Ford Motor Co. has announced this week that it will eliminate all but two car models from North American dealerships by 2020.
“For example, by 2020, almost 90 percent of the Ford portfolio in North America will be trucks, utilities and commercial vehicles. Given declining consumer demand and product profitability, the company will not invest in next generations of traditional Ford sedans for North America,” a statement released by the company read.
The company said it will keep only the Mustang and the new Focus Active, a crossover vehicle that is part sedan, part SUV, in North America going forward.
“The company is also exploring new ‘white space’ vehicle silhouettes that combine the best attributes of cars and utilities, such as higher ride height, space and versatility,” Ford added. White space refers to vehicle shapes and lines that a car company has previously not entered into.
Utility vehicles and SUV’s have a much higher profit margin for car makers. As a result, Ford also announced that it will be shifting $7 billion in research funds from cars to SUV’s and trucks.
Ford is not alone.
Earlier this month General Motors announced it was laying off close to 1,500 workers from a plant in Lordstown, Ohio, where the Chevrolet Cruze, the compact sedan, is assembled.
“As we look at the market for compact cars in 2018 and beyond, we believe a more stable operating approach to match market demand is a one-shift schedule,” GM said in a statement.
Auto makers are struggling to keep pace with the shifts in consumer demands and have been surprised at how quickly they’ve taken shape. The layoffs at Lordstown are set for June and are GM’s first significant cuts this year.
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