The only models to survive the purge are the Mustang and Focus Active
In a move that is as shocking as it is eerily reminiscent of a similar move when FCA killed off the Chrysler 200 and Dodge Dart two years ago, Ford just announced that it will kill off most of its non-crossover cars in the US. Due for the chop are the Fiesta, Fusion and Taurus, three Ford staples that combined in 2017 gave the company almost 300,000 sales. We dive in to see whether there is any merit to this decision.
The hole is not that large and shrinking
While speculations of Ford not replacing the Fiesta, Taurus, and even the Fusion have been circulating around for a while, the shock factor is generated by the announcement of the chop arriving simultaneously for all three models. But, if you start to think about it, the Fiesta and Taurus both sold fewer than 50,000 units last year, while the Fusion, while still popular at a little over 200,000, still sold considerably less well than the 300,000+ units at its peak in 2014. By comparison, both the aging Escape and Explorer crossovers sold around 300,000 last year, the best performance for the current generation models. Which gets at the heart of the issues – crossover sales in the US are booming (up 14% in Q1’18), while those of mainstream models are slumping at an alarming rate (down 11% in Q1’18). Ford’s move can be seen as simply getting ahead of the curve.
Crossovers are more profitable
One thing that public reaction often forgets is that volume is necessary but not sufficient for a company to make profits – it also needs for each vehicle sold to be profitable on its own. This is where crossovers dominate the mainstream models – the public is willing to pay considerably more for what is, from an engineering perspective, a car that is not much more expensive to manufacture. And it is not just the list price – sales of mainstream models, especially mid-sized and large ones, have long been driven by high discounts offered by dealers, further squeezing their profitability.
Ford is not leaving 300,000 customers hanging
The key thing is that by pulling the Fiesta, Fusion and Taurus from market, Ford is not telling 300,000 customers to go look elsewhere for their new set of wheels. Rather, it hopes that those consumers will be tempted into its crossover models instead, which is not an unreasonable expectation given the strength of brand loyalty and, arguably, the higher utility offered by five-door higher-riding models with an image coveted by most buyers.
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