In April 2018, Ford Motor Company made a decision about their opportunity costs moving forward and announced they will focus future production on SUVs, pickup trucks, and commercial vehicles rather than passenger cars. This decision was driven by a desire to make the company more profitable in light of:
1. Shifting consumer preferences: Ford recognized that consumer demand was shifting towards larger vehicles such as SUVs and trucks, while demand for traditional passenger cars was declining. By focusing on the vehicles that customers wanted, Ford aimed to maximize sales and profitability.
2. Higher profit margins: SUVs, pickup trucks, and commercial vehicles generally have higher profit margins compared to passenger cars. Ford saw an opportunity to increase its profitability by prioritizing production in these segments.
3. Cost efficiency: By streamlining production and focusing on a smaller range of vehicle types, Ford aimed to achieve economies of scale and reduce manufacturing complexity. This would result in cost savings and improved operational efficiency.
4. Competitor analysis: Ford closely monitored its competitors' strategies and observed that many other automakers were also shifting their focus towards SUVs and trucks. Ford wanted to remain competitive and ensure its product offerings aligned with market trends.
5. Investment in new technologies: Ford recognized the need to invest in emerging technologies such as electric and autonomous vehicles. By reallocating resources from passenger cars to SUVs, trucks, and commercial vehicles, the company could allocate more funds towards research and development in these areas.
Overall, Ford's decision to prioritize SUVs, pickup trucks, and commercial vehicles was motivated by a desire to cater to changing consumer preferences, increase profitability, streamline production, stay competitive, and invest in future technologies.