Ford Motor Co. will stop selling the Explorer in dozens of overseas markets in a bid to maximize profits, a top executive said Wednesday, reversing a recent effort to grow volume by shipping vehicles to as much of the world as possible.
The automaker won't send the next-generation Explorer, due in the second half of next year, to Cuba, Iceland, Thailand, Mongolia, Iraq, Egypt and other countries where it sells fewer than 100 of the large crossovers per year, Joe Hinrichs, Ford's president of global operations, said in a presentation at the Barclays Global Automotive Conference in New York. The move is part of a fundamental change in thinking about where and what type of vehicles Ford sells globally.
"The cost of doing business there wasn't worth the trip for less than 100 vehicles," Hinrichs said. "Digging into the data on the part numbers and build configurations exposes things like this and allows us to be more profitable and not spend the engineering resources in markets to do that."
Under the direction of CEO Jim Hackett, Ford is using "yield management" techniques to monitor individual vehicle lines and adjust prices and inventory to certain markets or regions of the globe in order to make more money.
In one instance, Ford discovered its high-margin Expeditions equipped with smaller touch screens weren't selling on dealer lots as fast as those equipped with larger screens, so it immediately stopped building the smaller screens to maximize profits.
Ford has also begun to reduce order complexity.
Hinrichs said the next-generation Explorer will be available with 25 exterior mirror configurations, down drastically from the 139 different mirrors available today.
Ford cut back by offering blind-spot monitoring technology as standard instead of an extra-cost option and making all the mirror caps gloss black instead of matching the vehicle's paint color.
The automaker also has reduced the orderable configurations of its Fusion sedan to about 30 instead of 2,000.
Hinrichs said that has sped the time it takes to deliver vehicles to 30 days from more than 80 previously.
Similarly, Hinrichs said Ford is reducing the number of orderable combinations on the next-generation Escape to about 25 from around 1,000 now.
"We're going part by part and product by product to attack all this complexity in the business," Hinrichs said.