Photographer: Andrew Harrer/Bloomberg
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Ford Targets Toyota Hybrids, Jeep SUVs in Showroom Overhaul

Updated on
  • Long-held 8% profit margin goal ‘now has upside,’ Hackett says
  • Carmaker has been losing share in lucrative SUV segments

Ford Motor Co. plans to topple Toyota Motor Corp. to become the U.S. hybrid king and will take a shot at Fiat Chrysler Automobiles NV’s Jeep brand with a series of new sport utility vehicles within the next few years.

The automaker will build gas-electric versions of all of its most popular vehicles by 2021, including the F-150 pickup, Escape crossover and Mustang muscle car. Five new SUVs will hit showrooms within the next two years, including a small, rugged off-roader aimed at the popular Jeep Wrangler.

Ford plans to release hybrid versions of the Mustang, F-150 and Explorer (pictured), plus the Escape and Bronco.

Source: Ford

“By 2021, we expect to surpass Toyota to be No. 1” in hybrids, Jim Farley, Ford’s president of global markets and a former Toyota executive, told reporters Thursday at the automaker’s cavernous design dome. “To do that, you have to offer it on every one of your mainstream products.”

Ford has been punished lately by both consumers and investors for fielding too many stale SUVs and being absent from several fast-growing segments. It’s pledging to have the freshest lineup in the U.S. by 2020 by dropping the average age of its models to 3.3 years, from 5.7 years now. Chief Executive Jim Hackett, brought in last May to turn the company around, characterized the need to overhaul Ford’s lineup and prepare for the electrified and autonomous age as an existential issue.

“Being frozen in the past is really a death sentence,” Hackett said. “We’re looking at things we never would have imagined 10 years ago.”

Ford shares rose 0.5 percent to close at $11.07 in New York. Toyota fell 0.2 percent to 6,917 yen at 11:08 a.m. in Tokyo.

A Toyota spokeswoman declined to comment on Ford’s target.

A teaser image of Ford’s new off-road small utility.

Source: Ford

Hackett, 62, is planning to shrink Ford’s passenger-car lineup as American consumers increasingly snub them in favor of roomier crossovers. The only sedans and coupes that’ll survive will be low-volume, higher-priced models that’ll help toward the company reaching a long-sought profit margin goal of 8 percent.

The CEO’s so-called “fitness” initiatives that include slashing $14 billion in costs over five years also are helping toward the profit efforts.

“That 8 percent margin target we have floated out there now has upside,” Hackett told more than 100 reporters sitting in stylish, multicolored swivel chairs built by Steelcase Inc., the office furniture maker he previously ran.

SUV Revamp

Ford will update its aging SUV lineup that’s been losing share in the U.S. the last several years by redesigning the Escape and Explorer and adding a battery-powered model with 300 miles of driving range. It’s bringing back the rugged Bronco and introducing a smaller SUV that shares the Bronco’s off-road sensibilities. All the new SUVs will be offered with a hybrid powertrain option, and some plug-in hybrid versions will be available, Farley said.

The SUV trend is “far from secret, and by the time 2020 rolls around, Ford’s new vehicles will have a lot of stiff competition,” said Jeremy Acevedo, an analyst with researcher Edmunds. “Even though SUV sales are robust, the market is starting to contract, and when dealer lots are inundated with SUVs of every size, shape and brand, it’s going to take a lot to stand out.”

Sliding Share

Ford losing U.S. market share in both the SUV and car segments

Source: LMC Automotive

In two years, 86 percent of Ford’s U.S. sales will come from SUVs and trucks, Hackett said. Light trucks were about 77 percent of its sales last year, according to researcher Autodata Corp.

Hackett declined to identify which car models the company will drop from its lineup because he said it would be unfair to dealers who still have to sell them.

Marked for Death: Detroit Ditching Cars to Mint Money Off Trucks

Farley said the Bronco and its smaller sibling are inspired by Ford’s brawny F-150 Raptor truck. The new Ford off-road duo will differ from Jeep by boasting more speed, a smoother ride and a cockpit packed with more creature comforts, he said.

The smaller off-roader is aimed at buyers “who don’t want SUVs that look like doomsday vehicles or have spartan military interiors,” Farley said. 

Michelle Krebs, a senior analyst with researcher Autotrader, said she thinks the Bronco and its baby brother have a shot at stealing some sales from Jeep.

“Jeep has been out there on its own and done really well,” she said. “Ford is the most likely one to go after them. The Bronco is a strong name with a strong following.”

‘Big Mistake’

Another new SUV coming is the Lincoln Aviator model that Ford will unveil later this month at the New York auto show, Farley said. He didn’t go into detail on Lincoln’s latest offering, but previously has said the luxury line will pivot to focus on SUVs and electric vehicles.

“This is the stuff that’s going to fund Ford’s future,” Krebs said. “Their big mistake was not keeping their products fresh. You just cannot let products linger for seven and eight years anymore. This is late in coming, but they have to do it now.”

These new SUVs will excite the market more than Ford’s hybrid push, she added.

“It’s going to be tough to top Toyota in hybrids and that segment is way down; even the Prius has not done well,” Krebs said. “And it doesn’t really matter who is No. 1. What matters is who makes the most money.”

— With assistance by Kevin Buckland

(Updates with response from Toyota in seventh paragraph.)
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