Seldom have I run across an automotive story that’s gotten as much “car talk” as this one. I was home in Detroit this weekend, and I heard a lot of people buzzing about Ford’s decision to phase out 90% of its cars.
You read that right. After nearly a century of manufacturing cars, Ford will be down to just the Mustang and the Focus (a new crossover) by 2020. So much for those 5-year product cycles – this one’s coming down quickly.
There goes the Fiesta, Fusion, Taurus, and other well-known vehicles that have long been part of Ford’s lineup and have likely been in your driveway at one time or another. All of this is an acknowledgment of both Millennials and Boomers moving to SUVs and trucks, something Ford believes is not a fad, but a long-term trend.
And in the process, the team at Ford believes this vehicular sacrifice frees the company up to focus on more popular models – like SUVs – as well as the coming electric vehicles.
And don’t look now because GM may not be far behind. Their CFO, Chuck Stevens, told CNBC that GM has “been on this path for a number of years.”
Perhaps you’ve been surprised these past few years as brands like Porsche and even Bentley have rolled out their versions of SUVs. That’s another indicator that North Americans have a decided lean to bigger vehicles. And thanks to better gas mileage, trucks and sport utility vehicles have become less expensive to drive.
While Ford’s cataclysmic move may not impact the radio industry directly, it most certainly will make waves across the automotive landscape. Even in an environment where SUVs and trucks have become dominant, you have to wonder if Honda, Toyota, Mazda, Hyundai, and others won’t be in a stronger position to take advantage of what could become a car market void.
It would be akin broadcast radio one day eliminating spot advertising as we know it to focus on digital marketing because of client demand – or lack of it.
But does it suggest a shift to hiring digital-only sellers and new media content creators to leverage the programming and sales products being demanded by advertisers, even in smaller markets?
We’ve talked about Ries & Trout’s Law of Sacrifice a number of times in this blog. And Ford’s strategic decision is proof positive that in 
today’s competitive environment it’s propitious to marshal your resources, rather than try to do too many things at the same time.
It’s a sign that sacred cows and the “we’ve always done it this way” corporate mindset is rapidly being lapped by a more agile business environment where focus and concentration may be more important than ever – not to mention moving at a faster pace.
In the radio industry, a decision as sweeping as Ford’s may be a non-starter – for now.
But who at Ford could have anticipated this move two years ago?
The orphaning of once-popular car brands is another sign that in the modern business era, all bets are off.
That may indeed be the case whether you’re selling :60s and :30s, running an AM radio facility, or programming a music station.
Ford’s bold move is a reminder not that just the automotive industry is undergoing massive change, but every business is.
Especially radio.
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In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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There’s an even bigger reason why American vehicle manufacturers are opting for trucks over cars. It’s because of “The Chicken Tax.”
Planet Money explains it in an informative and entertaining video you can watch at this link: https://www.youtube.com/watch?v=GnGLTThwpLU
Fascinating. BTW enjoyed your Phil Zachary/WRKO post. Went right to the heart of the matter.
SUV’s and Trucks. The plus side is you have more room to haul your stuff to the next station gig and still have room to sleep in it as well!
Not to mention you don’t have to rent the U-Haul when it’s time to go to your next market. (Ooh…that was a cheap shot.)
For radio ‘linear” and “non-linear” are new plateaus of separate potential.
To paraphrase Nicholas Negroponte from many years ago… maybe everything that goes though the air will become on-demand, bite-size and premium, and everything radio thought was the core live “format” may be the standard “basic free” rotating feed. And talent and teams will take on a whole new context and structure…
Interesting observations, Lee. Content creators, distribution providers, pay walls, subscriptions, and free are all components in devising business models. The fact that so many are “in play” – including the biggest of the boys – is mind-boggling. But these are the times in which we live. Appreciate you chiming.
As a retired car dealer friend said, “after Honda and Toyota everything else is just a “PGC”.( a pretty good car) A Taurus is only a pretty good car compared to the quality of an Accord or Camry. Maybe Ford just doesn’t want to or can’t compete in that arena anymore? On the other hand, Toyota is having a tough time competing in the large SUV/Light truck market.
The profit margins on SUV/Light trucks are high, they retain their value when used. (dealers love that part, since the $$ in the car business is all sitting on the used car lot) As my dealer friend said, “I’ve got 8 grand invested in a used piece of American iron and it sits on the lot for a month, it’s not doing me any good.” One year old Impalas and Chrysler 300s sell at the auction for less than half of the original sticker price. Are they good cars? They are, but there’s no money in them.
And in fact, that is what may be driving this decision. Ultimately, automakers may end up specializing in type of vehicles (Chrysler: Jeeps, Ford: SUVs/trucks, etc.). It speaks to how formerly big, slow moving companies are transforming themselves with rapid decision maaking and action. Thanks for the comment.
When my car dealer friend sold his car stores he developed two first class auto auctions, they were moving 8-10 thousand cars a week. RT sold them to Berkshire-Hathaway. Buffet knows where the money is.
No doubt about that. As a wise man once said, “Follow the money.” Note that Berkshire Hathaway just made a huge investment today in a little company in Cupertino named Apple.