Ford shifting all U.S. small-car production to Mexico

Ford is shifting all North American small-car production from the U.S. to Mexico, CEO Mark Fields told investors today in Dearborn.

"Over the next two to three years, we will have migrated all of our small-car production to Mexico and out of the United States," Fields said.

The industry has known for decades that domestic manufacturers struggle to make a profit on small cars. Shifting their assembly to Mexico can reduce costs to a point. But some of these cars are over-engineered.

For example, Field said the current Ford Focus can be ordered in 300 different configurations of options and colors. Ford wants to reduce that to 30, which will make the production process simpler and less expensive.

But Americans prefer larger vehicles, especially pickups and higher-riding SUVs and crossover vehicles for their personal use.

The future of smaller cars in the U.S. may depend on the ability to electrify their powertrains and introduce them to ride-sharing fleets where they can generate revenue from fares paid by multiple riders.

Along those lines, Fields and other Ford executives Wednesday outlined an aggressive plan to invest $4.5 billion over the next four years. These will include new models in segments such as commercial vehicles, trucks, SUVs and performance vehicles.

Ford also reiterated its commitment to developing an autonomous vehicle by 2021. The company believes that autonomous vehicles could account for up to 20% of vehicle sales by 2030.

Ford continues to present its corporate strategy to more than 100 analyst and investors throughout the day. The meeting comes as the U.S. auto industry's six-year recovery is cooling, while the U.K.'s exit from the European Union has presented a new challenge to Ford's rebound in Europe.

Then there is the high-stakes competition to develop and refine fully autonomous vehicles that initially will be used in ride-sharing services.

Ford shares have fallen 12% from the beginning of the year from $14.09 to Tuesday's closing price of $12.38.

Fields spent the first half of his 45-minute presentation assuring analysts that Ford's core business remains strong, especially in its most profitable segments such as full-size pickup trucks, commercial vans and its resurgent Lincoln luxury brand.

But he also said the company must respond to a global shift away from personal vehicle ownership to one in which personal ownership will be challenged by on-demand shared mobility.

"This is very different thinking for us," Fields said. "For most of our history we have thought about the thing and how many of the things we have sold."

In exploring how a traditional manufacturer can profit in a market where the vehicle becomes a service platform, Fields said the first question he and fellow executives had to define is "What’s our point of view on autonomy?"

"We see huge social economic and environmental benefits. We’re focused on usage where miles traveled be," he said. "Autonomous vehicles will account for one of every 10 miles traveled by 2025, and will grow from 5% of all vehicles sold in U.S. in 2025 to 30% in 2030."

KGW


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