Ford Motor is striving to build smart vehicles for a smart
world. One of the "Big Three" automakers in the US (with GM and
Fiat Chrysler), the company manufactures cars, trucks, and SUVs
under the Ford and Lincoln brands - the F-150, the Escape, and the
Fusion among its most popular models - and finances sales through
Ford Motor Credit. Ford, which does business worldwide, is making
significant investments in line with a strategic shift to move it
from solely an automaker to a leader in vehicle technology and
mobility services.
Operations
Ford's Automotive segment represents more than 90% of revenue
and includes the sale of Ford and Lincoln brand vehicles. The
Financial Services segment contributes more than 5% of revenue and
includes vehicle-related financing and leasing through Ford Motor
Credit Company; outside the US, Europe is Ford Credit's largest
operation with nearly 60% of that region's receivables in the UK
and Germany
Other operations include Central Treasury (which manages the
company's investment portfolio) and the growing Ford Smart Mobility
(which invests in emerging technologies).
Geographic Reach
Ford's business units span the five regions of North America,
South America, Europe, the Middle East and Africa, and
Asia-Pacific. More than half of its 60-plus plants are in North
America with about 25% in Europe.
The US accounts for more than 60% of Ford's revenue; other major
markets include the UK, Canada, and Germany, each accounting for
about 5% of sales.
Sales and Marketing
Ford's vehicles, parts, and accessories are sold through more
than 11,000 dealerships worldwide, most independently-owned. In
addition to retail sales, these dealerships sell vehicles to
commercial fleet customers, rental car companies, and
governments.
Financial Performance
Ford has seen strong growth for four consecutive years since
2013, with revenue up nearly 9% over that time. The company's total
revenue for 2017 hit $156.8 billion, an increase of more than 3%
from the previous year. The Automotive segment was up about 3%,
with Asian sales up 17% (powered by strong growth in China and
India). Financial Services revenue jumped more than 8% compared
with 2016.
Net income increased to $7.6 billion, a $3 billion increase from
2016 due a much lower tax pension remeasurement loss. Cash flow
from operations decreased about 1% to $18.1 billion in 2017.
Strategy
After an evaluation of its operations in 2016, Ford has several
initiatives in place to increase efficiency, cut costs, and
increase profits. The company plans to update factories, speed up
product development and facilitate decision-making within the
management ranks with fewer direct reports to the CEO.
In an effort to cut materials costs by $10 billion by 2022, Ford
is making new deals with suppliers, simplifying its designs and
available options, and sharing parts between vehicles.
With increased demand for SUVs and trucks, Ford is reallocating
$7 billion to support production of those vehicles. The company's
F-150 truck has been the best-selling model in the US for decades;
it is offering a diesel F-150 in 2018 and has plans for a hybrid
version. Ford also plans to add the midsized Ranger to its North
American pickup portfolio.
In other areas of its automotive business, Ford has boosted its
luxury Lincoln brand with a new Continental and an aluminum-body
Navigator. It has also launched a smaller, value model, the
India-made KA+. In 2017 Ford announced plans to introduce 15
electric or hybrid vehicles in China (the world's biggest auto
market) by 2025.
Ford is also making huge investments in emerging opportunities
such as electrification, autonomy, and mobility. In addition to new
electric vehicles models and hybrid versions of existing models,
the company is expanding its test fleet of 30 autonomous vehicles
and has begun testing in Europe (it plans to have a fully
autonomous vehicle in commercial production in 2021). A 2017
partnership with Lyft ride sharing service and a $1 billion
investment in artificial intelligence startup Argo AI will pave the
way for the development of software for self-driving vehicles. Ford
is also working on establishing its Transportation Mobility Cloud,
an open, cloud-based platform to manage a city's transportation
ecosystem.
Mergers and Acquisitions
In 2018, Ford agreed to acquire two transportation software
companies, Autonomic and TransLoc - part of its plan to speed up
the development of new products such as microtransit services and
self-driving cars.
Ford's $65 million acquisition of app-based, crowd-sourced
shuttle service Chariot (completed in 2017) is allowing it to use
data algorithms to schedule trips in real time. Chariot uses 100
Ford Transit 15-seat vans; its 28 routes have been based on demand
from riders. Ford is expanding the service from two cities (San
Francisco and Austin) to eight, with at least one outside the
US.