Ford Authority

Ford Forecasts A 20% Profit Margin On Mobility Services

Ford Motor Company spent the bulk of its press conference at the 2017 Detroit Auto Show talking about transportation rather than automotive products, demonstrating the seriousness with which it’s pursuing its so-called “Smart Mobility” plan and attempting to morph into both an automobile company and a mobility company.

But does the automaker really expect that it can make any money off of providing transportation services like shuttles, ride-hailing, and ride-sharing?

As a matter of fact, it does. Speaking to a reporter from USA Today, Ford President and CEO Mark Fields said that the automaker forecasts a profit margin of around 20% from transportation services – roughly double what an automaker should expect from new-vehicle sales in North America in a good year.

“New business models on mobility services can offer up a lot of opportunity for reoccurring revenue on, let’s say, the usage of our products, as well as new opportunities for us working with cities,” Fields said. “So we think it could add a whole new element of growth to our business going forward.”

Last November, Ford announced a new “City Solutions” team, which will work with cities around the globe to help address transportation infrastructure concerns and come up with custom-tailored solutions to those cities’ unique mobility obstacles. The team is already hard at work trying to do just that in San Francisco, California, and is collaborating with former NYC Mayor Michael Bloomberg and his coalition of mayors worldwide.

More recently, in Detroit this week, Ford announced plans to expand its recently-acquired Chariot van service from two cities to eight. Ford’s President and CEO also reiterated the company’s commitment to introduce a self-driving car for ride-sharing and ride-hailing services sometime in 2021.

Asked by USA Today whether Ford’s dealer network might prove an impediment to Ford’s plans to offer transportation services, Mark Fields replied: “No, I actually think it’s a huge advantage for us. There will be a spectrum going forward where people will want to shop, buy, own and drive vehicles the way they have for many, many years. And clearly our dealers are playing an important role in that.”

He added: “When you think about mobility services, autonomous vehicles, for example, up time is going to be really important. We have 10,000 distribution and service points around the world. That is a huge advantage for us that our dealers can play a very important role in.”

Aaron Brzozowski is a writer and motoring enthusiast from Detroit with an affinity for '80s German steel. He is not active on the Twitter these days, but you may send him a courier pigeon.

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