Ford Set to Shift $7 Billion Toward Trucks and SUVs

Ford Motor Co. will shift about $7 billion toward the development of more trucks and sport-utility vehicles while “attacking” costs, part of new Chief Executive Jim Hackett’s strategic plan for the No. 2 U.S. auto maker.
 Mr. Hackett, the former office- furniture executive appointed in May, outlined his strategy to investors and analysts in New York late Tuesday. He emphasized faster action to deploy capital in regions and product lines with solid growth potential while positioning the auto maker for a future of electric vehicles and connected and driverless cars.

 "Moving investment to trucks and SUVs is a response to shifting consumer tastes."


 Moving capital investment to higher-margin trucks and SUVs is a response to rapidly shifting consumer tastes in the U.S. market and abroad, as buyers abandon sedans for vehicles with greater utility and space. Part of the $7 billion capital reallocation includes reintroducing the Ranger pickup truck and Bronco SUV in North America and moving production of its next-generation Focus small car to China, plans that were previously disclosed.
 Ford also said it would shift about one-third of its scheduled investment in gas and diesel engines over the next five years—about $500 million a year—into cars that run fully or partly on battery power. That will come on top of $4.5 billion the company is spending over five years to expand its electric-vehicle lineup.
 The Dearborn, Mich., auto maker appointed Mr. Hackett to succeed Mark Fields, who was ousted in the spring amid a downtrodden share price and belief inside and outside the company that the auto maker lacked a clear vision. Mr. Hackett spent four months studying aspects of Ford’s business to devise the plan.
 The 62-year-old is out to prove to Wall Street that Ford has a plan to take on Tesla Inc. in electric cars and deep-pocketed tech giants like Google’s Waymo unit in driverless technology while also fending off hard-charging traditional rivals like General Motors Co., which many analysts believe has a lead in advanced technology.
 Ford is investing $1 billion in startup Argo AI to develop autonomous-driving technology, which executives said is on track for commercial deployment by 2021.
 Mr. Hackett, who emphasized smart design during his long tenure running Michigan based Steelcase Inc., wants to slash costs by modernizing and simplifying Ford’s vehicle lineup, factories and product development process. The company aims to cut material costs by $10 billion and engineering costs by an additional $4 billion over five years.
 “Ford will prepare for disruption by becoming fit” in operations and capital allocation, Mr. Hackett told investors. That should give Ford “the time, resources and flexibility to evolve,” he said.
 Executives said they would move quickly to shore up low margin or unprofitable parts of the business, as GM has done in recent years by exiting Europe, India and other money-losing markets.

BY MIKE COLIAS

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