Ford is cutting back on sedans to build more SUVs -- and it could mean a boom for its business

  • Ford announced that it's reducing its commitment to passenger cars.
  • For over a year, the auto industry has been grappling with a market shift toward pickup trucks and SUVs.
  • Ford hasn't followed Fiat Chrysler Automobiles in deciding that passenger cars are all-but dead in the US market.

Fiat Chrysler Automobiles CEO Sergio Marchionne, who is retiring in 2019, got there first: he saw that passenger cars weren't selling in the US, so he shifted the carmaker's production to more profitable, more in-demand pickup trucks and SUVs.

About a year ago, he was clear: the market is undergoing a structural shift.

Now Ford — struggling with a lagging stock price, under the leadership of new CEO Jim Hackett, and working to catch up to the perception that General Motors and Tesla are ahead on electric cars and autonomous vehicles — has followed suit. Sort of.

At the Deutsche Bank Global Auto Industry Conference in Detroit on Tuesday, Ford said that it was dialing back on cars, but not abandoning them.

The automaker "will shift toward a lower volume passenger car lineup in North America and Europe, while competing in more profitable sub-segments of the utilities market, as demonstrated by vehicles such as the new Edge ST and the upcoming Bronco," Ford said in a statement.

Ford said that over the next couple of years it will increase its SUV mix 10 percentage points and decrease its car portfolio 10 percentage points in North American.

RELATED: Check out Ford automobiles through the years:

Ford automobiles through the years
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Ford automobiles through the years
Henry Ford in his First Passenger Automobile, Quadricycle, First Built in 1896, USA, circa 1903. (Photo by: Universal History Archive/UIG via Getty Images)
Henry Ford seated in his first Ford automobile on Grand Boulevard, Detroit in September of 1896.
ORIGINAL CAPTION READS: Three-quarter view of a 1908 Model T Ford. Undated photograph.
A well-dressed African-American couple stand by their 1909 Ford Touring car in Southern California. (Photo by Jonathan Kirn/Corbis via Getty Images)
The Ford factory, Manchester, c1911. Lines of Model Ts, off the production line. (Photo by National Motor Museum/Heritage Images/Getty Images)
Ford Motor Company Advertisement Featuring the Big Four Automobiles, circa 1909. (Photo by: Universal History Archive/UIG via Getty Images)
Sir Harry Lauder sits proudly in his 1914 Ford Model T 'sporty' touring car which sold for $550, complete with equipment.
Making the bodies for Model T Fords, 1915. Factory workers on the production line completing upholstery for the seats. A sack of stuffing lies on the floor. (Photo by National Motor Museum/Heritage Images/Getty Images)
The family gather in and on the running board of their automobile. (Photo by Jonathan Kirn/Corbis via Getty Images)
A group of people driving in a Ford Model T automobile in the 1920's. (Photo by © Hulton-Deutsch Collection/CORBIS/Corbis via Getty Images)
(Original Caption) View of a Ford touring car with passengers, 1923.
Actors ZaSu Pitts and Ford Sterling pose for this still from the 1927 version of Casey at the Bat. Pitts played the role of Camille, and Sterling played the role of O'Dowd.
1928: American inventor and industrialist Henry Ford (1863 - 1947) and his son, automobile executive Edsel Ford (1893 - 1943), sit in 'The Fifteenth Millionth Ford'. (Photo by Hulton Archive/Getty Images)
(Original Caption) 1929- Picture shows a Ford Town Car. Cloche hatted model is sitting on the running board.
Photo of an early Ford automobile. Ca. 1900s.
The Lincoln was, and still is, one of the luxury cars of the Ford Motor Company.
(Original Caption) 1928- Picture shows the 1928 Ford model A automobile.
G Kinsey-Morgan's Ford Model C Ten, winner of a silver award at the MCC Torquay Rally, July 1937. Ford 10 1172 cc. Vehicle Reg. No. CLJ617. Event Entry No: 84 Driver: Kinsey-Morgan, G. Award: Silver. Place: M.C.C. Torquay Rally. Date: 16/17.7.37. Artist Bill Brunell. (Photo by National Motor Museum/Heritage Images/Getty Images)
(Original Caption) 1940 Ford Deluxe V-8 Coupe.
Rows of automobiles in the yard of a Ford Motor Company plant. (Photo by © Hulton-Deutsch Collection/CORBIS/Corbis via Getty Images)
Ford's 1955 Thunderbird features all steel convenience and safety with high performance. It has roll up windows, a telescopic steering column, and is available as either a hard top or a convertible.
Replacing the Boss 429 and Boss 302, the 1971 Boss 351 Mustang features a competition suspension package and a potent 351-cubic-inch Cleveland engine.
1978-Ford Motor Company's Country Squire Station Wagon.
Man inspects a new Ford Motors Company car that has just come off the final assembly line.
(Original Caption) 11/10/50-Dearborn, Michigan: The custom four-door Sedan, featuring Fordomatic drive, has new refinements in styling to emphasize distinctive body lines. The new models have a dual spinner radiator grille, long wraparound bumpers and new ornamentation.
LOS ANGELES,CA - CIRCA 1954: Actress Lori Nelson poses in her Ford Thunderbird car at home in Los Angeles,CA. (Photo by Earl Leaf/Michael Ochs Archives/Getty Images)
circa 1955: A suburban family waving as they pull out of a driveway in a packed late 1950s model Ford Country Squire station wagon. (Photo by Lambert/Getty Images)
A 1955 Ford Consul Convertible MK 1. The first post-war cars from Dagenham were almost identical to pre-war models, but the 1951 'Five Star Car' Consul/Zephyr range was revolutionary. With American-styled unitary bodies scaled down for European markets, the cars featured new independent front suspension by Earle MacPherson. Convertibles, which accounted for less than 2% of production, were developed by Carbodies of Coventry in 1953. Both the Consul and 6 cylinder Zephyr were popular among fleet users and hire companies. Ford production in Britain, began in a converted tram factory in Manchester in 1911, transferring to the purpose-built Dagenham factory in 1931. (Photo by National Motor Museum/Heritage Images/Getty Images)
View of a 1959 Ford Thunderbird motor car, its convertible roof in the down position, parked outside on a grassy field, 1959. (Photo by FPG/Getty Images)
DAYTONA BEACH, FL â February 1957: Driving this 1957 Ford for car owner Pete DePaolo, Marvin Panch finished fifth in the NASCAR Cup race on the Daytona Beach-Road Course. (Photo by ISC Images & Archives via Getty Images)
A 1958 Edsel convertible made by Ford, 1958. (Photo by Underwood Archives/Getty Images)
View of a 1965 Ford Thunderbird motor car parked on a rotating floor in a showroom, 1963. (Photo by FPG/Getty Images)
On the beach, a group of young men and women lean or sit on a mid-60s Ford Mustang convertible (either a 1964, 1965, or 1966 model), which sports mid-1960s California plates (1963 - 1969), as they listen to a woman play an acoustic guitar, mid 1960s. There are a numebr of surfboards propped against the car. (Photo by Tom Kelley/Getty Images)
A young man washes the family Ford Anglia car on an Essex estate in the early nineteen sixties. Bending down to wring a leather dry into a bucket the young man cleans his father's beloved Anglia in the street outside the family house which interestingly, is otherwise empty of other cars. This is the new age of car ownership when newfound wealth meant families could afford to buy a vehicle and travel elsewhere after the war years of 1950s austerity. The Ford Anglia is a British car designed and manufactured by Ford in the United Kingdom. The Ford Anglia name was applied to four models of car between 1939 and 1967. 1,594,486 Anglias were produced. The picture was recorded on Kodachrome (Kodak) film in about 1961. (Photo by In Pictures Ltd./Corbis via Getty Images)
30th May 1975: The car assembly line for vans at Ford. (Photo by Evening Standard/Getty Images)
Ronald and Nancy with their new Ford Ranger pick up, in their Californian ranch 'Rancho del Cielo'. (Photo by jean-Louis Atlan/Sygma via Getty Images)
CIRENCESTER, UNITED KINGDOM - JUNE 30: Princess Diana At Cirencester Polo Club With Her Maroon Red Ford Escort Cabriolet Car (Photo by Tim Graham/Getty Images)
The Newly Designed 35Th 1999 Anniversary Edition Ford Mustang. (Photo By Getty Images)
2002 Ford Mustang Bullitt driving on country road, 2000. (Photo by National Motor Museum/Heritage Images/Getty Images)
384022 08: FILE PHOTO: Ford''s new fuel-efficient hybrid electric (HEV) concept Escape SUV vehicle sits in a showroom January 4, 2001 in Los Angeles during its debut at the Greater Los Angeles Auto Show. The newest version of Ford Motor Co.''s popular Escape sport utility vehicle reportedly earned low marks in crash tests conducted by the Insurance Institute for Highway Safety, April 23, 2001. (Photo by Ford/Newsmakers)
394154 02: (FILE PHOTO) A 2000 Ford Windstar minivan is seen in this undated photo. Ford announced September 6, 2001 that it had sent more than 750,000 recall letters to owners of 1999-2001 model Windstars after reports that the minivan's windshield wiper motor could potentially catch fire. Ford said that small holes in the system could allow water, salt and debris to clog the motor and ignite a fire. (Photo by Ford/Getty Images)
2005: Ford Freestyle SUV. (Photo by John B. Carnett/Bonnier Corporation via Getty Images)

No massive shift

That's not a massive, FCA-like concession that cars are over.

But it is more extreme than what, for example, General Motors is contemplating. In an interview with Business Insider at the Detroit auto show, GM's North American boss, Alan Batey, stressed that passenger cars will still be an important component of the automaker's business when asked about vehicles such as the Chevy Malibu. 

Marchionne, in a press conference with reporters at the show, showed no signs of regret about FCA's decision. In fact, he said that FCA is now planning to look at developing a mid-size pickup truck to go up against the new Ford Ranger and the Chevy Colorado.

He also noted that while he expects the shift from cars to trucks to be permanent, the Japanese and South Korean automakers in the US might not be able to be as aggressive as their American counterparts because they've committed too much of their infrastructure to their highly regarded sedans, such as the Toyota Camry and the Honda Accord.

And FCA isn't entirely jettisoning cars — Marchionne said that the automaker could stay the course with some of its niche Dodge-brand muscle cars.

Ford has been in this position before. Prior to the financial crisis, its passenger-car lineup wasn't as strong as its traditionally hot-selling pickups and its SUVs. The company had always been relatively well established with small cars, thanks to its European operations, but it was adrift with larger sedans.

That changed, and vehicles such as the Fusion were well-received.

The SUV boom can't be ignored

But over the past three booming sales years, it's been obvious that SUVs are what Americans want to drive. Newer models can deliver good fuel economy and greater versatility than four-doors, so consumers aren't being asked to make any trade-offs.

Ford's formal commitment to spending less on cars and more on trucks might be seen as an admission of failure, but that would be wrong. The last thing the automaker wants is to be stuck with a capacity mismatch: not enough factories building SUVs while others continue to crank out cars. The political situation with the Trump administration has also made it difficult for Ford to move car production out of US.

Ford has always been a big truck company, and it pioneered some of the original SUVs, such as the Explorer, so it makes sense for the company to follow FCA and move in this direction. The larger question for the industry is whether other automakers will now follow Ford.

NOW WATCH: Ford replacing its CEO points to the short-termism on Wall Street

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