Segment Shifts

Historically, Ford has operated as four largely separate automotive companies around the globe – North America, South America, Europe and Asia Pacific – each with its own product development systems, manufacturing processes, suppliers and other duplicative structures. While this made sense in the past, in recent years the structure led to unnecessary and inefficient processes and a failure to realize the substantial benefits of scale available to a global enterprise like ours.

As we expanded our brand portfolio around the world, our global enterprise became more difficult to manage and we neglected to ensure that the Ford brand retained its strength in all markets and in all segments. The situation was especially acute in the United States where, in the 1990s, both Ford and our foreign and domestic competitors became increasingly dependent on sales of trucks and large SUVs.

Our focus on these vehicles left us exposed in the event of a market shift to smaller, more fuel-efficient vehicles. We did, in fact, begin to refocus our North American portfolio earlier in this decade with a new line of midsize cars. When fuel prices shot up rapidly in early 2008, however, consumer preferences shifted toward small cars at a much faster pace than we and others in the industry anticipated.

As part of our plan to return to profitability, we are working to reverse the decades-long trend of losing money on the production of small cars in the United States. We are increasing production of smaller-sized vehicles in North America and globally, and we are improving costs to competitive levels. The strong start of the new Ford Fiesta in markets from Europe to Africa to Asia is proof of the progress we are making in this area. We are also enhancing revenues by making vehicles with class-leading fuel economy, safety performance, quality and technology.