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With Its Back Against the Wall, Ford Motor Company (F) Responds

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Recently in an article by AutoNews, I noticed a really interesting paragraph that detailed how vehicle design has saved Ford Motor Company (NYSE:F) not once, but multiple times. In an interview with AutoNews, J Mays, Ford’s chief designer, mentioned that the company was “brought to its knees” by the war effort, and it was revived partially with the Thunderbird in the ’50s. After that it was the Mustang’s turn in the ’60s and Taurus in the ’80s. The Explorer and other gas-guzzling SUVs sold extremely well in the ’90s, but that’s when things began to go downhill.

Ford Motor Company (NYSE:F)

Every time Ford Motor Company (NYSE:F) has found itself up against the wall, Mays said, “it’s been design that has somehow allowed them to emerge as a successful company again.”

It wasn’t until recently, more than a decade after things began to sour, that new design innovation was needed to save Ford Motor Company (NYSE:F) after years of bad management, poor-quality vehicles, and the lingering effects of a recession.

Passing the baton
After all those iconic vehicles Mays mentioned, for Ford Motor Company (NYSE:F) to revive itself again, it needed to pass the baton to new vehicles that today’s consumers demand. So let’s look at exactly where the baton was passed, and when.

*2013 is projected based on sales through April.

The Explorer, Mustang, and Taurus all declined right as the Fusion and Escape took the sales lead in 2006. I circled this on the line graph for one reason. Can you guess why? If you guessed that’s the year Alan Mulally was introduced as CEO and created his “One Ford” vision, you’re correct.

His vision had two key factors. One was to aggressively restructure operations to become sustainably profitable. It was an aggressive move at the time, but Mulally sold off multiple brands, including Jaguar and Aston Martin — leaving only the Blue Oval and Lincoln.

Mulally also decided that it was too inefficient for each vehicle to have its own platform. By year’s end, the plan is to have 85% of global sales from nine core platforms, helping improve margins and operational efficiency. Restructuring on the back of its own private loans, Ford Motor Company (NYSE:F), under Mulally’s vision, turned the ship around from more than $30 billion in losses from 2006 to 2008 to being profitable in 2009. That’s impressive, so we’ll check off Point No. 1 of Mulally’s vision.

Second was to create valuable vehicles that consumers demanded. Enter the Fusion and Escape. According to the AutoNews data center, for the first four months of 2013 compared with 2012, the Fusion is up 25%. It’s clearly eating away at Toyota Motor Corporation (ADR) (NYSE:TM)‘s longtime leading market share, represented by the Camry, which saw sales decline 7% in the same time frame.

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