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The new generation of the Ford Fiesta, Britain’s best-selling car, is in the showrooms. It is more spacious, more efficient, and better equipped than its predecessor. Although the price has gone up, we can expect the new model to continue Fiesta’s seven year reign at the top of the UK sales charts. With the Focus, due for replacement next year, still firmly in the Top 10, things are looking good for Ford and its dealers. Or are they?
Ford recorded record profits last year and even makes money in Europe, where General Motors has given up the struggle and sold Vauxhall and Opel to Peugeot. But the American giants of the car business are not what they were. The emphasis now is on increasing profits and the share price. The US financial community was quick to point out that the stock market value of Tesla – the electric car company than has hitherto made no more than 50,000 cars a year – exceeds that of Ford.
Ford’s directors, which include members of the Ford family who have a controlling shareholding, concluded that the company’s future is in mobility services. They are not alone in wanting to embrace the technology of Silicon Valley, including car-to-car connectivity and self-driving vehicles; the whole industry is working on that, though with uncertain goals.
At the “Go Further” event last November, attended by 2,500 dealers from all around Europe, chief executive Mark Fields declared that Ford should be defined as an “auto and mobility” company rather than just a car and truck manufacturer.
The last Ford boss to say something like that was Jac Nasser, who wanted to create a “complete automotive services company” and bought up parts and service businesses and even scrapyards. The board disapproved and in October 2001, Nasser was fired.
Mark Fields was fired in May this year. The reason given was the opposite; Nasser had gone too far in diversification, Fields had not gone far enough.
Fields, who had headed Ford of Europe and the Premier Automotive Group (Jaguar, Land Rover, Volvo and Aston Martin) on his way to the top in the US, inherited a business that had been rationalised and slimmed-down by Alan Mulally, the “outsider” who is credited with saving Ford from bankruptcy and returning it to profit. On the face of it, he had done well developing Mulally’s strategy but it was not enough to affect the Ford share price, which stayed stuck below 11 dollars.
Fields’ replacement is another outsider, Jim Hackett (pictured), who was the chief executive of an office furniture business but also a Ford board director and, since 2016, the head of the company’s Smart Mobility unit. Hackett’s first move was to re-structure senior management in three streams, each with its own president. Making and selling cars are only two of these. The third, not surprisingly, is Mobility, dedicated to the new technologies and future transport systems.
The president of global operations, responsible for all aspects of developing and manufacturing vehicles, is Joe Hinrichs, previously Ford’s president of the Americas.
Jim Farley moved from heading Ford of Europe to be president of global markets including all domestic and overseas sales and marketing. The Mobility president is Marcy Klevorn, who was brought in as vice president for information technology in January this year.
If you are wondering whether this change of emphasis will bring a reduction of investment in the cars that you sell and your customers buy, you could be right. In rationalising its product range, Hackett seems to be at least partially dismantling Mullaly’s “One Ford” programme, which called for common designs in all markets, locally manufactured. It has already been announced that the Focus for North America will be imported from China and it is possible that the next European Mondeo will be made only in Mexico, alongside the US Fusion.
The new Fiesta is so similar to its predecessor that it may come under pressure in later years when its competitors adopt a more adventurous style. In any case, the B-sector is moving towards crossover SUVs.
Ford badly needs a better line-up of SUVs. The new higher-riding Fiesta Active may not satisfy the B-SUV market and the EcoSport simply isn’t good enough. The Kuga is way behind the best-selling VW Tiguan and the Korean offerings from Hyundai and Kia, not to mention the Nissan Qashqai. While the Edge, imported from America, cannot match the premium competition. And speaking of premium, Vignale, its much-vaunted luxury sub-brand, has become just a top trim level.
In its quest to serve a brave new world of electrification, ride sharing, and autonomous vehicles, Ford has to be careful not to diminish its core products. Today’s most successful car brands are offering wider ranges, not cutting models. Ten years ago, Ford could not wait to sell Jaguar and Land Rover. Now it would do well to study JLR’s strategy.
