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Ford to boost profit-rich U.S. large SUV production again

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Ford to boost profit-rich U.S. large SUV production again
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By Joseph White

DETROIT (Reuters) – Ford Motor Co said it will boost U.S. production of its largest sport utility vehicles in a move to grab profits in a market where consumers favor larger, more comfortable vehicles.

Ford’s Kentucky Truck plant in Louisville will increase the production rate for Ford Expedition and Lincoln Navigator sport utility vehicles by 20 percent in July – the second 20 percent increase in a year for both models, executives said during a media briefing on Monday.

The move highlights Detroit automakers’ aggressive efforts to capitalize on popular, profitable large vehicles in America’s heartland, even as policymakers in California, China and Europe push for smaller, electric vehicles to reduce carbon dioxide emissions linked to climate change.

The Trump administration, however, has proposed freezing U.S. fuel efficiency standards – a decision that would make it easier for automakers to sell large SUVs and pickup trucks.

With gasoline relatively cheap, U.S. consumers are paying premium prices for large SUVs that seat eight people and can tow a four-ton trailer.

The average transaction price of a new Ford Expedition is $62,700, Ford U.S. marketing director Matt VanDyke said, up $11,700 from the previous year. Ford does not disclose profits by model line. Average prices for the luxury Navigator rose to $81,000 in February from $78,000 a year earlier, according to Lincoln data.

In January, Ford said transaction prices across its U.S. model lines averaged $38,400, above the $34,000 industry average.

General Motors Co, which dominates the North American large SUV segment, will launch a new generation of its large SUV Chevrolet Suburban and Tahoe, and GMC Yukon, models later this year. Fiat Chrysler Automobiles NV last month said it will re-enter the large SUV segment with new models due out in late 2020.

Ford workers and engineers redesigned portions of the Kentucky Truck assembly line to allow for the latest increase, Ford North American manufacturing chief John Savona said.

For the first time, he said, workers at certain stations will be positioned at two levels – some in pits and some on platforms – to install parts on upper and lower sections of a vehicle in unison.

The redesigned Expedition and Navigator assembly system requires 550 additional workers, and those jobs will be filled by workers currently at Ford’s Louisville assembly plant, which builds small Ford Escape and Lincoln MKCSUVs, Savona said.

Ford invested $925 million to build the new generation Expedition and Navigator SUVs at the Kentucky plant. The automaker is pushing for market share in a segment it largely surrendered to rival GM over the past decade.

Since launching its new big SUVs, Ford has improved its share of the U.S. large SUV segment by 5.6 percentage points, Ford’s VanDyke told reporters on Monday.

But GM still commands a 70 percent share of a market where vehicles sell for more than double the average price of a midsize sedan. Ford on Monday night launched a marketing campaign to win over customers. Their slogan: “Built to be a better big.”

(Reporting By Joe White; Editing by Nick Carey)

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