Last week, Ford Motor (NYSE: F) It finally unveiled its long-awaited Jeep fighters: the Ford Bronco 2021 and Ford Bronco Sport 2021. Ford first announced that it would revive the iconic Bronco nameplate in January 2017, but due to the long development process typical of the automotive industry. , and the need to obtain these products correctly, the new Bronco family is just coming onto the market.
The Ford Bronco is a robust SUV aimed at the off-road market currently dominated by Fiat chrysler‘s (NYSE: FCAU) Jeep brand (especially the Jeep Wrangler). The Bronco Sport is a smaller and more versatile SUV that is also suitable for off-road. If the new Bronco family is successful, it could help increase Ford’s profitability in North America.
Ford Bronco returns
Ford has been raising investors’ hopes for the Bronco for several years. In 2018, Ford announced that it would suspend virtually all of its car models in North America: the Fiesta, C-Max, Focus, Fusion, and Taurus. Those models were losing money, and the goal was to replace that volume by expanding the company’s line of crossovers, SUVs, and trucks. All of those segments are profitable today and have grown in recent years. To support this strategic change, Ford’s 2018 five-year business plan required that only 6% of its investments in North America go to automobiles, compared to 33% in its 2015 plan.
The Ford Bronco 2021 is an important piece of that strategy. In a presentation last year, Ford said suspending the Focus and C-MAX and changing the company’s Wayne, Michigan assembly plant to build the reintroduced Ford Ranger and Bronco (which share a platform) would increase annual operating profit. at over $ 1 billion
Image source: Ford Motor Company.
The new Bronco will hit dealerships next spring, with a starting price of $ 29,995. It comes in two- and four-door options, with removable doors and removable roof panels for a true off-road experience. There are numerous ways to customize the Ford Bronco 2021 to meet the specific needs of off-road buyers. With some high-end option packages, the Ford Bronco’s price can top $ 60,000.
Early reviews for the Bronco are very positive, with some critics saying the Bronco has well-thought-out features that could make it superior to the Jeep Wrangler – its main competition. Last year, Fiat Chrysler sold 228,032 Jeep Wranglers (and 923,291 Jeeps of all models) in the US So if Ford can grow the off-road market and gain a share of the Fiat Chrysler market, the Bronco could become a major contributor of earnings.
Credit Suisse analysts estimate that the Bronco alone could earn nearly $ 1 billion annually in North America if unit sales reach 125,000 per year. Ford appears to have even greater long-term ambitions for sales volume, which could generate correspondingly higher profits.
The Bronco Sport adds to the range.
Wisely, Ford is looking to capitalize on the buzz surrounding the Bronco revival by expanding the nameplate on a family of vehicles with the Ford Bronco Sport 2021.
Image source: Ford Motor Company.
Unlike the full-size Bronco, which is built like a truck with a body-on-frame design, the Bronco Sport shares its foundation with the single-body Ford Escape. However, the Bronco Sport still has surprisingly good off-road capabilities, and its styling is much closer to the Bronco than the Escape.
The Bronco Sport will compete with the smallest Jeep models: the Renegade, Compass and Cherokee. Starting at just around $ 2,000 lower than the full-size Bronco, the sale price is over $ 40,000. The Bronco Sport will be built at Ford’s assembly plant in Hermosillo, Mexico, where production of the Ford Fusion is scheduled to end this month. It will hit dealerships near the end of 2020 – sooner than its bigger cousin.
Are these new models the key to a change at Ford?
Until now, Ford’s change strategy in North America has not gained momentum. In 2019, Ford’s car sales fell 29% year-over-year in the U.S., as expected, but crossover and SUV sales also declined nearly 7%. Loss of volume from product changes for the Escape and Explorer models and serious quality issues with the latter model contributed to that poor performance.
Meanwhile, Ford’s North American operating profit fell to $ 6.6 billion last year, a decrease of approximately $ 1 billion from 2018. Recently, in 2016, Ford produced an impressive $ 9 billion operating profit. millions in the region.
However, expanding the product portfolio has always been a key part of Ford’s North American game plan. The Bronco Sport will complement the Escape, which was deliberately made more car-like in the new generation that launched last year. The full-size Bronco will capture demand for off-road SUVs that Ford has been unable to address in recent years.
Ford’s decision to create a more differentiated product line in North America focused on trucks and SUVs is likely to be presumptive, as the segments it targets should hold better than the general automotive market in light of the COVID pandemic- 19. Bronco and Bronco Sport could help Ford increase profits in North America in the next two years, despite weak market conditions.
