Ford Motor Company belongs to the list of top ten largest cars manufacturers in terms of global sales. According to Auto Punditz (2021), Ford managed to sell 4,19 million vehicles worldwide, which is the eighth result in the overall chart. Furthermore, Ford Motor Company also happens to be one of the most influential and impactful automotive companies in history. Throughout the years, Ford Motor Company earned a respectable reputation due to its strong brand image, customer loyalty, consistently high sales volume, and constant innovation.
Brand Image
One of the several key capabilities that could serve as a competitive advantage is Ford’s strong brand image. From the very foundation, Ford has always presented itself as an innovative and human-centric company. Nowadays, Ford Motor Company emphasizes modern values of sustainability, equality, and progress, which are embedded into the foundation of Ford’s brand and extrapolated to its partners.
Firstly, Ford seeks to Earn Trust and is actively working to “become the world’s most trusted company” by serving its stakeholders with competence and integrity (Ford Motor Company, 2021a). Furthermore, Ford intends to Drive Progress and developed a quantifiable method of measuring progress, which accounts for human rights preservation, health protection, increasing social mobility, and enhancing common economic prosperity (Ford Motor Company, 2021a). Lastly, Ford wishes to Make Positive Impact and sets a positive net contribution to society and the environment as its ultimate goal (Ford Motor Company, 2021a). These aims have found a reflection in the new Supplier Code of Conduct. According to it, all Ford’s suppliers must respect human rights, protect the environment, source materials responsibly, and maintain responsible business practices (Ford Motor Company, 2021b).
In regard to portfolio strategy, Ford Motor Company prefers not to own many car brands. For instance, Stellantis, one of Ford’s competitors, owns 14 automotive brands worldwide (Auto Punditz, 2021). On the contrary, Ford only owns Lincoln brand, which presents a lineup of luxury SUVs to the customers. As a result, Ford Motor Company does not have an apparent weakness in its portfolio; however, both Ford and Lincoln stagnated in 2020, which resulted in a $1,3 billion net loss (Ford Motor Company, 2021c). Therefore, there is an apparent need for improvement in performance for both brands owned by Ford Motor Company.
Overall, the brand image of Ford follows the popular modern trends of sustainability, justice, and the common good. Adherence to those trends appears to be a necessity rather than a competitive advantage in the contemporary automotive business. Therefore, Ford Motor Company upholds a decently strong brand image, which is mandatory for staying competitive. Ford does what is demanded from the modern automotive giant to maintain positions on the market, but a breakthrough would require an extra effort.
Customer Loyalty Marketing
Another positive feature of Ford is the loyalty of its customer base, which was achieved through the marketing strategies such as the usage of social media platforms, dealership events, fan clubs, rewards, and discounts. This advantage is especially prominent in the USA, where Ford led the market by selling over 1,9 million vehicles in 2020 (Carlier, 2021a). The trend of strong loyalty to the brand has a history: for instance, a 2019 survey by 24/7 Wall St. revealed that 54% of customers replaced their Fords with another Ford (Suneson, 2019). Therefore, Ford Motor Company succeeded in raising a significant number of loyalists, at least in the USA.
Ford dealerships and service centers play a vital role in nurturing the customer’s loyalty to the brand. Buying a car is only a part of the driver’s experience; service and maintenance add a significant portion to it. In that regard, Ford dealerships across the country help the company stay ahead in the U.S. market. The testimonials of satisfied customers serve as an example of how that loyalty is achieved.
“Quick lane, very professional and the cleanest service department in the Chicago area. I was impressed with the dealership and staff”- Julie (Friendly Ford, n.d.).
“Allowed me to charge my Mustang Mach-E, while visiting from out of town. Appreciate the friendly service” (Hastings Ford Inc., n.d.).
“Alma Ford made it easy, Jim even walked me through syncing my phone and setting up the electronics. Chad in finance was knowledgeable and helpful, making the process painless” (Alma Ford, 2020).
Overall, a friendly and welcoming atmosphere in dealerships can be viewed as an important factor contributing to the customer’s loyalty to Ford. However, ensuring brand loyalty also became one of the mandatory conditions rather than a true competitive advantage. A 54% loyalty to Ford is a decent result; the problem is that Toyota achieved a 59,5% loyalty rating (Suneson, 2019). As a result, Ford Motor Company only manages to hold its positions instead of gaining ground.
Stable Sales and Profitability
Despite the setbacks in recent years, Ford still holds the leading position in the American market. Nevertheless, there is also an evident downward trend in the last few years, easily noticed in the performance reports. The COVID-19 pandemic can explain the net losses in revenue and wholesales sustained in 2020 compared to 2019. However, the lasting negative tendency requires an analysis of 10K-Form and a further explanation.
In terms of advantages, Ford Motor Company can present a wide network of dealerships around the world. According to Ford’s 10K-Form of 2020, the company’s vehicles are distributed by 10,717 dealerships (Ford Motor Company, 2021d). Therefore, the sales are diversified, and the company does not depend on a single customer, the loss of which would have endangered Ford’s business. In addition, Ford intends to take over the lead in the electrified vehicle segment, and new models such as the F-150 Lightning truck could create a significant competitive advantage.
There is an evident decrease in wholesales across the recent years. Ford’s wholesales plummeted to 4,187 million in 2020 from 5.386 million in 2019 and 5,982 million in 2018, respectively (Ford Motor Company, 2021d). Besides the COVID-19 pandemic, this setback can be explained by removing all non-truck vehicles except the famous Mustang from the model range. This move could have stemmed from the market study since in 2018, 66% of the U.S. customers already preferred trucks (Ford Motor Company, 2021d). While the removal of sedans had a temporary negative effect on the wholesales, the strategical benefits of it might come in the future. Finally, Ford Motor Company’s sales and profitability face risks of supply chain disruptions, unexpected defects of new models, and inability to attract highly skilled employees (Ford Motor Company, 2021d). Mitigating those risks is essential for reversing the negative trend of the last years.
Innovation
Even though it will be costly for Ford to transition from cars running on fossil fuel towards being all-electric, innovation will play a key role in Ford’s presence among the automotive industry leaders. However, Ford Motor Company will have to face tough competition from Tesla, Volkswagen, and, most importantly, the Chinese brands which offer cheap electrified vehicles. Nevertheless, Ford proclaims its adherence to innovation and already committed to that cause.
Firstly, Ford Motor Company acknowledges global climate change and commits to carbon neutrality. For instance, the company aimed to reduce Scope 1 and 2 greenhouse gas emissions by 76% by 2035 from a 2017 baseline (Ford Motor Company, 2021a). As a means to pursue their environmental goals, Ford already offers several electrified models to the customers. For example, Explorer, F-150, and Escape models can be equipped with hybrid power units (Ford, 2021). Moreover, a fully electrified Mustang MACH-E is already on the market, and an electric version of America’s most popular truck Ford F-150 will become available for purchase from Spring 2022 (Ford, 2021). Ford leads the American car market, which embraces electrification quite slowly. According to DeSilver (2021), only 2% of new vehicles sold in the U.S. in 2020 were electric. In terms of absolute numbers, Tesla sold about 0,5 million plug-in electric vehicles in 2020, Volkswagen was second with 0,22 million sales, and Ford did not make into top ten brands (Carlier, 2021b). Therefore, Ford has to use its traditional strength on the American market to sell more electrified vehicles. Currently, Ford Motor Company falls behind the competition in that regard.
SWOT Analysis and Future Changes in 2-5 Years
Based on studying the documents related to Ford Motor Company and its financial numbers, it is possible to provide a brief SWOT analysis of the company.
Strengths: leading position on the U.S. market, traditionally strong customer’s loyalty, strong brand image and popular core values, and decent potential for innovation.
Weaknesses: over-reliance on the U.S. market, relatively slow implementation of new technologies such as electrified vehicles, strong competition, such as Toyota, that does better even in areas where Ford does well, and inability to expand into international markets.
Opportunities: expansion into an eco-friendly segment, in particular, due to the brand’s popularity in the U.S, expansion into markets outside of the U.S, and development of self-driving vehicles.
Threats: vulnerability to global crises such as COVID-19 pandemic, and continuous loss of market share to the competitors.
Overall, in the next five years, Ford Motor Company could use its strong position on the U.S. market to improve the sales of electrified vehicles. Ford SUVs and trucks are already popular in the U.S., and Ford could capitalize on that factor. The brand image would stay in the current direction, and the emphasis on sustainability and the common good would probably be strengthened. In terms of marketing strategies, Ford would utilize the loyalty of the customer base, and at the same time, would try to attract new customers with innovative vehicles, including the self-driving ones. In addition, Ford would utilize their luxury brand Lincoln to offer a lucrative combination of SUVs utility and premium sedan’s comfort.
Three Strategic Suggestions for Upcoming Years
First of all, Ford should use a solid brand image and customer’s loyalty to expand into the electric vehicle segment. This strategy would allow challenging competitors in the USA, specifically – Tesla and General Motors;
Secondly, Ford should prioritize self-driving technology to obtain leadership in that promising area. By adopting this strategy Ford could launch new innovative products faster than American competitors and gain an advantage;
Lastly, Ford should expand into new markets with electrified SUVs and trucks of good quality. Ford SUVs and trucks are already popular in the U.S, so the company could increase their sales overseas.
Overall, one cannot state that Ford Motor Company is currently in poor shape. Even a significant fall of global wholesales has its explanation. However, the fact that the leading American automotive company falls behind the competition in innovative areas is concerning. Ford revolutionized the industry at the beginning of the 20th century, so the company should follow the glorious traditions. In the end, Ford still wields significant technological potential and has a promising starting position for another breakthrough.
References
Alma Ford. (2020). Customer testimonials. Web.
Auto Punditz. (2021). Global car sales analysis 2020. Web.
Carlier, M. (2021a). Leading car brands in the United States in 2020, based on vehicle sales (in units). Statista. Web.
Carlier, M. (2021b). Estimated plug-in electric vehicle sales worldwide in 2020, by automaker (in units). Statista. Web.
DeSilver, D. (2021). Today’s electric vehicle market: Slow growth in U.S., faster in China, Europe. Pew Research Center. Web.
Ford. (2021). New hybrid & electric vehicles, SUVs, crossovers, trucks, vans & cars. Web.
Ford Motor Company. (2021a). Integrated sustainability and financial report 2021. Web.
Ford Motor Company. (2021b). Supplier code of conduct for third parties supporting Ford Motor Company. Web.
Ford Motor Company. (2021c). Notice of 2021 virtual annual meeting of shareholders and proxy statement. Web.
Ford Motor Company. (2021d). Form-10K. Web.
Friendly Ford. (n.d.). Customer testimonials. Web.
Hastings Ford. (2021). Customer testimonials. Web.
Suneson, G. (2019). Ford, Honda, Toyota: Car brands with the most and least loyal customers. USA Today. Web.