Ford is getting out of the car business. Where did we go wrong?
In retrospect, it should have been obvious that Ford didn’t care about cars any more. Last fall, they emitted a press release that in the first paragraph said, among other gibberish, “strategic”; “leverage”; “product strengths”; “trusted brand”; “global scale”; “refocus”; “evolving”; and “disruptive”.
They didn’t drink the management consultant Flavor Aid; they got naked and jumped into an industrial vat of it and splashed their middle-aged white bodies around in it until they were all grapey and wrinkled. More wrinkled. Because Ford Motor Company was now going to be a “mobility company”.
All us auto writers had a hearty laugh, because it was obvious that Ford CEO Jim Hackett, appointed in May 2017 fresh off a 33-year career making office furniture at Steelcase, was in way over his head. Ford is a family-controlled company and while the Ford family is secretive, the youngest of them are fourth-generation automakers.
They have seen the Edsel. They have seen the Pinto. They have seen the Mustang II. They know fads and disasters. They’d give this yokel some leeway but when he started to threaten the security of the never-ending family fortune, yank him back on his chain so hard his chubby little baby face would detach from his body.
For months, it looked like Jimmy was digging his own hole pretty deep. Shortly after his hiring, he announced a six-step cost-cutting plan, but 11 months went by with him refusing to tell anyone what exactly his “plan” was.
A New York Times article over the winter described a conference call with investors in which a Morgan Stanley analyst called him on his failures, and reiterated the sentiment in a very public April 2018 letter.
Hackett’s back was probably against the wall at that point, and scared animals do desperate things—like announcing that within 18 months, the only car Ford is going to build is the Mustang. Everything else will be increasingly popular—and large—crossovers, full-size SUVs and trucks.
This is Ford’s nuclear option. It’s aided by the dinosaur-ending asteroid that is the Trump administration, ripping open fuel economy loopholes and keeping gas prices artificially low, which makes high-profit big vehicles even more profitable.
Ford doesn’t even make a car with a base price over $30,000—the average base price of the six “cars” they make (the C-Max, a small vanny wagony thing, barely counts), is $22,000. An Expedition starts at $51,790. The larger the vehicle, the larger the margin.
That’s the big turnaround in a nutshell. They don’t make even one hybrid or battery SUV, but they’ll probably make a halfhearted effort to do so, along with a light drizzle of autonomous driving, and watch the profits climb. Right up until that moment when gas goes up again and people say, “Huh, I’m really not enjoying paying $95 to fill my Flex twice a week,” which is returning 15 mpg around town and, oh yeah, all those fancy Ford turbo engines need premium.
It is the thinking of a man whose shining accomplishment is recruiting Jim Harbaugh to coach U Michigan. And maybe also of a man who thinks his job is on the line. It would be funny if Ford didn’t employ 200,000 people, and probably another million indirectly.
But Hackett has made a career of destroying lives for profit and is clearly only interested in his own skin, so what does he care if five years from now it all comes crashing down like the tower of glass that it is?
He’ll be long gone with a generous severance package, and it’ll be someone else’s problem.
David Traver Adolphus is a freelance automotive researcher who quit his full time job writing about old cars to pursue his lifelong dream of writing about old AND new cars. Follow him on Twitter as @proscriptus.