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Can The New KC Plant Help Ford Motor Company (F) Meet The New F-150 Truck Demand?

In order to live up to the increasing demand for F-150 trucks in US, Ford Motor Company (NYSE:F) has officially put its Kansas City Assembly plant into production on Friday. Ford Motor Company (NYSE:F) has invested around $1.1 billion in the plant, which might help them in meeting the ever increasing demand for its new F-150 production truck in 2015. Jon Hinrichs, Ford Motor Company (NYSE:F) President of Americas talked on CNBC about the plant and the new F-150 truck production.

Ford F-Series

Hinrichs said that the demand for Ford Motor Company (NYSE:F)’s new F-150 truck has been excellent so far in the year. Demand for F-150 truck has always been great, but Ford Motor Company (NYSE:F) has not been able to meet customers demand. Hinrichs said that sales of F-150 has been slightly up so far in 2015, but he mentioned that the demand for new F-150 truck is very high especially at the fleet level. He added that once Ford Motor Company (NYSE:F) is able to get Kansas City plant up and running, they will be able to meet customer demand from second quarter.

The new F-150 truck uses aluminum body, which went raised many criticisms about the model, stating that it reduces the resale value of the vehicles. In spite of this flip side, the demand for this new F-150 truck has been excellent, mainly due to reduced oil prices and increased efficiency of the new model. Hinrichs said that the projected residual value of the new F-150 truck was at high 50’s, which was much higher than other competitor trucks. He feels that this give a lot of value to the customers, when they own Ford Motor Company (NYSE:F)’s truck over the 3-year period.

“[…] Projected residual values (for New F-150) was at high 50s, which is significantly better than say Chevy and Ram trucks and that attributes itself to a lot more value to our customer when they own our truck over 3 years and lot of that came from the fuel economy saving coming from the light weighting of this truck by using Aluminum. So all the benefits are coming from that are being felt by the customer and eventually in the value of that truck over time,” Hinrichs said.

Hinrichs feels that the reduced oil prices has increased overall car sales. He added that SUV and Truck sales were better for Ford Motor Company (NYSE:F) even before the oil price drop. He thinks that the reducing oil prices is good for the industry.

Disclosure: None

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