Kelley Blue Book
Like every automotive CEO, Mark Fields had to wrestle with an uncertain future
After 7 years of growing new-car sales the party is…well, not over. In fact, at Kelley Blue Book we’re predicting approximately 17 million annual new-car sales in 2017, which is a great year for the industry by any rational measure. But a contraction is a contraction, and that’s enough to make CEOs re-examine their strategy. Unless you’re Ford, with a stock price down 40 percent despite the company’s profit trend over the last 3 years. In this circumstance family members and stockholders want more than a re-think, they want blood.
And so they got it, with the abrupt dismissal of Ford CEO Mark Fields. The frustration felt by the Ford family, its board of directors and its stockholders is easy to imagine, particularly given the stock gains made by Tesla over the same period.
Fields was in the top position during many of Ford’s recent success stories, including the launch of its advanced aluminum F-Series truck and the automaker’s global investment in alternative transportation technology. But some would argue the aluminum F-Series’ road map was set by Alan Mulally, leveraging his background at Boeing. And Field’s Smart Mobility investment, while prudent and necessary to ensure Ford’s long-term future, won’t have any impact on stock values any time soon.
Ironically, pretty much every recent financial number related to Ford — except the stock’s value — reflects the company’s success in the high-profit truck and SUV segments. In contrast, Tesla’s losses keep widening even as the Silicon Valley automaker misses self-imposed deadlines and its delivery numbers flatten. Tesla’s stock has gained 45 percent since the start of the year, all while Elon Musk shrugs and admits the company is over-valued.
While it’s a fascinating study in Wall Street’s assessment of a traditional automaker and a tech-company, one has to wonder what, if anything, Ford can do to turn things around (beyond firing Fields). The automaker just announced it will cut 1,400 salaried positions through buyouts, all without touching the areas of product development or future tech investment (including its Smart Mobility LLC division).
I don’t see Ford’s new CEO, Jim Hackett, dramatically shifting the company’s strategy toward alternative technology and shared ownership models. His background suggests he’s a fan of innovation and expanding beyond a company’s traditional product and market position.
So where did Mark Field’s go wrong? An argument can be made that while Ford’s truck and SUV business has been bustling it could have done even better. Ford is way behind in bringing a subcompact SUV to market. The EcoSport, which just made its Hollywood debut in The Guardians of the Galaxy, Volume 2, will fill the gap when it finally arrives next year, but that’s 7 years after Nissan initiated the segment in 2011 with the Juke. Almost every other mainstream U.S. brand had a subcompact SUV in place by 2016 (Toyota was also late to the game, with its C-HR just now hitting showrooms).
Could Ford’s flailing stock price be the result of one missed market opportunity? Not likely. The company’s car lines have also been floundering for years. Yes, even worse than competitors’ car lines that have suffered in the face of SUV popularity. But Ford’s car troubles and late EcoSport are not the issue. GM’s stock languishes as well, despite excellent financials.