Ford discontinuing many models in the future

[ChipBeck]

Dealership profit centers from most to least (actual dealers please tell me if this is wrong):

1. Financing (includes leasing)
2. Service and parts
3. Used cars
4. New cars

Gentlemen,

Many large volume dealers are able to cover 80 to 100% of their operating expense with service, parts, and body shop profits. Financing would be the 2nd largest profit generator, used cars #3. New car departments typically lose money at dealerships that must floor (finance) their new car inventory. Selling new cars may generate a loss but that sale allows the other 3 profit generating parts of a dealers business to occur.

Chip

 

[PeteK]

Gentlemen,

The captive finance arm serves one other very important purpose. When the shit hits the fan like the big recessions of the 1980’s and banks pulled out of financing dealers and flooring their inventories GMAC and FMC were the only source of financing available. Without GMAC my Pontiac-GMC dealership would have been history. In 2008 all banks stopped flooring inventories for boat dealers. Over 90% of the boat dealerships in Arizona were forced out of business. Captive finance companies are essential especially during downturns.

Chip

Important point. Thanks.

 

[MNJason]

www.cnbc.com/2018/04/30/ford-ceo-jim-hacketts-decision-to-dump-cars-may-prove-fatal.html

Lets hope not!

 

[NorthwoodGT]

there is a whole lot of things behind this move. Just a couple things like Trump's new CAFE is an issue with Ford cars that probably can't be met along with monies moved throughout the company that need to be replaced very soon to where the should have stayed in the first place. to invest in new car programs that are currently only netting 2-3% profit margins don't make a lot of sense. Hackett was put into that job for a reason and he will axe programs that aren't making the company the money it should be. I've been to many stock holder meetings and investors are fed up with the current stock price. Something had to change- drastically. And it will. (and the good ole boys club trying to oust Hackett to save their proverbial asses isn't going to work either) just saying.

 

[daytrayd]

When I first read this news, it sounded incorrect. I didnt believe it, but when you look at it they arent killing as many cars as you'd think. When I went to check out a focus RS 2 weeks ago, the lot was 90% F150, 8% mustang, 2% other I'd guess. It was crazy, but honestly whos rushing to buy a Taurus or fushion anymore? I've ridden in a fushion titanium, I liked it. Interior was decent. But the average joe whos not married to the brand will probably pick a camry or something fancier like a 3 series, or if on a budget a kia or even an impala. It is what it is. The car just doesnt fit into the market well right now.

I think the company knows what they are doing, and the company and stock will benefit in the long run. Eventually some new sedan concept will come along and catch fire, probably under a new name. I'd like to see a 647hp SHO one day, eco boost of course! I had so much fun hooning in my buddies SHO growing up. What an engine! Only thing that bums me is those who will lose their job, anyone know what factories will be shutting down, if any?

 

[2112]

According to Tesla stock holders, making money/being profitable is not a requirement for stock prices rising.

 

[B. West]

I probably shouldn't be commenting here as I am an current employee of the company but what I can tell you is this...... After the initial announcement, there was plenty of skepticism within the company as well as the general public. When you break down the numbers and you actually see how much (or little) passenger cars contribute to the profitability of the company while those segments are continuing to shrink across all brands, you start to understand the rationale. These are strategic decisions that are made at the very top of the house by individuals whose job it is to protect the investment of our stakeholders. There is a shift in the industry across all brands, not just Ford that dictates decisions like this. The fortunate part of all this is that there will be plenty of viable fuel efficient options for our current and future passenger car customers to migrate to. Most people don't like change however change is inevitable. Companies and individuals who refuse to change will ultimately have no value.

 

[Stef]

Stopped by one of the larger dealerships this early afternoon to kill some time and have a look at and compare Fiesta/Focus ST's. Thinking it would be very economical and yet still be a fun way to run errands and visit our job sites in and around the LA/OC area in one of these little manuel trans runabouts. I was able to talk with the fleet manager on this hot topic issue and got the scoop on why this move by Ford. Basically the market is now flooded with cars not enough buyers are interested in, and the margins are very low. The dealership makes more margin on parts/repair and used car sales then all the sedans proposed to be cut combined.

 

[BlackICE]

I probably shouldn't be commenting here as I am an current employee of the company but what I can tell you is this...... After the initial announcement, there was plenty of skepticism within the company as well as the general public. When you break down the numbers and you actually see how much (or little) passenger cars contribute to the profitability of the company while those segments are continuing to shrink across all brands, you start to understand the rationale. These are strategic decisions that are made at the very top of the house by individuals whose job it is to protect the investment of our stakeholders. There is a shift in the industry across all brands, not just Ford that dictates decisions like this. The fortunate part of all this is that there will be plenty of viable fuel efficient options for our current and future passenger car customers to migrate to. Most people don't like change however change is inevitable. Companies and individuals who refuse to change will ultimately have no value.

:agree:

However this shift is a small come compared to the huge shift to automated taxis in urban area that will come within the next 10 to 20 years. What percentage of personal vehicles are sold to urban areas vs rural? What will happen when the urban areas shift to a rent a ride model vs ownership? Will Ford or GM be in a position to capitalize on the shift, or will they exist to supply widgets to other companies that garner the bulk of personal transportation market's profits?

As many of the younger generation don't own a phone land line or even know what it is. Many of the younger generation that live in large cities don't own or care to own a car, SUV or truck.

 

[Brombear]

The move to automated cars is IMHO much exaggerated. What we see now are proof of concepts that work under best conditions. In reality there are so many derivations from ideal environments. Driving is complicated.

Just one small example how hard it is to know about the streets. My daily driver has a feature to recognize speed signs. Combined with the satnav it should always know the correct speed limit. Reality is that the satnav database has its flaws and the speed sign recognition sometimes fails without any idea why (I keep sensors clean). These are pretty basic and static requirements. I am not talking about moving targets, bad weather conditions, changing temporary roads, what else (hackers). The first 80% of any project are the easy to do After that it gets harder and harder towards 100% with subproblems where there is no solution (ethical dilemmas like kill the old man or the young girl)

Coming from a 30 year career in software development I am highly sceptical. I would not want myself or anyone of my family/friends being accidentally killed, because of an oopsie in data acquisition, algorithm oopsie, malfunctioning hardware. I am thinking more about 50 years but as usual predictions about the future are hard :wink

 

[twobjshelbys]

I wonder what happens to their police interceptor line. They have other specialty lines with Sedans too (taxi, limo, ambulance)