Ford Motor to boost production targets by 25pct in 2018
Reuters quoted Ford Motor Co as saying that it will boost production targets for two large sport utility vehicles by 25 percent this year to challenge rival General Motors Co's hegemony in a highly profitable US market segment and boost its own anemic profit margins.
Ford global operations president Joe Hinrichs said ahead of the announcement during a tour of the company's Kentucky Truck Plant in Louisville, Kentucky where the new generation of Ford Expedition and Lincoln Navigator SUVs went into production last fall "We can sell every single vehicle we can produce here. These are high-margin vehicles, so that is very meaningful."
The Expedition and Navigator are two of the highest-priced vehicles Ford sells, and the production increase at the Kentucky Truck factory comes as investors are growing restless as Ford's automotive profit margins have shrunk to 3.7 percent in the Q4 of 2017 from 5.7 percent a year earlier.
The company's margins have fallen behind rivals General Motors Co and Fiat Chrysler Automobiles.
Even before recent market volatility, Ford's shares were slumping. Year to date they are down 14.7 percent, while shares in No. 1 US automaker GM, which is seen by analysts as having a clearer vision and better operational focus, are up 1.2 percent.
According to data cited by Ford, the average price for a Navigator in January 2018 versus January 2017 jumped 38 percent, or USD 21,300, to USD 77,400, while the price for an Expedition rose nearly USD 8,000 to USD 57,700. Both are well higher than the industry average vehicle selling price of USD 33,100.
GM is outperforming Ford financially in part because it dominates the US large SUV segment with models such as the GMC Yukon and Chevrolet Suburban. Ford sold a little shy of 3,500 Expeditions and 1,300 Navigators in January. GM sold more than 19,000 of its large SUVs during the month.
Hinrichs said that "There is a big dog in the segment. We aim to get out there and challenge them with vehicles with better fuel efficiency and driving dynamics."
Ford said it will add USD 25 million in investments at the plant to support the production target hike, bringing its total investment there to USD 925 million. Upgrades at the plant, which also produces the company's popular Super Duty pickup truck, have included 400 robots, a centralized data analytics center and a 3D printer to save time and a lot of money on parts and tools.
Ford is playing catchup to GM in the large SUV market in part because of past decisions to focus investment on smaller vehicles at a time when high oil prices and stiffening federal fuel economy rules threatened big trucks like the Navigator. This is the first complete makeover for the Expedition and Navigator since the late 1990s.
Stable, relatively low oil prices have since encouraged Americans to shun passenger cars in favor of higher-margin SUVs and pickup trucks. In 2017, passenger car sales in the United States fell to 36.8 percent of total light vehicle sales.
Ford global operations president Joe Hinrichs said ahead of the announcement during a tour of the company's Kentucky Truck Plant in Louisville, Kentucky where the new generation of Ford Expedition and Lincoln Navigator SUVs went into production last fall "We can sell every single vehicle we can produce here. These are high-margin vehicles, so that is very meaningful."
The Expedition and Navigator are two of the highest-priced vehicles Ford sells, and the production increase at the Kentucky Truck factory comes as investors are growing restless as Ford's automotive profit margins have shrunk to 3.7 percent in the Q4 of 2017 from 5.7 percent a year earlier.
The company's margins have fallen behind rivals General Motors Co and Fiat Chrysler Automobiles.
Even before recent market volatility, Ford's shares were slumping. Year to date they are down 14.7 percent, while shares in No. 1 US automaker GM, which is seen by analysts as having a clearer vision and better operational focus, are up 1.2 percent.
According to data cited by Ford, the average price for a Navigator in January 2018 versus January 2017 jumped 38 percent, or USD 21,300, to USD 77,400, while the price for an Expedition rose nearly USD 8,000 to USD 57,700. Both are well higher than the industry average vehicle selling price of USD 33,100.
GM is outperforming Ford financially in part because it dominates the US large SUV segment with models such as the GMC Yukon and Chevrolet Suburban. Ford sold a little shy of 3,500 Expeditions and 1,300 Navigators in January. GM sold more than 19,000 of its large SUVs during the month.
Hinrichs said that "There is a big dog in the segment. We aim to get out there and challenge them with vehicles with better fuel efficiency and driving dynamics."
Ford said it will add USD 25 million in investments at the plant to support the production target hike, bringing its total investment there to USD 925 million. Upgrades at the plant, which also produces the company's popular Super Duty pickup truck, have included 400 robots, a centralized data analytics center and a 3D printer to save time and a lot of money on parts and tools.
Ford is playing catchup to GM in the large SUV market in part because of past decisions to focus investment on smaller vehicles at a time when high oil prices and stiffening federal fuel economy rules threatened big trucks like the Navigator. This is the first complete makeover for the Expedition and Navigator since the late 1990s.
Stable, relatively low oil prices have since encouraged Americans to shun passenger cars in favor of higher-margin SUVs and pickup trucks. In 2017, passenger car sales in the United States fell to 36.8 percent of total light vehicle sales.
Posted By : Amom Remju on Wed, 14 Feb 2018