Ford May Reduce Lineup to as Few as 20 Models

Alan Mulally Says Ford May Reduce Car Lineup
Alan Mulally Says Ford May Reduce Car Lineup

Ford Motor (F) may reduce the number of models its sells to as few as 20, CEO Alan Mulally (pictured) said Monday.

"There will be less than 30, on our way to 20 to 25," the former Boeing (BA) CEO said following a speech to a business trade group in London, Bloomberg News reported. "Fewer brands means you can put more focus into improving the quality of engineering."

The second-largest U.S. automaker recently offered nearly 100 models, but the disposal of its portfolio of European luxury brands, including Volvo, Land Rover and Austin Martin, has reduced the number of offerings. Ford also plans to dissolve the Mercury brand later this year.

Mulally, who is in Europe ahead of the Paris Motor Show, said it became clear to him after he took over the reins of Ford in 2006 that the company needed to simplify its operations. A key component of the restructuring plan includes devoting greater resources to the Ford brand.

Mulally also said he expects Ford to make a "solid profit" in 2010 and plans to invest £1.5 billion ($2.4 billion) in its U.K. operations during the next five years. Ford is the U.K.'s second-largest auto manufacturer. It employs some 15,000 workers there.

Sales and Accolades Are Rising

The Dearborn, Mich.-based company was the only one of Detroit's Big Three automakers not to go through government-sponsored bankruptcy last year, which some analysts say has helped its sales. Ford also has benefited from Toyota Motor's (TM) ongoing recall woes, mostly related to reports of unintended acceleration in Toyota and Lexus vehicles. So far this year, Ford has outsold Toyota in the U.S. every month except one.

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In 2009, the company posted a $2.7 billion profit for the year. More recently, Ford reported it earned $2.6 billion in the quarter ending June, the largest profit the company has seen since 2004. The company also reported a 30% boost in revenues.

Ford has also benefited from industry accolades, which include surveys showing its products are among the best made in the U.S. auto industry, according to a recent J.D. Power Initial Quality Study. In June, the Insurance Institute for Highway Safety awarded five Ford models the group's highest safety rating.

Though Ford appears on a roll, Credit Suisse Securities warned last week that Ford is likely to be less profitable next year than in 2010, due to higher structural and material costs, as well as burgeoning pension expenses.

Still, Mulally said Monday that he expects to improve overall performance and solid cash flow in the 2011 fiscal year. "All the fundamentals are moving in the right direction," Mulally said, even as he acknowledged that the overall economic recovery has slowed.