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Ford Margins to Shrink as Buyers Shift to Small Cars
Ford Motor Co. warns that its operating profit margin in North America, which hit 12% in this year's third quarter, will contract to 8%-10% by mid-decade.
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Ford Motor Co. warns that its operating profit margin in North America, which hit 12% in this year's third quarter, will contract to 8%-10% by mid-decade.
Mark Fields, president of Ford's Americas unit, tells an investor conference in New York City that its margin, or return on sales, is coming under pressure as customers downsize from big pickups and SUVs to small cars.
Rising incentives also are likely to cut into Ford's previously stable pricing, Fields says. He notes that the industry's U.S. car and light truck inventories ballooned to 3.1 million vehicles by Oct. 31, the highest level since December 2008.
New models have offset the downsizing trend this year, according to Fields, who will become chief operating officer on Dec. 1. He says the new generation of Escape compact crossover vehicles and Fusion midsize sedans commands transaction prices that are $4,200 and $3,700 higher, respectively, than their predecessors.
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