Ford Motor Co. is cleaving an additional $11.5 billion from spending plans and dropping several sedans, including the Fusion and Taurus, from its lineup to more quickly reach an elusive profit target.
The automaker is almost doubling a cost-cutting goal to $25.5 billion by 2022, Chief Financial Officer Bob Shanks told reporters Wednesday. By not investing in next generations of any car for North America except the Mustang, the company now anticipates it’ll reach an 8 percent profit margin by 2020, two years ahead of schedule.
Ford is trying to kick-start a turnaround that’s yet to take hold almost a year after the board ousted its chief executive officer. Getting rid of slow-selling, low-margin car models and refocusing the company around more lucrative trucks and SUVs is a crucial element of new CEO Jim Hackett’s rebound bid. By 2020, almost 90 percent of Ford’s North American portfolio will be pickups or sport utility and commercial vehicles.
“We’re going to feed the healthy part of our business and deal decisively with areas that destroy value,” Hackett said on an earnings call Wednesday. “We aren’t just exploring partnerships; we’ve now done them. We aren’t just talking about ideas; we’ve made decisions.”
Hackett, 63, is choosing a route similar to the one Fiat Chrysler Automobiles NV used to pass Ford in North American profitability. Fiat Chrysler CEO Sergio Marchionne killed off the Dodge Dart and Chrysler 200 sedans and retooled the factories that had been making them to build Jeep SUVs and Ram pickups instead. Marchionne now wants to eclipse General Motors Co.’s margins in North America before his retirement in 2019.