Looks like FCA is going to do the same. What will Government motors Do??

http://wardsauto.com/ideaxchan...4a48ad9c22076a963bcc

The Brutal Reality of Why Ford Is Cutting Cars
by John McElroy

For the last quarter of a century General Motors, Ford and Chrysler destroyed billions of dollars in shareholder equity. They wasted billions on product investments that never earned a nickel. And they stayed committed to regional markets where they had no hope of ever being profitable.

Those days are over.

We are witnessing the auto industry enter a new phase, one of steely-eyed, hard-nosed business decisions, where shareholder money only will be invested in ways that provide double digit returns, including the cost of capital. While this industry always has been brutally competitive, we’re entering an era that is going to disrupt or destroy the automotive world as we’ve known it. The forward-thinking automakers know they better be in supreme fighting shape if they are going to survive.

GM dumped Opel and pulled out of Australia, Russia, South Africa, India and Indonesia. It’s why Ford and FCA are eliminating most of their sedans and soon will take other drastic actions.

Nostalgia counts for nothing in this new reality. The old rules no longer apply. It makes people uncomfortable, but that doesn’t matter.

Ford’s announcement it’s phasing out its money-losing models in the U.S. market triggered bombshell headlines. Ford fans feel betrayed and denounced the company for a variety of perceived sins. Some accused the automaker of being greedy. Others said it’s abandoning entry-level buyers. Many believe the company will get killed by the next spike in oil prices.

But Ford’s decision is logical. It’s going to replace those cars with CUVs. And what are CUVs? They are pseudo-SUVs built on car platforms, with car powertrains, fitted with interiors using the very same bits and pieces that go into cars. In other words, they are cars with different top hats.

But there is a key difference. People are running away from cars and lining up to buy CUVs. That’s what they want. And they’ll pay more for CUVs, meaning Ford can make a profit on them.

For those waiting for the next oil spike, you’re going to wait a long time. Fracking, a new technology that is enabling oil companies to unlock huge new oil and gas reserves, is a game changer that is going to keep oil prices within a reasonable range for years. That’s not an endorsement of fracking, it’s simply a statement of fact.

Besides, Ford will offer hybrid, plug-in hybrid and battery-electric versions of its SUVs and pickups. Electrification is starting to make the idea of cars being much more fuel efficient than trucks obsolete. So, dropping cars becomes an even more reasonable risk.

Here’s the new reality. Automakers must pour billions into developing BEVs, even though they know consumer demand for them is miniscule. They would never make such huge investments, except government mandates around the world are forcing their hands. In time BEVs will catch on, but automakers will lose a lot of money on them for most of the next decade.

Automakers also must invest heavily to develop autonomous cars and mobility services. They wouldn’t make such big investments either, except there’s a lineup of tech companies and startups eager to elbow them out of the way and take over their business. It’s an existential threat they must counter. And that’s why we are entering an era that is going to disrupt the industry as we know it.

To survive, automakers need profitable operations, solid cash flow and fortress-like balance sheets. Anything that impedes this has got to go. So, get ready to see other operations get the axe.

In a way, this uproar reminds me of the Lincoln penny. It costs the U.S. government 1.6 cents to make each 1-cent penny, so it’s a money loser. These days, almost no one uses pennies. But every time anyone says it’s time to get rid of the penny, people cry out in protest. We are creatures of habit who don’t like change. But in the auto industry, change is a-coming.

Accords, Civics, Camrys and Sonatas ate their lunch.

quote:

Originally posted by ontmark:

For those waiting for the next oil spike, you’re going to wait a long time.

Pure nonsense.

We are ALREADY at $3 a gallon here in PA and CA has gone over $4

I'm in the camp that Ford will pay dearly for this when gas is $5 a gallon in the future and people are trying to find tiny econoboxes again.

Yep. The sedan isn’t done. Crossovers are just what the consumer wants now. Ford is stopping making the Fusion, who cares? Even Fusion owners probably don’t care. I don’t even believe this is news.

quote:

Originally posted by dusty3030:
Accords, Civics, Camrys and Sonatas ate their lunch.

Yup - straight murdered them in the back alley when they walked out from a martini lunch with the UAW Union Reps.

quote:

Originally posted by PASig:

quote:

Originally posted by ontmark:

For those waiting for the next oil spike, you’re going to wait a long time.

Pure nonsense.

We are ALREADY at $3 a gallon here in PA and CA has gone over $4

I'm in the camp that Ford will pay dearly for this when gas is $5 a gallon in the future and people are trying to find tiny econoboxes again.

Taxes are CA problem, same for PA< NY all the high tax states that drive prices up. Supply is still good, it's summer and the summer EPA blends are now in production, switching over costs big money, travel is up big time via car and it's vacation time.

This happens every year and folks act surprised.

Venezuela is also down on supply so that is factored into the pricing equation worldwide.

Gas is still inexpensive here, and a 4 door sedan or a small 4 door CUV get about the same mileage, I can't see buying a sedan in my future, even though I like the idea of a CTSV, it's too small, and it's GM. I don't see a car in my future period. CUV and Pickup.

quote:

Originally posted by PASig:
I'm in the camp that Ford will pay dearly for this when gas is $5 a gallon in the future and people are trying to find tiny econoboxes again.

Yup. Ya gotta be prepared to "follow the stupid," as I call it.

Gas prices go down, people spend a bunch of money up-sizing. Gas prices go up: People burn those investments in a panic to downsize. Gas prices go back down, and... Wash, rinse, repeat.

It never ceases to amaze and amuse me.

quote:

Originally posted by ensigmatic:

quote:

Originally posted by PASig:
I'm in the camp that Ford will pay dearly for this when gas is $5 a gallon in the future and people are trying to find tiny econoboxes again.

Yup. Ya gotta be prepared to "follow the stupid," as I call it.

Gas prices go down, people spend a bunch of money up-sizing. Gas prices go up: People burn those investments in a panic to downsize. Gas prices go back down, and... Wash, rinse, repeat.

It never ceases to amaze and amuse me.

You took the words right outta my mouth.

STUPID is correct, but so many people attach their persona to a car, it’s not surprising.

quote:

Originally posted by ensigmatic:

quote:

Originally posted by PASig:
I'm in the camp that Ford will pay dearly for this when gas is $5 a gallon in the future and people are trying to find tiny econoboxes again.

Yup. Ya gotta be prepared to "follow the stupid," as I call it.

Gas prices go down, people spend a bunch of money up-sizing. Gas prices go up: People burn those investments in a panic to downsize. Gas prices go back down, and... Wash, rinse, repeat.

It never ceases to amaze and amuse me.

Yeah, but when smaller cars aren't selling, it doesn't make sense to continue to make them just because people may want them in the future.

quote:

Originally posted by PASig:

quote:

Originally posted by ontmark:
For those waiting for the next oil spike, you’re going to wait a long time.

Pure nonsense.

We are ALREADY at $3 a gallon here in PA and CA has gone over $4

Around here I've seen it go from $2.45 for regular to just over $3 in just about 3 months. Last night on the news I heard about prices spiking again because of fears of reduced supply from OPEC in the wake of President Trump's withdrawl from the Iran nuke deal (nothing's even HAPPENED yet for pete's sake, and prices are going up!) and because summer is coming (i.e., "just because we can" ). I wouldn't be surprised to see it hit $4 by July 4th.

quote:

Originally posted by HRK:


Taxes are CA problem, same for PA< NY all the high tax states that drive prices up. Supply is still good, it's summer and the summer EPA blends are now in production, switching over costs big money, travel is up big time via car and it's vacation time.

This happens every year and folks act surprised.

Venezuela is also down on supply so that is factored into the pricing equation worldwide.

Gas is still inexpensive here, and a 4 door sedan or a small 4 door CUV get about the same mileage, I can't see buying a sedan in my future, even though I like the idea of a CTSV, it's too small, and it's GM. I don't see a car in my future period. CUV and Pickup.

Yup, every summer. And people mistake small blips for trends. We're producing more oil in the US than we have for a long time.

quote:

Originally posted by jhe888:
Yeah, but when smaller cars aren't selling, it doesn't make sense to continue to make them just because people may want them in the future.

Yup. Economics 101

If no one wants to buy your cars you have to leave the market to the Japanese and Germans.

quote:

Originally posted by dusty3030:
Accords, Civics, Camrys and Sonatas ate their lunch.

Yep.
When Honda started the Acura division, I was a huge fan. I bought an early '90's Acura Legend and loved it. I have had many Acuras since then.
My wife had a mini-van (3 kids), we've had a full size Chevy Tahoe, but no American sedans since the late 1980's.

I was a Ford man for decades, but 8 years ago, I said NO MORE FORDS! Every Ford I ever had since 1971 had problems that were not addressed by Ford. I was always dismissed, or told to live with it, or asked to pay big money to correct a design flaw. Personally, I could care less if Ford folds or losses market share. I only buy foreign brands regardless if it is manufactured in the US, Germany, Japan or elsewhere.

quote:

Originally posted by dusty3030:
Accords, Civics, Camrys and Sonatas ate their lunch.

When one of these are still considered an infant at 70,000 miles but the Ford/GM types are considered nearly ready for pasture (whether real or perceived by the end-user) at the same mileage, it's not that hard to see why such a decision was made.

Looks like the Canadians are now paying right at $5.00 in US money for a gallon of gas.

I wouldn't be surprised if they end up spending close to $7.00 US per gallon in a year or so.

My last American sedan was a 1972 Mercury Grand Marquis Brougham purchased new. My only American made "cars" in the past twenty-five years have been Corvettes. I currently own a Corvette and a Honda Accord. I am looking at trading the Honda Accord for an Acura SUV.

I thought Ford's former CEO Mullaly showed a lot of foresight and wisdom. I think cutting down cars so much is a big mistake by Ford, and hiring Hackett as CEO after he spent 30 years selling furniture. I think they will look back a few years from now, thinking this is the moment we screwed up.

My Fusion was trouble free at 114,000 miles until a Frac sand hauling 18 wheeler ran me off the highway Monday going home from work and totaled it. A FRACing truck running my car off the road, the irony

GM dumped Opel and pulled out of Australia. Not true that they pulled out of Australia. They are just called Holden but it is still a GM subsidary.

quote:

Originally posted by OKCGene:
Looks like the Canadians are now paying right at $5.00 in US money for a gallon of gas.

I wouldn't be surprised if they end up spending close to $7.00 US per gallon in a year or so.

I don't care about Canada. It's not my problem, as I see it. Neither is kalifornia or other liberal cesspools (I never buy gas in Illinois, either, as they charge typically $.30-40 more per gallon than Iowa or Indianna). In my area (Colorado), prices are going up slightly, but that's because of the 'summer blend changeover.'


I agree with Ford on this one. I don't think I will ever buy a 'car' again (coupe/sedan). We have a pickup and a CUV, and I love both.

It's the height of folly to produce a product nobody wants. That is what really doomed the Edsel. It wasn't a *bad* car; it just wasn't what people wanted (it was a marketing failure, not a mechanical one). Today, nobody will produce a huge land-yacht station wagon of the kind that were so popular in the late 70s. Marketing trends change. If you don't keep up, you get left behind.