Will Ford Motor Company Build Dodges and Chryslers? – Motley Fool
Will the next-generation Chrysler 200 be a reskinned Ford (NYSE:F) Fusion?
It’s way too early to say for sure. But Ford CEO Mark Fields raised some eyebrows with a comment he made during the Blue Oval’s earnings conference call on Jan. 28 — a comment that followed an even more surprising remark made by Fiat Chrysler Automobiles‘(NYSE:FCAU) CEO Sergio Marchionne a day earlier.
Why FCA might want someone else to build its sedans
Here’s the background: FCA is selling a lot of SUVs and pickups in the U.S. and not so many compact and midsize cars.
On the one hand, U.S. demand for white-hot FCA products like the Jeep Wrangler and Cherokee exceeds supply. The company is running several of its North American factories around the clock — and still, its dealers are clamoring for more of the popular vehicles.
But at the same time, sales of its compact and midsize sedans, the Dodge Dart and Chrysler 200, are slumping. FCA’s Sterling Heights Assembly Plant, the high-tech factory that makes the 200, will be closed for the entire month of February because of weak demand.
Marchionne thinks the shift in demand away from sedans and toward car-based “crossover” SUVs is a permanent shift in the market — or at least permanent enough to make plans for the next several years around. That’s why he said last week that FCA would look to a partner to manufacture the successors to the Dart and 200, while it put those cars’ factories to use making SUVs and trucks instead.
So where does Ford come in?
During Ford’s earnings conference call on Thursday, one day after Marchionne’s remarks, Deutsche Bank analyst Rod Lache asked Fields whether Ford had any similar plans to shuffle its own small-car production given the shifts in the U.S. market.
Fields said that Ford won’t be getting out of the small-car business anytime soon. “We believe very strongly that it’s important to have a balanced portfolio, to anticipate changes in customer demand, changes in the economic environment, or in the regulatory environment,” he said.
That makes a lot of sense. Fields and the rest of Ford’s senior executive team are determined not to forget the hard lessons learned last decade, after Detroit’s overreliance on SUVs (and neglect of fuel-efficient small sedan models) cost the U.S. automakers big when gas prices jumped and the economy soured. Today, Ford has strong, competitive, and profitable small and midsize car models in its lineups around the world — and Fields isn’t about to neglect their ongoing development.
But Fields pointedly didn’t rule out the idea of building small cars with a partner. “We’re always open to talking with others,” he said. “We’re always going to look at different opportunities to improve the profitability of all of our vehicles including our small cars.”
“[When] we identify a need in the marketplace, we look within ourselves and we say, what are our core competencies? In some cases, we convince ourselves that we can fulfill that need on our own. In other case, we can say, listen, there are other great companies out there that we can approach and partner with,” he said.
The upshot: Ford is signaling that it’s open to a conversation
After his botched courtship dance with General Motors (NYSE:GM) last year, Marchionne might not get a warm reception if he approached GM with a proposal to have some sedans made.
But it seems pretty clear that Fields would welcome that conversation, or at least hear Marchionne’s proposal with interest. We’ll be watching to see what develops here.
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