Ford profits?
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Freshman User
Joined: May 2012
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Ford profits?
Hey guys, while being bored earlier and browing around the web, i clicked on the SUV wikipedia, and was rather shocked to read the following statment.
"SUVs became popular in the United States, Canada, India and Australia in the 1990s and early-2000s. U.S. automakers could enjoy profit margins of $10,000 per SUV, while losing a few hundred dollars on a compact car.<SUP id=cite_ref-11 class=reference>[11]</SUP> For example, the Ford Excursion could net the company $18,000, while they could not break even with the Ford Focus unless the buyer chose options,<SUP id=cite_ref-12 class=reference>[12]</SUP><SUP id=cite_ref-13 class=reference>[13]</SUP> leading Detroit's big three automakers to focus on SUVs over small cars."
Now, i can see Ford making 18 G on a loaded excursion, however, i can not see them selling a base focus for the less then what it cost to build
Has anyone else ever heard about this? I'm having a really hard time believing what i'm reading, so, i'm thinking that this might be one of those "internet stories"
I thought it was interesting and just wanted to bring it to other people attention
"SUVs became popular in the United States, Canada, India and Australia in the 1990s and early-2000s. U.S. automakers could enjoy profit margins of $10,000 per SUV, while losing a few hundred dollars on a compact car.<SUP id=cite_ref-11 class=reference>[11]</SUP> For example, the Ford Excursion could net the company $18,000, while they could not break even with the Ford Focus unless the buyer chose options,<SUP id=cite_ref-12 class=reference>[12]</SUP><SUP id=cite_ref-13 class=reference>[13]</SUP> leading Detroit's big three automakers to focus on SUVs over small cars."
Now, i can see Ford making 18 G on a loaded excursion, however, i can not see them selling a base focus for the less then what it cost to build
Has anyone else ever heard about this? I'm having a really hard time believing what i'm reading, so, i'm thinking that this might be one of those "internet stories"
I thought it was interesting and just wanted to bring it to other people attention
Logistics Pro
Joined: Mar 2010
Posts: 3,532
Likes: 495
From: NC
No it is true. SUV's and trucks were dealership cash cows, small cars were loss leaders. That has switched somewhat now because of fuel prices but look at the price of an F-250 tipping $60K and a Focus at $18K. Trucks are still money makers.
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Freshman User
Joined: May 2012
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I suppose it makes some sense, i just always assume it was "cheaper" to build a car over a truck, therefore they could sell it off cheaper, guess i assumed wrong, thanks for clarifying Excurville
Frmr Ford Trans Engr
Joined: Aug 1999
Posts: 24,725
Likes: 2,651
From: SE Florida
It is cheaper to make a car than a truck. The Focus sells for a lot less than a truck, too. The CAFE (Corporate Average Fuel Economy) laws make selling the small cars at a loss necessary. When the fuel economy of the small cars is averaged with the lower economy of the larger cars the company can meet the law.
Small cars have been selling at a loss for many years.
Small cars have been selling at a loss for many years.
Lead Driver
Joined: Oct 2010
Posts: 5,420
Likes: 16
From: Ouray, CO
They also have to be price competitive with the ... import models
er, I mean cars built outside the US,
ah, I mean cars built outside the US or even in the US,
with parts mostly made outside the US, assembled mostly outside the US
by people mostly outside the US. - shoot, never mind.
er, I mean cars built outside the US,
ah, I mean cars built outside the US or even in the US,
with parts mostly made outside the US, assembled mostly outside the US
by people mostly outside the US. - shoot, never mind.
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