Hackett, 62, last year took over an automaker that lacks a model to compete with cars like GM’s Chevrolet Bolt or Tesla’s Model S. On Tuesday, Hackett rejected the notion that Ford is behind.
“Ford is going to aim ahead to where it has to be,” he said at the conference Automotive News World Congress in Detroit. “Because it has to be ahead in order for people to believe our strategy isn’t about catching up to somebody else.”
Executives did, however, acknowledge that Ford has to change course. That will include cutting car lines that no longer sell well.
“We know we must evolve to be even more competitive and narrow our full line of nameplates in all markets, to a more focused lineup that delivers stronger, more profitable growth, with better returns,” Jim Farley, Ford’s president of global markets, said in a statement.
The biggest factors contributing to Ford’s expectation for lower profit this year are the rising price of commodities, including steel and aluminum, and adverse effects from currency exchange rates, in part due to Brexit. Those costs represent a $1.6 billion headwind to earnings this year, Shanks said.
Prolonged Payback
The profit forecast prolongs the payback from spending on autonomous vehicles and other technology that Hackett’s predecessor, Fields, had been promising to investors before his ouster in May. Profit will rebound over time, Shanks said in a phone interview.
“We certainly see us on a path toward the margins that we have been targeting for a long time,” Shanks said, referring to the 8 percent target. “Not this year or next year, but within the next several years.”
In addition to electrifying its lineup, Ford is reallocating investment toward crossovers and rugged off-roaders amid slumping demand for passenger cars in its home market. The Lincoln luxury brand, already highly reliant on models like the Navigator, will orient toward SUVs in the future.
Ford projects it will boost the share of its sales from SUVs by 10 percentage points -- all at cars’ expense -- over the next couple years to cash in on more lucrative models that American consumers want.