Ford wants to take the lead using smart mobility

Ford wants to take the lead using smart mobility

Record profits, ambitious plans for the future and more patent applications than ever: in a rapidly changing world, Ford Motor Company wants to take the lead in ‘smart mobility’.

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And yet, investors and analysts remain sceptical. Will Ford reinvent itself or is this ‘dinosaur’ fighting a losing battle?

 

  2011 2015
Annual turnover (in bilions of dollars)  135.6 149.6
Annual profit (in milions) 8.8 10.8
Annual car sales (in milions 5.7 6.6

 

Eight years after the crisis in the car world, the sun appears to be shining again in ‘Motown’. Partly thanks to the falling fuel prices, Ford sold 6.6 million cars worldwide – 5 per cent more than in 2014. In doing so, the US car manufacturer posted its highest profit ever in 2015: 10.8 billion dollars.

Smart mobility

Add to that the fact that Ford last year launched its ambitious Smart Mobility Plan – dozens of initiatives worldwide, which have to explore and shape the future of mobility – and you have an innovative company that is ready for the future. Investors, however, are not convinced. On the contrary. Wall Street punished the Michigan car maker: after the launching of the plan, the share prices took a months-long dive. In February, the share price hit a temporary low of 11.17 dollars (compared to more than 15 dollars in mid-2015).

According to Adam Jonas at Morgan Stanley, the investors thought: hang on, we’ve seen this before. At Kodak, for instance: it went bust in 2012 after 124 years because it was too slow in catching the wave of the digital revolution. ‘The automotive industry is overripe for disruption,’ says Jonas, with an eye to the autonomous cars of Google and the car-pooling of Uber. ‘And this disruption is unlikely to come from a century-old’ mastodon as Ford. In response, Ford CEO Mark Fields says that the car maker sees and understands the changes in the market. ‘We’re taking this very, very seriously.’

The company appears to put its money where its mouth is. For Ford, the Detroit Motor Show, for a change, was not about a new car, but rather about the smartphone app FordPass. Ford also has more than a hundred people in the Research and Innovation office in Palo Alto (Silicon Valley) and it applied for 5,872 patents last year, an increase of 36 per cent on the year before. In addition, Ford is apparently working closely together with Google on a new ride-sharing service.

This is very much in line with the Smart Mobility Plan, which is rooted in Ford’s ongoing market analyses and is based on three global trends that the company sees: an increase in the number of megacities, a growing middle class and a desire for cleaner air.

In the busy cities of the future, people won’t opt for the car any longer, but for the folding Ford eBike – at least, Ford hopes. Andrew Del-Colle, editor at Road and Track, gives Ford the benefit of the doubt. ‘Although it’s very clearly the storyline that Ford likes to promote – that it is progressive and remains relevant in the midst of change – there’s also no reason not to believe Ford.’

Investor scepticism

The investor scepticism, however, also has other causes than the ‘seeing is believing’ surrounding the ambitious future plans. According to Adam Jonas, the automotive industry is in the middle of the greatest credit bubble ever: some 86 per cent of the new cars are bought on credit. The optimistic message coming from Ford is therefore also judged on Wall Street as ‘unsustainable’ and ‘unrealistic’.

Nevertheless, Ford CEO Mark Fields has the fullest confidence: ‘The road ahead of us is wide open.’

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