Business

Ford Motor Company (NYSE:F)’s Decision To Phase Out Major Car Models By 2020 In North America Can Actually Improve Its Profit Margin

Ford Motor Company (NYSE:F)’s has decided to pull out some of its major car models by 2020 and the process starts May 2018 onwards when the company will stop producing Focus. The decision is restricted only to North America at present while the company may plan a different calculation for Europe. The American multinational automaker revealed this decision unexpectedly during its quarterly financial release shocking many.

According to the announcement, Ford will have only cars in its traditional genre Mustang and the newly announced Focus Active for sale whereas its other brands including crossovers, SUV’s and trucks production will continue. Focus Active assembling will take place in China and then imported to the United States. After stopping the production of Focus in May 2018, the company will stop producing Taurus in March and Fiesta in May next year.

Is Ford Aiming For Success Similar To Steve Jobs’ Apple?

Although this decision of Ford is quite sudden, instead of being criticized, it is being hailed as one of the most practical decisions of all, resembling exactly what Steve Jobs did when he returned back to Apple in 1997 dropping the expanded product-profile of the company and narrowing it to just few lineups and turning more focus on promoting and generating revenue from it. For Apple, this strategy worked and the company made one of the biggest comebacks in the history or corporate world. And it seems Ford too is planning on similar lines.

Surprisingly, this is not the first time that the company has thought of taking the route of slashing up its product manufacturing. Last year in October, the CEO of the company put forth the idea of cutting cars from its product lineup. The proposed slash up was for more than $14 billion including relocating around $7 billion from sedans to SUVs.

According to the CEO of Ford, James Hackett, “We’re going to feed the healthy parts of our business and deal decisively with the areas that destroy value.” He stated it has been easy to identify what was wrong and what should be done about it and now that the company has understood what it needs to do, they are taking clear decisions.

With the company’s financials already showing improvement, it seems that this decision of Ford is definitely going to contribute to increasing its profit margin.