Ford Blue President Kumar Galhotra spoke to retirees recently about the Ford+ transformation and Ford Blue’s strategic priorities.
“That last two years feel like 10, given the COVID crisis and the following chip shortage,” Galhotra said, addressing a group of Ford Retired Engineering Executives (FREE). “It’s been a period in our company’s history that I’ve never seen before in my 33 years. And on top of that we’re going through a comprehensive restructuring of the company. It’s been a really interesting and challenging time.”
Galhotra described the mission of Ford Blue, Ford Model e, Ford Pro and Lincoln:
- Ford Blue – To inspire customers to pursue their dreams and passions in life with iconic Ford vehicles and experiences, and serve as the engine that supports and powers our future
- Ford Model e – To delight customers with truly incredible electric and connected vehicles and services and build the future as our center of innovation and growth
- Ford Pro – To accelerate productivity and sustainability for commercial customers with a trusted platform of connected vehicles, software and services
- Lincoln – To create effortless luxury mobility experiences built around must-have products, services and always-on experiences that enhance our clients’ wellbeing
Galhotra said Ford Blue and Ford Model e are designed to work together.
“If we had completely separated Ford Blue and Model e, it would just have been an unnecessary duplication,” he explained. “Ford Blue delivers our iconic internal combustion vehicles with world-class engineering, purchasing and manufacturing expertise that will also serve Model e. And Ford Model e delivers breakthrough electric vehicles with connected, always-on experiences powered by software that will benefit Ford Blue.”
He said Ford Pro presents a great opportunity for the company.
“Ford Pro has over 40% market share of U.S. class 1-7 commercial trucks and vans, with an even larger share in key work vocations, which is fantastic. But with the availability of connectivity and every vehicle having a modem we can do so much more for these customers,” said Galhotra. “We are now selling software and telematics services that can improve their productivity and uptime substantially.”
Galhotra said Lincoln has come a long way in the last five years.
“Lincoln now is all about China and North America. In China, the brand is so strong – it’s on par with Audi and BMW – and the market is bigger,” he said, noting that the volume in China this year will likely surpass North America. “A huge challenge in front of Lincoln is to electrify and electrify as quickly as possible.”
Galhotra went on to share 10 strategic priorities for Ford Blue: improving quality; reducing structural costs; delivering brand-defining customer experiences; doubling post-warranty loyalty; modernizing the distribution network; positioning Ford as a lifestyle brand; inventory reframing; complexity reduction; improving yield and revenue management; and achieving capital efficiency through increased use of product derivatives.
“Quality is a really big issue right now. We’ve had a lot of recalls on vehicles built since 2016,” he said. “Our warranty costs are significantly more than GM or others. And besides the cost, it’s such an inconvenience for the customers.”
According to the 2022 J.D. Power Initial Quality Study (IQS), which measures quality at three months in service, Ford moved up in rank among other automakers from 14th place in 2021 to 10th place in 2022, and Lincoln moved up from 15th place to tie for 10th place. But Galhotra said it’s not enough.
“Think of all the competitors above us, like Chevrolet, Cadillac and Dodge,” he said.
Attention to quality is vital, especially considering the strength of the Ford Blue portfolio, said Galhotra.
“In my 33 years, we have not had the amazing product portfolio that we have today,” he said. “Explorer and Expedition are doing very well. Ranger doesn’t get a lot of credit, but I would argue that it’s the second or third most profitable vehicle in the company. It’s doing phenomenally well around the world.”
Galhotra said there will be exciting derivatives of existing products, such as Expedition Timberline and Stealth, Explorer Timberline and Bronco Raptor.
“There is a lot of growth opportunity,” he said, noting that the Ford Blue team is working hard to break constraints on popular products like Maverick, Bronco, Super Duty and Transit.
Galhotra said the team is aware that gas vehicle volumes may go down in five or six years when the company is selling 2 million battery electric vehicles.
“So, the team has got this tension. We’re doing both. We’re trying to capitalize on the success, and buy ourselves optionality,” he said. “If we continue to grow the Ford Blue business, which we intend to do, it would be foolish to ramp those vehicles down any sooner than we need to. So, it’s a very interesting time in the company right now, given that dynamic and that transition.”