Synopsis
In 2019, Ford Motor Company announced that it would discontinue the production of the Ford Fusion model per its strategy of shifting from passenger cars toward SUVs and crossover models. Many people have wondered whether this decision to abandon the production of passenger cars will enhance the company’s competitiveness and financial performance or weaken its performance.
Introduction/ Relevant Factual Information
Although the sale of passenger cars has been a major source of income for Ford Motor Company, the company decided to stop manufacturing and sell the Ford Fusion model, the largest automobile under the company’s portfolio (Reed & Brunson, 2024). The company reached this decision after the sales volumes of the Ford Fusion began shrinking for several years in a row. The demand for passenger cars in the United States has decreased over the last few years while the demand for other automobile models, such as SUVs and trucks, has increased simultaneously (Reed & Brunson, 2024). Consequently, Ford Motor Company decided to focus more on SUVs and crossover models and stop manufacturing large family cars, particularly the Ford Fusion model. To restore its competitiveness and financial performance, the company will need to expand its customer base, invest in fuel-efficient vehicles, and introduce cars that can run on multiple energy sources.
Explanation of Relevant Concepts, Theories and Applications
Ford Motors is among the five largest automobile companies in the United States and across the globe. The United States-based company has been manufacturing cars, SUVs, crossovers, sedans, and other vehicle models since 1908 when it was founded by Henry Ford (Reed & Brunson, 2024). The company sells most of its products to customers in the United States, Canada, European countries, and others worldwide. While the company has been generating handsome revenues from selling cars, the demand for the cars has been decreasing over the last few years. For example, car sales translated into 19 percent of the total sales made by the company in 2020, with trucks accounting for 46 percent and SUVs accounting for 34 percent of the total sales (Reed & Brunson, 2024). The low sales volumes for cars could be why the company stopped manufacturing cars and instead focused on SUVs and crossover trucks.
Over the last six years, the company has faced stiff competition from other automobile companies, such as General Motors, Tesla, Toyota, Honda, and other renowned automobile brands in the United States and globally. Customers are becoming increasingly choosey in terms of the type, design, comfortability, and other automobile features of the vehicles they buy nowadays. As such, many companies are finding it difficult to keep up with the preferences of customers, which has resulted in some of them, including Ford Motors, discontinuing the production of certain automobile models (Trainer, 2022). It is observed that many Americans prefer trucks and SUVs compared to other vehicle models, which can be demonstrated by the fact that trucks accounted for 69 and 78 percent of sales in the United States in 2018 and 2020, respectively (Trainer, 2022). In line with the shifting customer preferences, automobile companies are forced to introduce new models that are appealing to the customers and, at the same time, capable of ensuring profitability and competitiveness.
The last few decades have been accompanied by calls for service providers across various industries to produce eco-friendly products using tactics that do not have a negative impact on the environment. In the automobile industry, such companies as Tesla have been manufacturing electric-powered vehicles instead of gasoline-powered ones to contribute towards environmental conservation. Gasoline powered vehicles are becoming less popular amongst customers due to their impact on the environment and climate change (Boudette, 2022; Dearborn, 2021; Reed & Brunson, 2024). Furthermore, the fluctuations in the prices of petroleum products have forced many people to prefer electric-powered vehicles instead of gasoline-powered vehicles. In accordance with the calls for environmental conservation, Ford Motors has also started manufacturing electric-powered vehicles as well as vehicles that can be operated through both gasoline and electricity (Boudette, 2022; Dearborn, 2021). The company has set up numerous facilities and electricity plants in cities across the United States to begin the production of batteries and other accessories for electric-powered vehicles.
Recommendations
Due to stiff competition in the automobile industry, Ford Motors and other vehicle manufacturers have to adopt highly effective strategies to remain competitive and ensure profitability. Since statistics indicate that more people prefer SUVs and trucks, companies should invest money in these models as they are likely to be sold in high volumes in the coming years (Trainer, 2020). Ford Motors and other players in the automobile industry also need to expand their customer base to avoid over-dependency on a few markets. For example, Ford Motors should consider marketing its vehicles in Africa, Asia, and other countries instead of relying too much on American and European customers.
Alternative Recommendations
Statistics indicate that many people are shifting from gasoline-powered vehicles to electric-powered ones. As such, automobile companies need to invest in fuel-efficient vehicles, particularly electric-powered vehicles which are expected to have a high demand in the future (Boudette, 2022; Dearborn, 2021). It is observed that many people in different regions are interested in vehicles that offer comfort, convenience, and other features that match their respective preferences. It is recommendable for automobile companies to conduct regular studies to identify the preferences of customers in different locations and design the vehicles to meet the unique needs and preferences of these customers.
Conclusion
Ford Motors announced in 2019 that it would no longer manufacture cars, particularly the Ford Fusion model. This decision has attracted the attention of people around the world who are wondering whether this will help the company restore its financial performance and competitiveness. The decision will likely produce positive results for the company since many people are more interested in SUVs and trucks and shifting from gasoline-powered vehicles to electric-powered ones. By manufacturing more trucks and designing them to be more fuel-efficient and environmentally friendly, Ford Motors will regain its competitive edge and generate huge profits through the sale of these vehicles.
References
Boudette, N, E. (2022). Ford Splits Into Electric and Gas Divisions to Speed Up Transition. New York Times. https://www.nytimes.com/2022/03/02/business/economy/ford-model-e.html.
Dearborn, M. (2021). Ford to Lead America’s Shift to Electric Vehicles with New Mega Campus in Tennessee and Twin Battery Plants in Kentucky; 11.4B Investment to Create 11,000 Jobs and Power New Lineup of Advanced EVs. Ford Media. https://media.ford.com/content/fordmedia/fna/us/en/news/2021/09/27/ford-to-lead-americas-shift-to-electric-vehicles.html.
Reed, M. M and Brunson, R. R. (2024). CASE 4: Ford Motor Company: Will the Company’s Strategic Moves Restore its Competitiveness and Financial Performance? https://prod.reader-ui.prod.mheducation.com/epub/sn_777a2/data-uuid-e0a84e4ae8f64b70a7a71801a43f34cd.
Trainer, D. (2022). Ford Motor Company: Ready For Another Century. Forbes Magazine. https://www.google.com/amp/s/www.forbes.com/sites/greatspeculations/2022/04/04/ford-motor-company-ready-for-another-century/amp/.
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