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Ford CEO Jim Hackett Says Car Prices Can’t Keep Rising Forever

Jim Hackett
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Ford CEO Jim Hackett has finally said something that everyone can agree on. Car prices can’t keep rising forever. Hacket recently gave an interview to Automotive News, and in the interview, he tossed out that little nugget, which is good news considering how new vehicle prices have ballooned.

Hackett says that Ford is looking at ways to stop the ever-increasing price of new cars, and it’s called “reductive design.” The technique of reductive design is one of removing things that car buyers don’t use and don’t want, but run up the price of a new car. The Ford CEO gave some examples of items he is talking about.

hackett

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He says that the automaker still makes some cars with CD players in them when most people have a library of digital music on their smartphones. He also talked about things like garage door openers built into visitors. He says that 70 percent of drivers who have those don’t use them. Hacket says that the automaker is looking at things that customers don’t use at all. One upside of the increasingly connected vehicles is that they can tell the things that consumers aren’t interacting with inside the vehicle and remove that content.

Hackett said that he is “really optimistic” that the paradigm of everything just getting more expensive is going to get disrupted soon. The question is, what does “soon” mean as Hackett doesn’t elaborate at all. We agree that new car prices are getting out of hand. The average transaction price for a new vehicle has reached around $33,000, and the cost of new trucks and SUVs can soar well above that. Ford’s average selling price is likely to increase with it ditching all its cheaper small cars. Jim Hacket talked about the Ford EV future a few months ago.

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Source: Automotive News

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Written by Shane McGlaun

Shane is a car guy with a fondness for Mustangs and off-roading.

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14 Comments

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  1. in late 1966 I bought a brand new 1966 Ford Fairlane 500 with 390 cid, 4 barrel carb, 4 in the floor total price was $3250.00 this included tax, 36 months insurance. payments $125.00. what a change.

    • Inflation adjustment brings that $3,250 from 1966 up to $25,436 in 2018 dollars. Just for reference, not quite as drastic as it sounds. 36 months insurance would be pretty sweet

    • In 1974, I bought a used 1968 VW Beetle for $75. And almost a year later, I bought a 1963 VW Beetle for $150. The days of getting TWO cars for under $300 are long gone.

      • True.
        On the other side of the coin today cars have a lot of content way over and above what is necessity for transportation. and consumers have no choice in that regard because every auto company does it, no exceptions.
        I expect some day we will see a small or medium sized truck from China or India with no frills for $15,000.

  2. I bought a Ford Pinto in 1972 for $2,350 and sold it in 1980 with 108,000 miles on it for $500.
    4 speed, German HO cam 2.0L, no AC, crank windows and AM/FM radio.
    Only maintenance was points, plugs, HO cam drive belt.
    Simple.

  3. Prices increase because the cost of materials and labor also increase. Robotic manufacturing helps reduce assembly costs, which is what the Asians have been doing for decades but in the U.S. we have labor unions to protect workers and increase their hourly wages so they can pay union dues. If the domestic manufacturers use more robotics, they risk putting more workers out. So to keep car prices under control, they must use more robotics or close plants, affecting labor. This is why we see more imports than domestics, because foreign makers use less labor to cheapen their prices, and the U.S. customer buys whatever will cost less, either made by union workers or robots, and don’t care who makes the cars anymore. It is a lose-lose deal forever.

    By 2050 the domestics will lose 80% or more of all car sales since most are imports already. We have lost our nationalism and replaced it with pure consumerism!

  4. Speaking of unused car equipment, some other things to consider eliminating are safety-related additions. Too many people assume they will be in a horrific crash whenever they get behind the wheel. Of course, that would require squelching the safety nannies like NHTSA and IIHS who use scare tactics to convince buyers that they *NEED* all of the latest safety options.

    • You are 100% correct.
      The 4 wheeler, bike and trike market has been able to creep in without these ridiculous regulations that try to engineer out all driver induced incidents.
      Would take tort reform to go along with this to kick the greedy attorneys aside and make drivers 100% responsible like they should be.

  5. NA auto makers invented the robotics and use it just as much as everyone else who copied the system. Foreign makers in NA don’t have unions so pay less and they too are building/buying as much as they can were the labor is cheaper.

    People think because of all the foreign makes being built in their country it’s perfectly fine to buy them, and they don’t think of the fact that they are slowly getting rid of their own domestic companies. The domestic companies don’t help this by doing stupid money saving things either in the past and now. Their are foreign companies hurting themselves the same way in the long run I believe as they they started changing in the 90’s.

    I guess we live in a throw away society that people seem to accept as a lot of the stuff put on vehicles is there to sell what we think we need but in reality we don’t really don’t need either. It just renders the vehicle too expensive to fix/correct it’s problems down the road.

    After all

  6. Most people do not have a library of tunes on their phone. Digital downloads are falling at about a 20% rate year over year. The younger ones are streaming music from services like Pandora. The older ones are using COMPACT DISCS and radio (both traditional and satellite)! Removing CD players from Lincolns and Cadillacs will anger many of their buyers and should not be done. The real reason prices keep increasing is the automakers are getting greedy. One of Alan Mulally’s first acts at Ford was to increase pricing even though content during his turn at CEO didn’t really increase much.

  7. Instead of telling this to the press, he should be talking to the “price setters” at Ford. According to the automotive magazines Ford I’d ridiculously overpriced.

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