bronco mid-size off-road SUV.

  In the U.S., demand has been shifting from passenger cars to SUVs with lower gas prices and the Trump Administration’s environmental deregulation. The sales ratio of light trucks has expanded from 53% in 2014 to 65% in 2017. Meanwhile, Ford has been producing many compact passenger cars, and when they remained unsold, selling them to rental car companies with discounts. As a result, the company experienced a downturn in profitability. In April 2018, Ford announced a bold plan to stop selling most of its passenger cars. As FCA US dropped most of passenger cars from its North American lineup in 2016, and GM sold Opel, its European unit, to PSA, Ford’s competitors have been eliminating low-margin parts of their businesses. As a result, Ford will also start swift implementation of operational reforms.

Fordの米国におけるモデル別販売台数 Ford Ranger
The Ford Ranger to be launched in 2019

 

Passenger car lineup plan in North America

Models to be discontinued C-Max A Focus-based MPV. Only the HV and PHV versions went on sale. The PHV was discontinued from the 2017 model, and the HV from the 2018 model.
Fiesta A subcompact sedan/five-door hatchback. Its production at the Cuautitlan plant in Mexico will end in 2019 and sales discontinued in North America. The seventh-generation Fiesta will be built only at the Cologne Plant in Germany and go on sale in Europe, the Middle East, and Africa.
Taurus A full-size sedan. The model will be discontinued with the current model.
Fusion A mid-size sedan and a sibling of the Lincoln MKZ and European Mondeo. The model is scheduled to be built at the Hermosillo Plant in Mexico until 2020 and will be discontinued.
Focus A compact sedan. Production of the current model at the Michigan Plant ceased in May 2018 and sales of the Focus sedan will be discontinued in North America.
Models to remain Focus Active A crossover wagon. The model will be built in China and launched in North America in 2019.
Mustang Ford’s flagship sports car. The model is built at the Flat Rock Plant in Michigan.
Models under development New “white space” vehicle New “white space” vehicles with silhouettes that combine the best attributes of cars and utility vehicles, such as higher ride height, space, and versatility.

 

Light truck lineup plan in North America

Sales ratio in 2020 Intending to expand the sales ratio of trucks and SUVs in North America from 70% to 86% of the total sales by 2020.
SUV lineup plan by 2020 Planning to expand its SUV lineup from six to eight models. All SUVs will have a hybrid version except for the all-electric model.
Models to be launched

Ranger A mid-size pickup truck. The model is scheduled to be built at the Michigan Assembly Plant starting at the end of 2018 and go on sale in the beginning of 2019. It comes with a 2.3-liter EcoBoost engine mated to a ten-speed automatic transmission. The name of the Ranger compact pickup will be brought back into use after it was discontinued with the 2011 model.
Bronco A mid-size off-road SUV with a frame. Production of the model will start at the Michigan Assembly Plant in 2020. The model name, Bronco, will be revived after it was discontinued in 1996.
New Escape A compact crossover SUV and sibling of the Lincoln MKC and European Kuga. The vehicle will be built at the Louisville Plant in Kentucky and introduced as a 2019 model.
New Lincoln MKC A compact crossover SUV and sibling of the Ford Escape. The vehicle will be manufactured at the Louisville Plant in Kentucky and launched as a 2019 model.
New Explorer A three-row seven-seat full-size crossover SUV. The vehicle will be produced at the Chicago Plant in Illinois and released as a 2019 model.
Compact crossover A compact crossover positioned between the EcoSport and the Escape. It is reported that the model will be built at the Hermosillo Plant in Mexico after 2020.
Lincoln Aviator A three-row rear wheel drive premium mid-size SUV. The model is scheduled to be launched in 2019. It shares a platform with the next generation Explorer. A PHV version will come with a twin turbo engine. The model name, Aviator, will be revived after it was discontinued in 2005.
Mach 1 A Mustang-inspired all-electric performance SUV. The model is slated to be introduced in 2020.

 

Production plan at the U.S. plants

Michigan Assembly Plant This plant will be closed from May to October 2018 to update its equipment with a USD 850 million investment for production of the 2019 Ranger and 2020 Bronco. Production of the Focus and C-Max concluded at the end of May 2018.
Flat Rock Plant Ford is scrapping plans to build a new all-electric SUV at the Flat Rock Plant and will shift production for the hybrid autonomous vehicle to the Cuautitlan Plant in Mexico. This model is scheduled to come to market in 2021 as Ford’s autonomous fleet vehicle. Ford plans to invest USD 900 million in this plant to enhance its production capacity for new models.

 

Production plan at Mexican plants

San Luis Potosi Plant Ford has cancelled plans to build this plant in July 2017 in consideration of the policies of President Trump to increase employment in the U.S. The company paid a USD 65 million penalty to San Luis Potosi state for the cancelled project.
Hermosillo Plant Plans to shift production of the Focus from the Michigan Assembly Plant to this plant were cancelled. The Fusion and Lincoln MKZ will be built at this plant on two shifts by 2020. It is reported that a compact SUV or crossover will be manufactured at this plant after 2020.
Cuautitlan Plant Production of the Fiesta will end in 2019. A new all-electric SUV was planned to be produced at the Flat Rock Plant in Michigan, but will be built at this plant instead. The Flat Rock Plant will manufacture a hybrid autonomous vehicle.
Irapuato
transmission plant
Ford invested USD 1.2 billion to build a new plant within the premises of a joint venture plant it operates with Getrag. The new plant started operations in July 2017. It is operating on one shift with 600 employees but will run on two shifts with 1,200 employees by the end of 2018. Its annual production capacity will be 800,000 units.

 

Ford’s light vehicle sales in the U.S.

2014 2015 2016 2017 Jan.-May
2017
Jan.-May
2018
Ford brand Passenger car 762,545 760,039 653,300 555,838 242,150 211,902
Light truck 1,614,296 1,741,816 1,834,187 1,908,203 778,019 789,540
Total 2,376,841 2,501,855 2,487,487 2,464,041 1,020,169 1,001,442
Lincoln brand Passenger car 42,169 37,778 40,746 39,552 17,467 11,783
Light truck 52,305 63,449 70,978 71,607 29,595 28,952
Total 94,474 101,227 111,724 111,159 47,062 40,735
Ford Motor total 2,471,315 2,603,082 2,599,211 2,575,200 1,067,231 1,042,177
Ford’s market share 15.0% 14.9% 14.8% 14.9% 15.3% 14.7%
Total US Light Vehicle Passenger car 7,749,432 7,566,668 6,895,771 6,120,774 2,599,176 2,261,684
Light truck 8,773,231 9,916,173 10,657,658 11,125,098 4,382,632 4,804,611
Total 16,522,663 17,482,841 17,553,429 17,245,872 6,981,808 7,066,295

 

Ratio of passenger cars and light trucks

2014 2015 2016 2017 Jan.-May
2017
Jan.-May
2018
Ford Motor Passenger car 32.6% 30.6% 26.7% 23.1% 24.3% 21.5%
Light truck 67.4% 69.4% 73.3% 76.9% 75.7% 78.5%
Total US Light Vehicle Passenger car 46.9% 43.3% 39.3% 35.5% 37.2% 32.0%
Light truck 53.1% 56.7% 60.7% 64.5% 62.8% 68.0%

Source: Automotive News



Investment in electrification to be raised from USD 4.5B to USD 11B

 According to the electrification plan unveiled by Ford in January 2018, investment from 2015 to 2022 will be raised from USD 4.5 billion to USD 11 billion to introduce forty new electrified vehicles globally, including sixteen full battery electric vehicles. The company plans to deliver the Mach 1, a Mustang-inspired battery electric performance SUV, in 2020. It will also add hybrid powertrains to high-volume vehicles like the F-150 and Explorer from 2020 to 2022.

 

Electrified vehicles Ford plans to release

Autonomous vehicle hybrid This model is designed for ride sharing business. It will be built at the Flat Rock Plant and launched in 2021.
Mach 1 A Mustang-inspired all-electric performance SUV. The model is scheduled to roll out in 2020. It will offer at least 300-miles of range.
Hybrid versions of high-volume vehicles Hybrid versions of the F-150, Mustang, Explorer, Escape, Bronco and other vehicles are to be released from 2020 to 2022.
Transit Custom
Plug-in Hybrid
A plug-in hybrid version of a commercial van designed for the European market. The model will be launched in 2019.
Police Responder HV A Fusion-based police vehicle hybrid sedan. The model became available for sale in October 2017. It is manufactured at the Hermosillo Plant in Mexico and modified for law enforcement use at the Chicago Plant in Illinois.
Affordable all-electric small vehicles A range of affordable electric vehicles that the Ford-Zotye joint venture will build. Production of the vehicles is scheduled to start at a new plant in Zhejiang province in September 2019.

 

Renault-Nissan Alliance, Daimler and Ford to pull out from joint development of FCV

 In June 2018, the Renault-Nissan Alliance, Daimler and Ford decided to pull the plug on a strategic cooperation agreement to develop and commercialize fuel cell vehicles. The three companies signed an agreement for the joint development of fuel cell vehicles in 2013. However, fuel cell vehicles are not used widely yet due to their high price tag and a delay in establishment of infrastructure including hydrogen stations. The Renault-Nissan Alliance will focus on electric vehicles as a next-generation vehicle and pour their resources into battery-electric vehicles. Ahead of this, Ford and Daimler disclosed their consensus to dissolve the partnership for development of fuel cell vehicles. While both companies will continue to develop fuel cell vehicles individually, they will focus more on battery-electric vehicles.


Expanding partnerships for mobility and autonomous vehicle businesses

 In 2018, Ford’s mobility team is accelerating and expanding its activities to deliver a broad suite of mobility products and services to personal vehicle owners, fleet owners, and cities globally. The company is bringing together software development engineers through acquisitions and partnerships to offer transportation infrastructure for cities. In January 2018, Ford acquired Autonomic and TransLoc, new start-ups that support improving efficiency for city transportation solutions. Technologies from these companies will be incorporated into Ford’s cloud service, which manages demand and supply of city transportation.

 Regarding the autonomous vehicle business, Ford will advance it by combining scalable, foundational technology with innovative, robust business models through partnerships with other companies. The automaker will build its autonomous vehicle business in multiple cities with an aim to introduce an SAE level 4-capable autonomous vehicle into the market by 2021.

Ford and Domino’s Pizza collaborate for delivery service trials with an autonomous vehicle (Photo: Ford) GoRide non-emergency medical transportation service (Photo: Ford)



Partnerships for mobility businesses

Collaboration with Lyft In September 2017, Ford formed a partnership with the Lyft on-demand transportation company to bring an autonomous vehicle to the market. In the future, the two companies aim for their platforms to be connected so that Ford’s autonomous vehicle can be dispatched through the Lyft app on demand. Currently, Ford is deploying human-driven vehicles on Lyft’s network to test its platform interface and ensure compatibility with Lyft’s platform.
Acquisition of Autonomic Ford acquired Autonomic, a technology start-up that specializes in scale, architecture and leverage for transportation solutions, in January 2018. Autonomic will support the establishment of the Transportation Mobility Cloud platform, which manages demand and supply for city transportation. In addition, Ford’s acquisition of Autonomic will serve as the cornerstone for “Ford X”, a new team established in Ford Smart Mobility LLC to discover and incubate new business models.
Acquisition of TransLoc TransLoc, which was also acquired in January 2018, is a provider of demand-response technology for city-owned micro transit solutions. This start-up will be integrated into Ford’s mobility marketing.
Joint venture with Zotye In May 2018, Ford Smart Mobility, a Ford subsidiary, and Zotye Auto signed a memorandum of understanding (MOU) to establish a joint venture (JV) to provide vehicle solutions to fleet operators and drivers. The two companies plan to set up a new 50:50 JV in Zhejiang province. Working closely with Zotye-Ford manufacturing JV, the new mobility JV will deliver services including all-electric vehicle leasing, data-driven fleet management solutions, in-vehicle digital services, connectivity, and vehicle customization in Zhejiang province.

 

Expansion of mobility businesses

Chariot shuttle service In January 2018, Ford introduced its Chariot shuttle service in Columbus, Ohio, through a partnership with JPMorgan Chase as part of the Smart Columbus initiative. Chariot is dispatching its shuttles along six routes for 400 Chase employees. By providing this service, Ford is reducing the number of single-occupant vehicles and relieving congestion, and also moving toward improving every employee’s overall quality of life.
Chariot shuttle services are being deployed in eight cities including Austin, Chicago, Columbus, Los Angeles, Seattle, the San Francisco Bay Area, New York City, and London, the U.K., as of June 2018. The number of shuttles for enterprise services has increased by 400% compared to 2017.
GoRide medical mobility service Ford GoRide is a part of Ford Smart Mobility subsidiary and delivers a non-emergency medical transportation service. In partnership with the Beaumont Health network in Detroit, Michigan, the company provides a transportation service for patients in Transit minivans with professionally trained drivers. GoRide currently has 15 Transits and plans to increase the number to 60 vans by the end of 2018.
Expansion of Canvas’ business In February 2018, Ford announced plans to expand the business of Canvas, a mobility service subsidiary of Ford Motor Credit Company. Canvas delivers a subscription-based alternative to car ownership in San Francisco and the west Los Angeles areas. It plans to expand its platform in 2018 to meet even more customer needs. Canvas serves over 600 customers less than one year since launching.

 

Partnerships for autonomous vehicle businesses

Investment in Argo AI Ford disclosed a partnership with Argo AI, an artificial intelligence company, in February 2017. The automaker is investing USD 1 billion in Argo AI during the next five years to develop autonomous driving software. Argo AI has introduced over 30 Fusions into the autonomous vehicle driving testing in Dearborn and Ann Arbor, Michigan as well as Pittsburgh, Pennsylvania.
In October 2017, Argo AI acquired Princeton Lightwave, which develops LiDAR sensors for creating a three-dimensional view of the world. Princeton Lightwave’s technology will complement Argo Ai’s autonomous driving system in handling object detection in challenging scenarios such as poor weather conditions and driving at high speeds.
Partnership with Qualcomm In October 2017, Ford, Qualcomm, a leading semiconductor company for smart phones, AT&T, and Nokia started conducting Cellular Vehicle to Everything (C-V2X) connected car technology trials in the San Diego Regional Proving Ground in California. The goal of the trials is to demonstrate the potential of C-V2X technologies, including support for improved automotive safety, autonomous driving and traffic efficiency. C-V2X is designed to expand the role of wireless technology for road safety applications by facilitating the ability of vehicles to directly communicate with other vehicles, pedestrian devices, and roadside infrastructure such as traffic signs.
Collaboration with Domino’s Pizza Ford and Domino’s Pizza are launching a collaboration to investigate customer reactions to pizza delivery using a Ford Fusion Autonomous Research Vehicle in August 2017. Customers will be able to track the delivery vehicle through GPS and, as the autonomous vehicle approaches, will receive a code to unlock the Domino’s Heatwave Compartment inside the vehicle via text messages.
Cooperation with Postmates Ford formed a partnership with Postmates, an on-demand delivery service company, in January 2018. Postmates offers on-demand delivery of anything from anywhere to a customer’s doorstep from restaurant carryout orders to hardware store items and grocery goods. The two companies will conduct pilot programs to explore how autonomous driving technology could change the delivery experience for consumers, enable retailers to reach new customer bases, and transform the way commerce moves in the communities in which vendors operate.


Growth plan for China: 50 new models to be released by 2025

 In 2017, Ford’s sales in China decreased by 6.9% y/y to 1.132 million units, and its equity profit was USD 916 million, down 36.3%. Its market share also shrank by 0.4 percent points to 4.2%. In December 2017, Ford announced its growth plan in China until 2025. Targeting to increase its sales in the country by 50% compared to 2017, the automaker will launch more than 50 new models. In addition, the joint venture with Zotye will build low-priced compact electric vehicles. In April 2018, Ford also disclosed plans to integrate its sales networks into one.

 In China, trade with the U.S. administration has been a matter of concern. In June 2018, the Trump administration announced that 25% tariff would be levied on Chinese-built products amounting to USD 50 billion from July due to China’s infringement of intellectual property. China immediately announced that it would impose a retaliatory tariff of 25% on the U.S. products amounting to an equal sum. Both countries include vehicles in the products that will have tariffs imposed.

 

Growth plan for China: 8 SUVs and 15 electrified vehicles to be introduced by 2025

Business plan According to a plan announced in December 2017, Ford will release more than fifty new models in China by 2025, including eight all-new SUVs and at least fifteen electrified vehicles from Ford and Lincoln. In addition, the new Zotye-Ford joint venture will launch an all-new range of affordable all-electric vehicles. The company plans to locally assemble five more vehicles in China starting in 2019, including a Lincoln premium SUV and a global all-electric small SUV. All new vehicles in China will be internet-connected by the end of 2019. Ford is joining Baidu’s Project Apollo and continues working on autonomous vehicle development. The automaker aims to increase its revenues in China 50% by 2025 compared to 2017.
Integration of distribution network In April 2018, Ford announced the creation of a single new distribution channel for its China business. The new Ford National Distribution Services Division in China (NDSD) replaces a complex joint venture and dealer network. As a result, Ford dealers in China will be able to offer customers Ford’s full lineup of vehicles, regardless of which company builds them, and whether they are locally assembled or imported.
Zotye-Ford to build new plant In November 2017, Ford and Zotye Auto established a 50:50 joint venture with an investment of CNY 5 billion to produce and sell electric vehicles. Zotye-Ford joint venture is building a new plant with an annual production capacity of 100,000 units in Zhejiang province to manufacture compact electric passenger cars. Production at the new plant is slated to start in September 2019.


Consolidated results: 2018 revenue to be modestly higher; EPS to fall to USD 1.45-1.70

 Ford has adopted adjusted EBIT instead of adjusted pre-tax profit in its financial reporting starting in 2018 to provide more transparency for its business and better align with reporting by other OEMs. Ford also changed its operating segmentation; it used to report results of operating segments including automotive, financial services and others; it now has segments including automotive, mobility, and Ford Credit. Results for the autonomous vehicle business, which used to be included in the automotive segment, were moved to the mobility segment from 2018.

 Ford’s revenue for the first quarter of 2018 grew by 7% y/y to USD 42 billion; its adjusted EBIT declined by 13% to USD 2.19 billion; its net income increased by 9% to USD 1.74 billion mainly owing to a lower tax rate in the U.S. Ford’s 2018 guideline predicts that its revenue will be modestly higher than 2017; its adjusted EPS is projected to be USD 1.45-1.70, down from USD 1.78 in the previous year.

 

Ford’s consolidated results

2014 2015 2016 2017 Jan.-Mar.
2017
Jan.-Mar.
2018
Wholesales(1,000 units 6,323 6,635 6,651 6,607 1,703 1,662
Revenue (in billions of USD 144.1 149.6 151.8 156.8 39.1 42.0
Automotive operating margin 4.6% 6.8% 6.7% 5.0% 6.4% 5.2%
Adjusted pre-tax profit(in millions of USD 7,293 10,800 10,375 8,437 2,520 2,185
of which:Automotive segment 5,499 8,772 9,422 7,259 2,175 1,732
of which:) Financial Serveces segment 1,794 2,028 1,879 2,310 481 641
Net income(in millions of USD 5,665 7,182 4,596 7,602 1,592 1,736

Source: Ford Earnings Review, Annual Report
(Note) Ford has adopted EBIT instead of pre-tax profit as an indicator for its business results starting in January 2018. Thus, automotive operating margin and adjusted pre-tax profit for January-March 2017/2018 show automotive EBIT margin and adjusted EBIT, respectively.

 



Production Forecast by LMC Automotive: Ford Group's production to grow to 6.6 million units in 2021

LMC Automotive, April 2018)

Ford Groupのライトビークル生産予測

 According to LMC Automotive's latest forecast (April 2018), the Ford Group's global light vehicle production is expected to be 6.31 million units in 2018, down by 0.1% year-over-year (y/y). While production in North America and South America will decrease, output in Europe and Asia will grow. Notably, production in India is projected to increase by 24.3% y/y. LMC Automotive forecasts that the group’s global output will fall 0.8% y/y in 2019, but return to growth in 2020 and reach 6.6 million units in 2021, up by 4.7% compared to 2018.

 The Ford Group’s production in the US is expected to fall by 5.0% y/y to 2.28 million units in 2018. The group’s output will be impacted by new model changeovers at its Michigan assembly plant, as the automaker shifts Focus production to China and drops the C-Max to make room for production of the Ranger midsize pickup, beginning in November. The plant will be down for four months during the changeover. LMC Automotive presumes that the group’s production in the US will decrease by 4.1% y/y in 2019, but increase after 2020 and rise to 2.33 million units in 2021, up by 1.9% compared with 2018.

 Mexican production for the Ford Group is projected to drop in 2018 and 2019, down by 8.0% and 28.1% y/y, respectively. Although lessening, risks related to the Trump administration’s policies persist, specifically regarding ongoing NAFTA renegotiations, as well as potential tariffs on aluminum and steel production. The net effect is that corporations continue to be discouraged from investing in Mexico. This, along with the country’s car-centric production mix, leads to a more subdued outlook in the country.  The Ford Group plans to launch a new compact hybrid, as well as a small SUV in 2019, and start full production of the models in 2020. Meanwhile, Ford Fusion production will move to China in 2021. As a result, LMC Automotive forecasts that the Ford Group’s production will climb 89.0% y/y to 390,000 units in 2020. However, in 2021, its output will decline to 350,000 units, which is an increase of 22.1% compared to 2018.

 

Ford Group's light vehicle production forecast (LMC Automotive, April 2018)

(Units)

COUNTRY GLOBAL MAKE 2015 2016 2017 2018 2019 2020 2021
Ford Group  Ford 6,267,285 6,158,751 6,135,787 6,149,773 6,075,447 6,222,097 6,375,646
Lincoln 131,530 166,034 181,225 158,410 183,731 212,429 226,256
Troller 1,683 1,389 1,726 1,873 2,035 2,468 2,570
Total 6,400,498 6,326,174 6,318,738 6,310,056 6,261,213 6,436,994 6,604,472
USA Ford 2,380,801 2,306,925 2,311,857 2,206,592 2,096,609 2,120,263 2,222,929
Lincoln 59,928 71,382 91,592 77,525 93,289 107,407 104,578
USA sub-total 2,440,729 2,378,307 2,403,449 2,284,117 2,189,898 2,227,670 2,327,507
China Ford 945,380 1,007,647 928,953 900,468 988,828 1,000,587 1,012,253
Lincoln 0 0 0 0 19,398 49,919 84,050
China sub-total 945,380 1,007,647 928,953 900,468 1,008,226 1,050,506 1,096,303
Germany Ford 752,848 678,965 634,019 707,610 728,306 617,885 590,026
India Ford 171,820 242,548 268,706 333,892 372,228 372,983 413,284
Spain Ford 388,436 395,688 417,033 384,997 354,909 373,768 358,590
Mexico Ford 397,594 348,241 272,706 253,252 178,534 374,871 350,077
Lincoln 36,158 42,287 39,087 33,489 27,706 14,849 0
Mexico sub-total 433,752 390,528 311,793 286,741 206,240 389,720 350,077
Turkey Ford 323,666 328,887 367,005 373,014 354,372 350,366 347,818
Brazil Ford 238,780 163,731 249,113 243,329 251,858 244,696 245,118
Troller 1,683 1,389 1,726 1,873 2,035 2,468 2,570
Brazil sub-total 240,463 165,120 250,839 245,202 253,893 247,164 247,688
Romania Ford 47,967 38,849 49,771 107,774 126,472 192,619 228,649
Canada Ford 165,245 219,129 203,608 197,901 187,465 171,529 161,357
Lincoln 35,444 52,365 50,546 47,396 43,338 40,254 37,628
Canada sub-total 200,689 271,494 254,154 245,297 230,803 211,783 198,985
Thailand Ford 138,473 166,148 185,216 179,962 156,364 155,776 182,697
South Africa Ford 72,398 84,577 91,344 90,715 96,560 97,308 96,494
Russia Ford 38,616 44,504 53,437 61,287 68,360 61,476 81,107
Argentina Ford 90,338 68,281 70,464 69,974 71,161 45,010 38,200
Taiwan Ford 19,510 16,270 17,559 20,257 20,755 21,162 23,260
Vietnam Ford 12,047 14,268 11,457 14,094 15,963 14,982 16,458
Nigeria Ford 747 2,439 3,372 3,891 4,252 4,453 4,503
Venezuela Ford 3,717 2,059 167 687 2,366 2,278 2,742
Malaysia Ford 112 19 0 77 85 85 84
Australia Ford 29,503 16,958 0 0 0 0 0
Poland Ford 48,893 12,618 0 0 0 0 0
Belgium Ford 394 0 0 0 0 0 0

Source: LMC Automotive "Global Automotive Production Forecast (April 2018)"
(Note) 1. Data indicate figures of only small-size vehicles, including passenger cars and light commercial vehicles with a gross vehicle weight of under 6 tons.
2. All rights reserved. Reproduction of any data will require permission of LMC Automotive.
For more detailed information or inquiries about forecast data, please contact LMC Automotive.


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Keywords
Ford, North America, pickup truck, SUV, electrification, EV, autonomous driving, mobility, Lyft

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