In an effort to keep up with competition, Ford's chief executive plans to makes some major changes.
"The firm says it will shift resources from traditional cars to SUVs and trucks, while investing in electric power and tech services.The firm will also automate its manufacturing processes more to help to cut costs by $14bn (£10.5bn)."
Ford has decided to make these changes because of the increase of demand for electric cars in China and the increase of demand for light trucks/SUV's in U.S. markets. In order to keep up with their competition, the chief executive wanted to expand the industry and renovate it. Although the company has a stable history/foundation, they are falling a bit behind.
These changes come in a transitional phase for Ford. This is the third year with the new chief executive; he has lead the firm to " two of the most profitable years in its history, but the share price drifted lower." I am interested to see how the loyal Ford consumers react to the changes and how the investment in electric cars will do. Ford's stock may initially take a hit, however, I expect them to be successful in the long run (because Ford has great brand loyalty and consumers will be interested in their new models).
http://www.bbc.com/news/business-41493412
The manufacturing process alteration will cost a lot, but if that is predicted to reduce cost by $14 billion, it would bring a huge revenue to Ford in the long run.
ReplyDeleteI also think this decision to be positive, as they want to adjust themselves to the increasing demand of electric cars.
I like Ford's idea of getting into the electric car market even though it is not exactly on brand for them. I believe it is a good idea to get into this industry as soon as possible because it seems as though interest has been increasing steadily ever since Elon Musk launched Tesla. This seems like a good idea especially in the long run.
ReplyDeleteIn the future I expect auto makers to start tapping into the electric car industry more and more. This will be done by allocating more funds and time to put a product on the market that is desired. The demand is becoming higher for electric cars, if Ford can put out an affordable vehicle that still operates smoothly this move has potential to be a big one. Ford also seems to be taking a page out of Toyotas book by cutting down manufacturing costs, most likely using a LEAN outlook approach. Ford seems to be making moves that will benefit them in the long run and will promote growth.
ReplyDeleteThese ideas could be great for ford, but it sounds like it will displace many factory workers. This would be by allocating a larger share of production to technology and capital. Hopefully the benefit for consumers, i.e. better satisfying their preferences, outweighs the job loss.
ReplyDeleteThe market for electric cars is continuing to grow everyday. Therefore, it makes sense for Ford to start focusing more of their attention on the electric car market. It is interesting that they are starting to spend more on SUVs and trucks because of the high demand in the United States. I didn't really notice that SUVs and trucks were in higher demand than normal here. I agree that Ford will continue to be successful for a long time.
ReplyDeleteIt is quite interesting that Ford saw growth within the profits of the company, yet showed the opposite effect in its share price. While Ford makes moves to meet consumer demand, it will likely face further price drops in its shares as it is behind competition in the electric car field. Surely the drop in costs to the company will prove positive in the financial sector, only time will tell how their investments in the electric field will impact the company as a whole.
ReplyDeleteThe automobile industry has seen a lot of changes over the years, especially on the electric side of things. The majority of these changes could be contributed to Tesla. Since Tesla has been around, more and more car companies have been making the switch to electric vehicles to compete with this new market. If I remember correctly, GM announced that it plans to have about 40 electric vehicles by 2020 or so. Ford will definitely have their work cut out for them. Ford's top selling vehicles are the Mustang and the F-150. In my opinion, these two cars can get no where near being electric since they have always been about 'power' and being 'tough'. It would be hard to continue that image with electricity.
ReplyDeleteThis is great for Ford, they have always been more known for their trucks and there is a less negative reputation surrounding their Truck and SUV products, my only concern is will the trend of SUV and Trucks on the rise in the US will continue.
ReplyDeleteThe automobile industry is growing pretty rapidly with all of the new innovations with the electric cars. The changes has occurred with many different companies. Although, it will be interesting to see how their stock price is effected with this change. Depending on how successful they are with these new innovations, it could help their stock price significantly.
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