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13 FEBRUARY 2018 AL CIRCLE

Ford expands its aluminium-bodied SUV production to boost profit margins and challenge GM

EDITED BY : BEETHIKA BISWAS 2MINS READ

Ford Motor Co said on Monday it will boost production of Ford Expedition and Lincoln Navigator, their two large SUVs by 25% this year to challenge rival General Motor that is outperforming Ford financially in a highly profitable U.S. market segment. It is also expected to boost Ford’s falling profit margins.

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“We can sell every single vehicle we can produce here,” Ford global operations president Joe Hinrichs said during a visit to Kentucky Truck Plant in Louisville, Kentucky where the new generation of Ford Expedition and Lincoln Navigator SUVs went into production. He expects these high-margin vehicles to bring about a change.

Production expansion of the Expedition and Navigator at the Kentucky Truck factory comes as investors are concerned over Ford’s shrinking automotive profit margins in Q4 2017. The profits have shrunk to 3.7% from 5.7% a year ago and have fallen behind rivals General Motors Co and Fiat Chrysler Automobiles NV.

GM’s GMC Yukon and Chevrolet Suburban are currently dominating the U.S. large SUV segment. Ford sold about 3,500 Expeditions and 1,300 Navigators in January. GM sold more than 19,000 of its large SUVs during the month.

“We aim to get out there and challenge them with vehicles with better fuel efficiency and driving dynamics,” Hinrichs said.

Ford will invest $25 million more at the plant to support the increased production target, bringing the total investment to $925 million. Ford has redesigned the new Expedition and Navigator models with aluminium bodies to improve mileage, like the Ford F-series pickup models with which they share many components.

That change required “the greatest technological transformation” at the Louisville plant, said electrician Chuck Billingsley.

Ford has also warned investors that its overall vehicle profit margins are threatened by rising steel and aluminium prices. Ford’s switch to aluminium has boosted its sales while reducing weight and boost fuel economy but, aluminium price hike affected the profit margins.


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EDITED BY : BEETHIKA BISWAS 2MINS READ

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