It was overshadowed a bit by other news, but Ford Motor (NYSE: F) announced something important recently: It's giving its commercial vehicle lineup a big overhaul.
Commercial trucks and vans might not seem as exciting to investors as, say, electric cars. After all, where's the growth? But investors should take note here: Commercial vehicles are one of the "profit pillars" that will help Ford fund new high-tech lines of business, including big moves into electric vehicles and self-driving.
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In other words, commercial vehicles are a key part of Ford's plan to get to that exciting future. Ford is spending money to maintain its strong competitive position and increase the profitability of its trucks, and that's not boring at all. Let's take a closer look.
A slew of new profit-boosting commercial vehicles
Here's the laundry list of new products, changes, and updates that Ford has announced around its commercial-vehicle lineup since the beginning of March:
- An all-new F-600 Super Duty. Despite the name, this isn't a pickup truck. It's a so-called "chassis cab," a medium-duty truck that can be turned into a tow truck or a snowplow or any number of other vehicles. (The truck in the photo above is an example: Ford provides the "chassis" and the "cab" -- the engine, the underpinnings, and the front section where the humans sit -- and an aftermarket supplier adds the rest.) The F-600 fills a blank spot in Ford's lineup: It has the capabilities of a medium-duty "Class 6" truck, but it's sized like a "Class 5" model -- more like a big pickup. That makes it easier to drive and park, and cheaper to operate.
- A revamped Transit van, with new driver-assist technologies that make it easier to drive, a new all-wheel-drive option, and more fuel-efficient drivetrains that make it less expensive to operate over its life cycle. That's all important, because the Transit is a big seller and a big profit generator. It's Ford's global commercial-van stalwart, used by plumbers and delivery services and other commercial customers all over the world. The automaker is making the investments necessary to keep it competitive with rivals from German heavyweight Daimler AG and others.
- Ford's biggest trucks, the F-650 and F-750 Medium Duty models, get a new gasoline engine option (a new 7.3-liter V8) and a revamped dashboard and stereo system intended to help the bigger trucks feel familiar to new drivers who might have experience with Ford's pickups. Ford points out that the labor market for medium-duty truck drivers in the U.S. is tight right now; these changes seem simple, but they'll help Ford's customers get new drivers up to speed more quickly.
- Ford's F-53 and F-59 "stripped chassis" models, which serve as the basis of vehicles like motor homes and walk-in vans, also get new steering systems and instrument clusters intended to make them easier to drive.
- Ford's ancient E-Series van, which is still offered in a "cutaway" version used for vehicles like shuttle buses and ambulances, also gets the updated instrument cluster and radios, and the new 7.3-liter engine is now an option here as well.
- Last but not least, Ford announced that it will build the next-generation version of its small Transit Connect vans at the Mexico factory that currently builds the Ford Fusion and Lincoln MKZ sedans. The Transit Connect is a popular urban commercial vehicle. Ford also offers a version with seats and an upgraded interior as an alternative to minivans. Right now, Transit Connects sold in the U.S. are imported from Europe; building the vans in Mexico should reduce the costs of those sold here while giving Ford's dealers more vans to sell.
About two years ago, former CEO Mark Fields explained that Ford sees commercial vehicles as one of its four "profit pillars," along with pickups, SUVs, and performance vehicles. These are all parts of the vehicle market where the company has a significant presence and generates good profits. At the time, Fields said that Ford would invest in all of them to boost profits, which in turn would be used to finance the automaker's moves into electric vehicles, self-driving, and shared mobility.
Fields' successor as CEO, Jim Hackett, has changed many things at Ford since taking over in May 2017, but he hasn't changed that part of Fields' strategy. This series of announcements might not sound sexy, but they're an important component of Ford's plan to get to a profitable high-tech future -- by boosting sales and staying abreast of rivals in the here and now.
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