In a high-stakes move Ford Motor Company (NYSE:F) hopes to set a new industry standard, but could it end up losing its status as the market leader for pick-ups? Production of the 2015 F-150 was scheduled to start Tuesday, and the new model will arrive in dealerships next month.
Ford F-150: Too much of a risk?
The thinking behind the move is that customers will be more than willing to buy the lighter model, which will see improved fuel efficiency compared to the old steel-bodied version. Of course, aluminum has been used in the industry before, but never in such a high-volume vehicle. The company made 647,697 F-150 pickups in the U.S. last year, an average of one every 49 seconds.
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The risks inherent in the move become clear when we consider that the F-series trucks have taken the title as the best-selling vehicle in the U.S. for the past 37 years. Morgan Stanley has estimated that 90% of Ford Motor Company (NYSE:F)’s global profit come from the trucks. If there are any hiccups the potential for disaster is great.
Understandably the company has undertaken significant research that has informed the decision, with the new model coming to market after 10 million miles of testing. CEO Mark Fields is confident that management has made the right decision, after unanimously voting to introduce aluminum back in 2012.
Ford F-150: Potential gains
Should the move be successful Ford Motor Company (NYSE:F) could take even firmer control of the truck market, and is using the F-150 as a test case to inform the introduction of aluminum-bodied Mustangs, Edges and Lincolns. Senior analyst Karl Brauer of Kelley Blue Book has praised the initiative, which he claims will future proof the company as consumers and regulators become more concerned with fuel economy.
The company claims that the new truck will have up to 20% better fuel economy than previous versions, which gets around 23 mpg on the highway. The attractions of greater fuel economy have been diminished due to low gasoline prices, which have recently reached a 4-year low.
The gamble might not pay off unless global oil prices rise once more, but those with environmental concerns will presumably be pleased by such a move from a titan of the auto industry.