Ford sees lineup changing to match demand, will add debt

DETROIT -- Ford Motor Co. will likely make changes to its car lineup as demand for small utilities continues to outpace that for sedans.

That could include offering crossover-style variants of certain sedans -- as it plans to do in Europe with the Fiesta subcompact’s new Active model -- or dropping certain nameplates altogether.

“Over time, there should be some pruning of the portfolio to support growth in other areas,” Joe Hinrichs, Ford president of the Americas, told Automotive News today. “Clearly we’re going to invest in growing the SUV portfolio. We certainly intend to have a strong car base as well; we don’t know where the market’s going to go. But there will be some pruning over time as there should be in a nameplate and portfolio.”

Ford’s car sales dropped 13 percent in November and are down 14 percent through the first 11 months of the year.

Sedans slump

Sedans have fared the worst. Fiesta sales have led the decline, dropping 26 percent year-to-date. Focus sales have fallen 17 percent; C-Max and Mustang sales are down 13 percent; Taurus sales have dropped 11 percent and Fusion sales are down 10 percent.

Hinrichs didn’t name specific nameplates that could be cut, but noted former popular vehicles such as the Freestar minivan and Ranger midsize pickup that were killed after demand dropped.

“If you look at our past, there’s been some nameplates that have dropped off and other nameplates have been added,” Hinrichs said. “Given where the market is going, the demands for capital investment and the regulatory changes coming at us, we’ll continue to always look at the total portfolio and see where’s segmentation going and where should we be phasing out.”

Adding debt

Separately, Hinrichs told Reuters today that Ford plans to raise about $2 billion in long-term debt. It would be the first time the company has sought to add to its automotive debt in nearly four years.

Hinrichs said the money will largely go toward investments in new technology.

“It’s an opportunistic time,” Hinrichs told Reuters. “It’s a supportive marketplace for long-term debt given where rates are, and we want to make sure that throughout the cycle of the industry we have the flexibility to do what we need to do and want to do, especially in the emerging part of the business.”

SUV options

Stephen Odell, Ford’s director of global marketing, sales and service, said there’s no indication the SUV trend will end anytime soon, but options are available to address both vehicle segments.

Last week in Germany, Ford introduced a new Active model for its Fiesta which includes a higher suspension and looks more like a crossover.

“You can address both markets in some cases with a similar product offering,” Odell said, although he declined to say if the Fiesta Active model would come to the U.S.

To help combat sluggish car demand, Ford will make all of its small cars in lower-cost Mexico.

That includes moving the Focus compact and C-Max hybrid out of the company’s Michigan Assembly Plant in Wayne in 2018 and moving the Focus to a new $1.6 billion plant in Mexico. Ford has not said what it will do with the C-Max.

Mexican business equation

Ford’s decision to move the Focus south of the border ensured the nameplate would have a future in the U.S. that may not have been possible if Ford continued to build it in America, Hinrichs said.

“It improved the Focus business equation and allowed us to have a next-gen Focus,” Hinrichs said. “We want it to be an important part of our car offerings in the marketplace, but it’s important to recognize where that segmentation’s been going over time and what that may mean in the future about the volumes.

“I think it would be a very challenging proposition to build the next-gen Focus in the U.S.”