Ford Motor: all products must be bigger and more expensive

Having nearly exterminated passenger cars, I have been expecting the big three to start killing off the smaller CUVs, as they continue their push for ever higher ATP and GP, regardless of loss of volume, due to fewer people being able to afford what they want to sell.

We old phartz remember the big three doing this in the past, repeatedly. The same thing always happens: someone else enters the market, in segments the big three abandoned, and eats their lunch. So big three management goes crying to the government it hates, for protection from competitor inroads in markets they abandoned, using their employee’s as hostages.


The Big Three seem incapable of building and selling anything that is small or cheap, and it’s been this way for decades. Bob Lutz spends some time on this problem in his book:

It’s an excellent read and I highly recommend it. Especially given how the industry is pivoting and going through some pains. It’s been too long since I’ve read it so the details are foggy. I might need to read it again myself.

We want to get rid of our Odyssey but are having a problem finding something we like at a price we find reasonable for what we are getting. So the problem is not just relegated to the Big Three (we shopped Honda, Toyota, Mazda, Hyundai, Kia).

Some people enter a business to build cars and make money doing it.

Some people enter the car business to make money.

The difference is those that succeed and those that suck.


You make “creating shareholder value” sound like a bad thing.


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Seems that someone at Honda started to think about “affordability”. Last year, Honda announced they were dropping the bottom “LX” trim Civic. Back in the day, “LX” was the high volume, mid-priced trim, with both DX and CX below it. The push for ever higher ATP and GP sent the LX trim to extinction, joining DX and CX.

Now, Honda announces the return of the LX trim. Meanwhile, GM and Ford honchos dismiss concerns about affordability with “let them buy used”.

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But is that really what this article says they’re doing?

As I read the article, it just says they’re discontinuing the ICE versions of their small SUV’s - to be replaced with EV versions instead.

Isn’t that kind of what all of our industrial policy is about? To get auto manufacturers to stop investing capital and equipment in making ICE versions of these cars? In the highest volume vehicles, it might still be worth it for them to keep pushing out ICE’s, because they won’t be able to get the battery production high enough in the very short term to convert 100% of the best sellers. So they’ll need maybe another model cycle or two to replace them. But for smaller volume cars, why on earth would we want them to rebuild a factory line to make the ICE version rather than just going full EV?


I see used vehicle prices are on the rise again. Dealers get you coming & going. Best to buy a reliable brand, maintain it & drive it into the ground to avoid as many dealer transactions as possible.

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This is nothing new and has always been the case. Every transaction has substantial costs involved, so best to minimize the number of transactions.

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Farley’s comment: he said: “So I’m very optimistic about our 8% because we are not going to be playing in the two-row commodity SUV market because Ford’s tried that in the ICE business, didn’t really work out for us. We want to play our hand, our strength, in commercial, [truck], larger vehicles on the category side. We do not want to have too many top hats because that costs a lot to engineer.”

No “commodity” vehicles. They don’t care about volume. They refuse to compete on price. They only want to make the biggest vehicles (which carry the highest ATP and GP)



Remind me again, what was the number one selling vehicle in the US for the last umpteen years?

[cough] F-series [/cough]


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Is that really factual though, or is it that they just don’t build them and sell them in the U.S.?

Ford sold almost as many Pumas as Tesla sold Model Ys last year in Europe (137,000 vs 138,000). And, if you add Ford’s Kuga (127,000 units) on top of that, Ford crushed Tesla in the small car market for European sales.

Generally speaking, the U.S. just doesn’t buy a lot of small cars. The Tesla Model Y last year was the rare exception.

This is true. Last year, Ford sold 653,957, and another 15,617 of the EV version. That is out of a total sales for the year of 1,864,464, so the F series accounts for 36% of total sales.

Add in the Bronco and 3 row SUVs: 421,920, for a total of 1,075,877, or 58% of 2022 volume. If you wish, add the smaller trucks, Ranger, Maverick, E-series, Transit, for another 262,907, but the E-series and Transit are working vehicles, thus thin margin, and the Ranger and Maverick are “smaller”, so, the plan Farley is laying out would see all of them get the chop too.

So, according to Farley’s plan, they would shutter Oakville Ontario, and Louisville Assembly, along with the plants that build the components for those “commodity, two row” SUVs. Several thousands of people out of work, but they are just expendable meat, right? It’s all about ATP and GP, right? Narrowing the customer base of the company is “creating shareholder value”, right? “Consumer choice” is Communistical rhetoric, right?

What happens if consumer’s choose something else, like a Tata, or Mahindra, and Ford can’t give away those $50,000+ huge pickups and SUVs? That will be the problem of the CEO that comes after Farley, right?



Thanks for pointing out that section of his quote in the rest of your post - I missed that.

But this seems like the right strategy for Ford - and it make a lot of sense. You suggest that they “refuse to compete on price.” Is there any reason to think they can compete on price in generic, commodity small cars?

This year is the beginning of the wave of BYD and other Chinese automakers beginning their export strategy to the rest of the world. Within a few years, their sales to Asia and Europe will start to be a significant chunk of the market. It might be a few years more before they start to penetrate the U.S. market, but there’s going to be enormous pressure on the “just a car” bottom end of the market. These manufacturers won’t be trying to distinguish themselves on branding for a while - they will be pushing in trying to be the cost-conscious version of each market segment.

For a company like Ford, which leads automakers (or used to) in terms of proportion of domestically assembled cars, they’re probably not going to be able to match those imports on price in generic, “just a car” type cars or SUV’s. What they do have is an outstanding brand in the truck segment, and strong brand identity generally - which means they should concentrate on vehicles that aren’t commodity cars, but have distinguishing design or features that they can use to differentiate their brand from competitors.


Given the tensions between the US and China, I am not optimistic about Chinese cars hitting the US market anytime soon. That is why I used Tata and Mahindra as my examples of low end competition.

Ford has already abandoned India and South America. Can’t be long before they bail out of Europe, as they keep giving the company the Welch treatment. Cutting whatever is lowest, makes something else the lowest, and next for the chop. That is the way they are heading: North America only, biggest, most expensive, only.

There are plenty of companies offering distinctive products, without being exorbitantly priced. But all Farley sees is that 8% GP number, pushing it higher and higher.

What made Ford? Selling a decent quality car at a lower price. Meanwhile, high end brands, like Packard, and Pierce Arrow, fell by the wayside.


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Considering the damage done to foreign made EVs via the IRA, I would agree. China would have to commit to building them in North America to compete against the $7500 tax credit - and of course that is unlikely to happen any time soon.

Ford has already abandoned India and South America. Can’t be long before they bail out of Europe,

Ford sells quite a few cars in Europe. I don’t see your rationale for why they would leave that market.

I mean - why? We import more stuff from China than anywhere in the world. It’s not like consumers won’t purchase Chinese-made manufactured goods. We’re not refusing to buy iPhones because they’re made in China.

I agree that Chinese cars aren’t likely to hit our shores for a bit, because their initial markets will be Asia (for obvious reasons) and Europe. But that will put pressure on global prices for those lower-end commodity cars, as some of the production volume and capacity that would have been sold in Japan or France ends up being directed to the U.S. market.

Yeah, well, you can’t always be successful doing today what worked a century ago. BYD isn’t Packard, and Dearborn might not be able to compete with Shanghai on price for indistinguishable generi-box SUV’s.

I wonder. I suspect there will be a lot of resistance in the buying public to a previously unknown brand of Chinese car. And, as I have said previously, my understanding is that the existing models of these cars in China are missing significant features required in Western markets and adding those features to qualify for sales will add significantly to the price.

No, but iPhones are perceived as an American product, regardless of where they are actually made. There are a number of Chinese phones which I understand are very good and priced way below iPhone that one doesn’t see here at all.

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To me the difference is with the iPhone you know the hardware, you know the software. All China is doing is physically assembling bits. But with a Chinese phone you are getting Chinese hardware, Chinese software. Do you want to trust that?

Now… Chinese car. Not sure I’d trust the safety. The resale value. Nor the installed software.


True - though part of the reason is that the U.S. government has been very aggressive against the Chinese telecomms sector in a way that they haven’t with most other consumer products:

It is certainly true that the U.S. market will require a lot of work for Chinese makers to crack. But unlike smartphones, the U.S. is a disproportionately large piece of the global auto market. There are 1.6 billion smartphone users in China and India compared to 0.275 in the U.S.; but in autos, the China/India market is only 26 million units compared to about 14 million here. We’re so much larger a piece of the market that Chinese firms are certainly going to try to get a foothold here, at some point.

Plus, they’re almost certainly going to be coming with just EV’s. Unlike cellphones, where they’re just a cheapo cut-rate version of just another phone, they’ll be actually pushing forward an important environmental policy. More like cheap Chinese solar panels than phones. A cheap EV will have enormous support from US enviros, both because it will help speed the transition away from fossils and it makes their efforts to force that change seem less focused on rich folks. So they’ll have a green halo, which phones can’t really match.