Job One: Ford Creates Special Group Tasked With Developing "Profitable, Competitive" Vehicles
Ford formed a team this week, called it the “Enterprise Product Line Management (EPLM) group,” and put it to work with the company’s marketing, engineering, mobility, and product development arms to overhaul the company’s product lineup. The goal is to study what customers want and use that information to build more profitable, competitive vehicles.
The team is split into ten smaller divisions that will focus their efforts on a specific model or product group — including everything from electric models to rugged off-roaders. However, EPLM won’t simply be responsible for their development — it’s also in charge of making sure customers are engaged with everything Ford offers, and that the products are brought to market swiftly, sell well, and remain profitable to manufacture. That’s a pretty full plate, if you ask us.
Ford’s profit margin for its global operations sank to less than 3 percent in the second quarter of this year, while North American margins slipped to 7.4 percent. Ford hopes to get a handle on that and raise its profit margin to 8 percent globally by 2020, with North American sitting pretty at 10 percent. EPLM is expected to be a large part of that process.
“Our most successful franchises — from F-150 to Mustang to Transit — are anchored in an obsession for the customer, deep product expertise and an unyielding commitment to strong returns,” explained Jim Farley, Ford president of global markets. “By taking this approach, we can raise the bar across our product lines. Each team will have clear accountability for winning in the marketplace and delivering profitable growth.”
Headed by Jim Baumbick (pictured), vice president of EPLM, the ten teams will be responsible for Ford’s F-Series, urban utilities, rugged utilities, family utilities, performance vehicles, commercial vehicles, electric vehicles, compact trucks, luxury vehicles, and emerging market vehicles. And those people will be incredibly busy, as the automaker intends to increase its number of nameplates by 2023. In doing so, Ford wants to possess the most new models of any manufacturer — targeting an average vehicle age of 3.3 years for its future fleet.
However, those models will also serve as a precision strike, focusing on the kind of vehicles people are most likely to buy as Ford goes about culling sedans and hatchbacks from its lineup. It places a lot of pressure on Enterprise Product Line Management, as any failures stemming from the strategy could be placed directly upon its shoulders.
[Image: Ford Motor Co.]
Consumer advocate tracking industry trends and regulations. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied, he pivoted to writing about cars. Since then, he has become an ardent supporter of the right-to-repair movement, been interviewed about the automotive sector by national broadcasts, participated in a few amateur rallying events, and driven more rental cars than anyone ever should. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and learned to drive by twelve. A contrarian, Matt claims to prefer understeer and motorcycles.
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The answer is not an ever-expanding line-up. The answer is identifying what your core products are and being committed to constant improvement and predictably frequent generational updates. Too much product at Ford is left to wither on the vine and become grossly uncompetitive. Better to stop producing something entirely than let it limp along forever as a heavily incentivized joke, ruining your brand's reputation and resale value. They need to treat their entire line-up like they treat the F-150 - 100% commitment to it being the best vehicle in its class.
It sounds like two forces at work here: 1.) the demand by the short-term stockholders to put their interests above all else--to cut the development of all vehicles except those of the highest profitability (which cuts R&D costs significantly but puts long-term viability at risk--but before those chickens come home to roost, these stockholders have long since cashed out), and 2.) Ford is responding to President Trump's threats to Mexican imports (remember where the Fiesta, Focus and Fusion are made) by discontinuing, among others, the models that will face a huge price increase (either by the prospect of tariffs or by the need to manufacture them in the United States), making them price-uncompetitive. (The Taurus is already pretty much a marginal car, sold mostly to fleets.)