Ford Reveals Plans To Targets Higher Margins Faster Including Drop of Unpopular Sedans

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On Wednesday, Ford Motor Co. revealed a plan to cut its costs and improve profit margins at a faster speed than what was previously announced, which includes dropping the increasingly unpopular models of sedans in North America.

The No. 2 automaker in the United States said that it is planning to cut costs amounting to $25.5 billion (£18.3 billion) by 2022, up from the total of $14 billion that the company announced to investors during the last fall.

Ford said that by 2020, the company is expecting to record a pretax profit margin amounting to 8 percent globally and 10 percent in North America, ahead of a previously set target of 2022.

As a response to a shift in the demand of consumers to SUVs, Ford said that it planned to cut down on its car portfolio in North America. It plans to retain only two models: the sporty Mustang, which was launched 50 years ago this month and a new compact crossover that is called Focus Active that will be launched in 2019.

Ford said that it “will not invest in next generations of traditional Ford sedans for North America,” which includes the full-size Taurus and midsize Fusion.

The US automaker has been under pressure from investors of Wall Street to improve the product lineup of the company and boost the flagging profit margins.

Bob Shanks, The Chief Financial Officer of the company, said while talking to reporters as Ford reported its first-quarter results: “we have looked at every single part of the business.

“We are driven to turn this business around.”

The company reported a first-quarter profit that was better than expected, with a 7 percent rise in the revenue of the company and a lower effective tax rate that offset a rise in costs, especially higher prices of commodities.

The No. 2 automaker in the US reported a net profit of $1.74 billion, or 43 cents per share, for the first-quarter. It is up from the $1.6 billion, or 40 cents per share, during the previous year. On average, analysts had expected earnings per share amounting to 41 cents.

Despite the higher profit, the adjusted pretax profit margin of Ford dropped to 5.2 percent from 6.4 percent during the same quarter last year.