As Ford Motor Company prepares to end its “traditional sedan” product lines in the US market, the automaker should anticipate a bit of a struggle; axing products is a balancing act. Or at least, so says Bloomberg in a recent piece. An automaker that discontinues a product too quickly runs the risk of missing out on valuable revenue and tarnishing the brand, the outlet says; one that does it too slowly might amass too large a cache, necessitating the use of steep discounts to move product and, again, tarnishing the brand.
Discontinuing old product is “one of the trickiest tasks in management,” Bloomberg says, fraught with peril on either side.
Production of the Ford Focus at the automaker’s Michigan Assembly Plant in Wayne, Michigan already came to a close last month, but the Taurus is scheduled to remain in production until March, 2019; the Fiesta until May, 2019; and the Fusion until sometime in 2021. The latter of these models has the greatest chance of remaining relevant until its expiration date, with Ford having just refreshed it for the 2019 model year, and sales proving consistently strong year-to-year even though it was 2012 when the midsize car saw its last complete redesign.
Even still, getting products to leave dealer lots is a challenge when everyone knows their time is limited. An 89-year-old Ford dealer near Lexington, Kentucky by the name of Jack Kain tells Bloomberg he’s already having trouble selling sedans. “It’s incumbent upon [Ford] to do what’s right,” he says, meaning offering incentives to entice consumers into purchasing the soon-to-be-discontinued cars. “It’s money that moves the metal; we all know that.”
The problem: Ford’s announcement that it’s fixing to discontinue traditional sedans in the US market is, in effect, a very public vote of no confidence. Who wants an automobile that the manufacturer itself has communicated is weak or out-of-fashion?
There are also competing interests within the automaker itself, Bloomberg points out. The team behind the outgoing product has incentive to boost production to sell as many units as possible, as “the equipment has been amortized and the unit economics are good.” But as we’ve said, that runs the risk of flooding dealers with obsolete, hard-to-sell product, taking up dealer lot space (and oftentimes, vehicle components) that might be better devoted to the incoming product.
How well will Ford execute the delicate balancing act of axing its US-market sedan lineup? That remains to be seen.