Ford -- The Business Model -- December 11, 2022

See talking autos, December 9, 2022. 

Updates

December 13, 2022: to increase F-150 production.

Original Post

I find this so incredibly interesting.

By the way, a lot of smaller SUVs look a lot like the bigger sedans. Technically Ford discontinued the "sedan," but a lot of SUVs function a lot like sedans. 

Initially I was concerned about Ford losing entry-level products (Fusion, Escort, Focus-like, etc) but with the smaller SUVs, Ford has that segment easily covered.

Ford sales in 2018

• down 3.5% over 2017 but records across the board
  
• top-selling car brand in the USA
• total vehicle sales, including Lincoln brand,: 2,497,318
• top-selling car brand in the USA
• 2,393,731 vehicles sold (-3.3%)
• F-Series: America's favorite truck
• top seller of commercial vehicles
• SUVs: at record sales
• traditional car sales were down by nearly a fifth

2018: US economy: a banner year -- White House

• The U.S. economy grew at a rapid rate of 3.1 percent, the fastest pace for any calendar year since 2005, with output rising by $560 billion over the four quarters of the year.
• Gross private domestic investment, just 17 percent of GDP at the start of the year, accounted for 36 percent of the growth in real GDP in 2018. 
• Real investment in intellectual property products, up 10.8 percent, and grew at its fastest pace since 1999.

Ford to stop selling sedans at the end of the 2019 model year. Link here.

Why Ford stopped selling sedans. May 17, 2021. Link here.

And here we go, the "footprint rule." 

In 2011, the car industry in the United States won a change to the EPA’s calculation of Corporate Average Fuel Economy (CAFE) standards.

The “footprint rule” refers to the area between all four wheels of a vehicle and is what the EPA uses to calculate the vehicle’s fuel economy, based on a function of its size.

This rule change incentivizes manufacturers to build larger vehicles, holding them to looser standards.

Results of this are larger vehicles that rake in profit.

It should come as no surprise that most new vehicles on the road are more prominent than their previous generation due to this loophole. [This was no loophole. LOL.]

Taking Ford’s own Explorer SUV as an example, the latest generation is 4.9 inches longer and 5.2 inches wider than the previous model.

The “footprint rule” is not the only reason for model growth. Bigger cars feel better, you quite literally get more for your money, but it is also cheap value for the manufacturers. Margins are higher per inch, making a bigger vehicle easier to squeeze profit out of. After an announcement from EPA administrator Scott Pruitt stating the rollback of 2025 standards outlined by the agency, Ford’s team mapped out what they needed to meet CAFE standards.

Outcomes showed that Ford no longer needs mileage offsets from smaller, less profitable vehicles.