Ford’s F-150: the high-stakes relaunch of America’s favourite truck

The Cotton family has owned a Ford dealership in suburban Chicago for three generations. Their best-seller is the carmaker's best seller, and the best-selling vehicle in the US: the Ford F-150. The pick-up is the "bread and butter" of the dealership, said owner Pam Cotton Conn.

Her father started selling the truck when he opened the dealership in 1974. It shows up at construction sites, and in parking lots outside restaurants. "It feels like the backbone of our country," she said. "I don't think there's anything more American than a Ford F-150."

Ford will next week unveil a redesign of a vehicle that has been the most popular in the US for more than four decades and -- with the company's debt growing and Wall Street getting impatient with persistently disappointing results -- it cannot afford anything besides a seamless launch. As well as being an icon of US car manufacturing, the F-150 is one of Ford's most profitable vehicles, providing the financial firepower for other projects at the company, such as autonomous vehicle efforts like Argo AI. The F-series comprised 29 per cent of US light truck sales in 2019, ahead of the Ram pick-up from Fiat Chrysler Automobiles and Chevrolet Silverado from General Motors, which had 20 and 18 per cent of the market, respectively.

(C) Ford

The F-series debuted in 1948, using the expertise Ford developed making heavy duty trucks for the US military during the second world war.

The first buyers were farmers, manufacturers and small businesses Ford will be revealing the truck's first big update since 2015 and hinting at an even bigger one to come in mid-2022, when it plans an all-electric F-150. Hot on its heels, in July, Ford will be rolling out another important product, the Bronco, which is meant to challenge Jeep in the off-road category and generate buzz to lure buyers to showrooms.

Both vehicles will be headed to dealerships later in the year. The launches are tricky since Ford is trying to increase production after Covid-19 shuttered factories worldwide, and the company has yet to realise benefits from restructuring that began in 2018. Jim Hackett, who took the wheel as chief executive three years ago, is cutting jobs and closing factories in Europe, and has dropped all car models in North America except for the Mustang to focus on higher-margin trucks and sport utility vehicles.

With £38bn in debt, Ford's vehicle sales are critical to restoring the balance sheet. Yet the company is haunted by last year's launch of the 2020 Ford Explorer SUV, where quality problems led to diminished sales. Analysts agree Ford has no leeway for a repeat of recent history.

"F-150 alone will sell over 600,000 units a year," said David Whiston, an analyst at Morningstar. "It's too big to mess up. Its profits drive everything else going on at Ford." He added: "Management took a black eye on credibility last year with problems on the Explorer launch . . .

If they mess up another high-profile launch, it won't look good."

Ford’s F-150: the high-stakes relaunch of America’s favourite truck(C) Ford

More than half of workers in trades like oil and gas, highway construction and waste management drive an F-series truck, according to Ford. The company introduced the F-150 in 1975 Ford sank £1bn last year into upgrading the Chicago assembly plant where the Explorer is built, but the upheaval resulted in quality problems with the SUV, including faulty seats, loose wiring harnesses and malfunctioning digital displays.

The vehicles had to be shipped to a plant more than four hours away in Michigan for repair. Ultimately, dealers had fewer Explorers to sell. "Losing that level of volume last year with the launch fed through the company's financials throughout the entire year," said Steve Brown, a Fitch Ratings analyst.

Joe Hinrichs, the president of Ford's global automotive business and de facto head of operations, retired in March. Many analysts and investors saw his departure as tied to the botched launch, although Mr Hackett denied it. If the Explorer is important to Ford, the F-150 is critical. The F-series debuted in 1948 with "Bonus Built" trucks, so dubbed because the company claimed they were built to last longer and offered better value for money.

The carmaker used the expertise it developed making heavy duty trucks for the US military during the second world war to manufacture its first truck for consumers that did not use a car platform. The first buyers were farmers, manufacturers and small businesses, but by the 1950s more drivers were buying them for personal use.

Ford’s F-150: the high-stakes relaunch of America’s favourite truck(C) Ford

Ford made rear anti-lock brakes standard in 1987, a first for a pick-up truck, and added a driver's side airbag in 1994 Ford last broke out the numbers for its trucks and van business in 2017, when it brought in £72bn in revenue with a 14 per cent earnings before interest and taxes margin, "which is far above the low- to mid-single digit margin most mass market automakers do", Mr Whiston at Morningstar said.

Ford cannot afford to have launch glitches or poor quality lead to market share gains for established rivals like General Motors or Fiat Chrysler, or newcomers like Tesla, Rivian and Nikola. Investors have grown impatient with Mr Hackett. The stock has sunk 40 per cent since he took the top job and the company lost its investment-grade credit rating this March.

Mr Whiston said in a note that the promotion of Jim Farley to chief operating officer in February "may be a set-up for Hackett to gracefully retire sometime by the end of 2021". Mr Farley contrasted the upcoming F-150 launch with the Explorer's at an investor conference earlier this month, pointing out there was no factory revamp happening this time. He also said the company had staggered the launches at the two plants that will make the truck -- Dearborn, Michigan, and Kansas City, Missouri -- and staggered the introduction of a hybrid variation, to reduce complexity.

While the factory shutdown has delayed the launch's timing, Ford still plans to start selling the truck this autumn.

"We're really on track," Mr Farley said.

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