Ford betting on small cars

kevin | Decision Making | Monday, July 21st, 2008

This is an example of big-time decision-making.

The Ford Motor Company, which devoted itself for nearly 20 years to putting millions of Americans into big pickup trucks and sport-utility vehicles, is about to drastically alter its focus to building more small cars.

The struggling automaker, reacting to what it sees as a rapid and permanent shift in consumer tastes brought on by high gas prices, plans to unveil its new direction on Thursday, when it will report quarterly earnings.

Among the changes, Ford is expected to announce that it will convert three of its North American assembly plants from trucks to cars, according to people familiar with the plans.

And as part of the huge bet it is placing on the future direction of the troubled American auto industry, Ford will realign factories to manufacture more fuel-efficient engines and produce six of its next European car models for the United States market.

American car manufacturers have never figured out how to make money on small cars, at least that’s what they’ve said, a feat that the competition from Japan, even building cars here, has somehow mastered. Sitting here today, it seems like a sensible bet, but make no mistake, it’s a bet the company move.