Ford Looks to Beat Toyota Hybrids -- WSJ
March 16 2018 - 3:02AM
Dow Jones News
By John D. Stoll
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 16, 2018).
Ford Motor Co. Chief Executive Jim Hackett said Thursday he sees
"upside" to the auto maker's longer-term 8% target for profit
margins, citing progress on cost-cutting initiatives and an
overhaul of product-development procedures.
Mr. Hackett, nearing one year at the helm, said the company is
emerging from an extended "think phase" during which about 10 top
executives hammered out a series of strategic steps. "We're just
going to run the company better," Mr. Hackett said.
Ford plans to surpass Toyota Motor Co. in annual U.S. sales of
hybrid vehicles in 2021, for instance, looking to lead a segment
where Detroit auto makers have long been laggards. Ford is a
relatively strong in hybrids already, but Mr. Hackett said its
presence in that market is "unsung."
Officials at Toyota, which leads the market, couldn't
immediately be reached for comment.
Hybrids, which combine a conventional combustion engine with a
battery to improve fuel economy, have been a bit slow to catch on
in the broader market due to high costs.
Jim Farley, president of global markets at Ford and one of Mr.
Hackett's top lieutenants, said the auto maker aims to boost demand
for hybrids by putting battery power in its most popular vehicles
-- including the F-150 pickup truck, the Mustang sports car and
Explorer sports utility. Ford will also roll out in 2020 a
"Mustang-inspired" electric SUV capable of 300 miles on a charge, a
move to better compete with Tesla Inc., Audi AG and the Jaguar
brand.
Ford also is planning a pair of off-road SUVs to take on Fiat
Chrysler Automobiles NV's Jeep Wrangler. The Wrangler is among the
most profitable vehicles sold in the world and has a lock on the
market for rough-and-tumble off-roaders.
Mr. Hackett's outlook comes as Ford deals with a rough stretch.
The auto maker has suffered a series of safety recalls in the U.S.,
fallen behind Fiat Chrysler in profit margins and lost ground in
China.
The Dearborn, Mich., auto maker also attracted unwanted
attention in February when a top executive, Raj Nair, was fired
following misconduct allegations.
Investors haven't shown much support for Mr. Hackett, who took
over for Mark Fields as CEO last May. Shares of Ford closed at
$11.07 on Thursday, little changed from when the auto maker hired
Mr. Hackett, a former CEO of the Steelcase Inc. officer furniture
company.
"The journey to realizing the benefits of any plan will be a
long one," Barclays analyst Brian Johnson said in a note published
Thursday. "We continue to believe that arguably there won't be much
to get excited about with the Ford story until 2019 or perhaps
2020."
Ford's $43.7 billion market value trails General Motors Co.'s
$52.7 billion market capitalization and Tesla's $55 billion. Mr.
Johnson said GM has a "clear lead" over Ford when it comes to
emerging technologies, execution and cost management.
Auto makers are locked in a tech race with Silicon Valley and
other nontraditional car companies. Ford's efforts with driverless
cars are expected to gain steam as the company launches new testing
programs and autonomous-vehicle prototypes.
The company is forecasting an 8% global profit margin by about
2022, a number that would put it closer to better-performing peers,
including GM. Ford's 5% operating margin last year was
disappointing, falling sharply below the 2016 figure even as the
company was making big profits on pickup trucks.
The company's operating profit, which fell 18% last year, will
be pressured in 2018 amid currency pressures and higher commodity
costs.
During a presentation Thursday, Joe Hinrichs, president of
global operations, said Ford is making progress on a campaign to
trim its engineering expenses by $4 billion and cut $10 billion in
material costs.
Write to John D. Stoll at john.stoll@wsj.com
(END) Dow Jones Newswires
March 16, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.