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US Car Makers are dropping most of family cars

Discussion in 'General Off Topic Chat' started by theoldboy, Apr 26, 2018.

  1. theoldboy

    theoldboy Senior Member

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    Headline from CNBC.Com

    Ford is basically giving up on US Car business, and GM is not far behind

    Ford's plan to reduce its passenger car lineup to just two models, and GM's difficulty selling passenger cars in the US show how much tastes are drifting toward trucks, SUVs and crossovers

    Ford will only update the Focus Active crossover and Mustang for the U.S. market, while GM called out a challenging passenger car environment.

    My Question.

    Are we in europe going to follow....
     
    #1 theoldboy, Apr 26, 2018
    Last edited: Apr 26, 2018
  2. Syphon

    Syphon SCN Admin
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    Interesting. Saw this earlier. Hope not. Would miss the choice.

    Scott
     
  3. Jimbobcook

    Jimbobcook and karma is restored...

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    More mustangs = warmer summers lol

    I too like the choice of what to get, and after my Mk2 is dead it would be a tough shout on what to get.

    I would an f150 buts it's not logical lol
     
  4. theoldboy

    theoldboy Senior Member

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    Not sure about the correlation between mustangs and warmer weather (this is the UK after all) as all the Mustangs near me are not convertable.

    Mk1 & 2 don't die (very often) they just carry on costing money and bringing you joy, which I hope will also be true for the MK3.
     
  5. Jimbobcook

    Jimbobcook and karma is restored...

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    Mustangs are a direct issue for the ozone layer lol just behind cows. Bigger holes in the ozone warmer weather haha

    Sent from my ONEPLUS A3003 using Tapatalk
     
  6. theoldboy

    theoldboy Senior Member

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    Unless they have had a REVO map in which case there is no ozone layer left :)

    And my friend Donald says that global warming is not real and he is always right :)

    EDIT And just to be clear he is not my friend and i do believe in global warming.
     
    #6 theoldboy, Apr 26, 2018
    Last edited: Apr 28, 2018
  7. Jimbobcook

    Jimbobcook and karma is restored...

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    I have no reply for that lol
     
  8. m0rk

    m0rk sarcasm comes free
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    So as a fairly new arrival to Canada I totally get why they've made this choice.

    Basically you either buy an SUV (I have a Ford Escape), a Honda Civic, or a Truck

    You 'need' a big car (boot) here, because you literally can't get anything delivered.... So it needs towing or putting in the back of the car / flat bed.

    Anyway, I'll turn my Escape in on it's first birthday around December & get the F150 Supercrew that makes up 20% of the vehicles in my neighbourhood.
     
  9. Jimbobcook

    Jimbobcook and karma is restored...

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    I want an F-150 :-( lol

    Sent from my ONEPLUS A3003 using Tapatalk
     
  10. theoldboy

    theoldboy Senior Member

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    From CNBC.com
    Ford's new CEO, Jim Hackett, announced a bold strategic move for America's most enduring automaker: abandoning the car business.
    Bowing to short-term shareholder pressures that felled predecessor Mark Fields, Hackett is undoing 115 years of Ford's automobile legacy.
    A 3 percent jump in Ford's stock price validated Hackett's decision, but that adrenaline shot could be short lived.

    Ford's new CEO, Jim Hackett, just announced a bold strategic move for America's most enduring automaker: abandoning the car business. Hackett completely reversed former CEO Alan Mulally's full-line strategy to focus on trucks and SUVs. A 3 percent jump in Ford's stock price validated Hackett's decision, but that adrenaline shot could be short-lived. Jettisoning automobiles may prove fatal for Ford, leaving the market to GM and foreign producers.

    Bowing to short-term shareholder pressures that felled predecessor Mark Fields, Hackett is undoing 115 years of Ford's automobile legacy. Unlike General Motors CEO Mary Barra, labelled a "car gal" for her 38 years in the business, Hackett has no experience in automobiles. He comes from thirty years of making furniture and most recently as interim athletic director at the University of Michigan.

    Founder Henry Ford didn't create the automobile, but he turned it into "every person's vehicle" in launching the Model T in 1908. In 1913 he introduced the first moving assembly line. The following year he offered a fair day's work for a fair day's pay, doubling wages to $5 per day to enable his workers to enjoy an adequate standard of living and be able to purchase the cars they produced.

    That rich history may seem irrelevant to today's global world. Not so. When Alan Mulally became CEO in 2006, he fully embraced Ford's heritage and restored its focus on automobiles, insisting Ford could make money in a full range of cars by being cost competitive with foreign automobile plants in the South.

    "Hackett has no experience in automobiles. He comes from thirty years of making furniture and most recently as interim athletic director at the University of Michigan."
    In 2007 Mulally borrowed $23.6 billion by mortgaging all of Ford's assets, including the famous Ford Blue Oval, and acted decisively to focus on the Ford brand by spinning off Jaguar and Land Rover. He used the loan and proceeds from asset sales to finance a major overhaul of the company's automobiles and factories and provide "a cushion to protect for a recession or other unexpected event."

    At the time the loan was interpreted as a sign of desperation. Even General Motors CEO Rick Wagoner belittled the move. When the economy collapsed the following year, Mulally's vision saved the company as GM and Chrysler were forced to declare bankruptcy. By the time GM was back in business and Chrysler was bailed out by Fiat, Ford had a five-year head start in revamping its product line.

    Ford's F-series and its Ford Focus became America's best-selling cars, and its F-150 the top-selling truck, enabling Ford to reverse its declining share in the U.S. In addition, Mulally negotiated a landmark labor agreement with the United Auto Workers in 2009 that eased onerous work rules and introduced a 50 percent lower wage for new factory hires. Mulally's strategy turned Ford around, as it went from losing billions to solid profitability.

    Hackett is correct in acknowledging that today's market has shifted to SUVs and trucks and in recognizing the success of Ford's Expedition and Explorer SUVs and F-150 trucks. But he is overplaying his hand by jettisoning automobiles.

    The dramatic drop in oil prices to $40-60 in the past four years after a decade of $100 per barrel oil has lessened consumer concerns about gasoline prices and boosted SUVs and truck sales. Hackett is gambling that the present oil glut will keep gas prices so low that consumers won't worry about fuel costs, but history shows that oil prices fluctuate wildly and will eventually get back to $100.

    Hackett is also betting President Donald Trump will withdraw the Corporate Average Fuel Efficiency (CAFE) standards that Mulally signed up for in 2012. They require automakers to double fuel efficiency to 54.5 miles per gallon by 2025.

    The demise of CAFE standards, administered by National Highway Traffic Safety Administration (NHTSA) under the 1975 law, is anything but a sure bet. Furthermore, President Trump may be unhappy about the factory closures and massive layoffs Hackett has triggered, especially if foreign manufacturers capture Ford's sales.

    However, the biggest winner from Ford's move may be GM's Barra. In four years at the helm, she has committed GM to a full line of automobiles and trucks, positioning the company to grab the share Ford abandons.

    With its 50-50 joint venture with China's SAIC, GM is currently selling more cars in China than it does in the U.S., as China accounts for more than one-third of GM's global sales. In the future GM will likely import Chinese-made cars into America, giving it a large cost advantage over domestic-made cars.

    The stock market has recognized GM's strategies are paying off, pushing its stock up 23 percent in the past two years as Ford's declined 15 percent.

    Ford may survive for a long time as a producer of trucks and SUVs, but it will no longer be the great American automobile company Henry Ford created and Alan Mulally restored. Playing to short-term shareholder demands rarely results in long-term success.

    On the other hand, Hackett may be betting when he moves on, Ford's strategic dilemmas will rest with a future CEO.

    Commentary by Bill George, a senior fellow at Harvard Business School, former Chairman & CEO of Medtronic, and the author of "Discover Your True North." Follow him on Twitter @Bill_George.

    For more insight from CNBC contributors, follow @CNBCopinion on Twitter.
     

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