DETROIT — Alan Mulally told Ford Motor Co.'s leadership team in 2008 that the automaker wouldn't have a sustainable business if it didn't reduce its dependence on big pickups and SUVs.
Ford's CEO today, Jim Hackett, is taking the company in the opposite direction. Not only is Ford projecting that light trucks will soon account for nearly 90 percent of its North American sales, but it's fueling that shift by eliminating every nonluxury sedan from the lineup.
The Fusion, Ford's most serious effort to challenge Toyota and Honda's longtime dominance in midsize family cars, is a goner. Also out: the Fiesta, Ford's recession-era attempt to woo young buyers, and the Taurus, a venerable nameplate that Mulally rescued from the scrap heap after arriving in 2006 to save the company from collapse.
The iconic Mustang will survive, as will the Focus, but only as a wagon imported from China in much lower volumes.
"We're going to feed the healthy part of our business," Hackett said, "and deal decisively with the parts that destroy value."
Pickups, SUVs and crossovers are at the center of the healthy part, Ford concluded as it pored over its operations to find $25.5 billion in cost savings it has promised to unlock by 2022. (That's nearly double the $14 billion it had identified as of October, an indication of how deeply Hackett has ordered the company to search for ways to improve its "fitness," as he calls it.)
Cars, "most Lincoln products" and chunks of Ford's overseas business are among the value destroyers — for which all options are being considered, CFO Bob Shanks said. And with demand for cars deteriorating every month, Ford made the boldest move yet under Hackett, who was brought in 11 months ago to make the company act more decisively.
UBS analyst Colin Langan estimates that Ford loses $800 million a year selling small cars in North America.
In contrast, Ford indicated that it made more than $3 billion in the first quarter alone on the "high performing" parts of its business, which Shanks described as "trucks and most utilities."