SWOT Analysis of Ford 2021


NameFord Motor Company (NYSE:F)
IndustryAutomotive 
Founded1903 
HeadofficeDearborn, Michigan, USA
CEOJim Duncan Farley 
Revenues$127.1 Billion, 2020
Net loss– $1.279 Billion, 2020
CompetitorsGeneral Motors, Toyota, Tesla, DaimlerChrysler, Honda, Volkswagen


Company overview:

Ford Motor Company is an automobile company that manufactures and markets passenger cars, SUVs, Ford trucks, utility vehicles, and Lincoln luxury vehicles. Henry Ford founded the company in 1903 and its head office is in Dearborn, Michigan, USA. In 2020, the annual revenues were $127 Billion, a loss of -$1.279 Billion and a market capitalization of $56.25 Billion. The company brand value is $13.6 Billion and ranked 33th on the 100 most valuable brands list (Bloomberg, 2021). Let’s now go over the SWOT Analysis of the company.



Ford Strengths 2021:

  • Strong brand image.

    With 118 years of heritage, Ford has a strong brand image and recognition in the automotive industry. In 2021, Ford is ranked 35th among the 100 most powerful brands and ranked 21th among U.S Fortune 500 (SyncForce, 2021). 
  • 2nd largest US market share.

    Carlier (2021) evaluated that Ford has a 14% market share in the US automobile industry, second to General Motors (GM). The company is ranked 2nd largest automotive player in the US and 4th largest automobile company in the world. 
  • $11 Billion investment in electric vehicles.

    Cook (2021) pointed that Ford motor would make an investment of $11 Billion for electric cars and trucks by building three factories in the US in the next four years. The investment would allow Ford to design and manufacture more than one million electric vehicles per annum.
  • 2021 – Green car and truck awards.

    Green Car Journal 2021 has award Ford F-150 and Ford Mustang Mach-E as ‘Green Truck and Green Car’ of 2020. The two green brands give consumers new choices and possibilities in the passenger automotive segment (Ford Motor, 2020). 
  • Huge certified dealership network.

    According to Ford (2021), the company sells certified dealership franchisees for its operations and distribution of automobiles. In 2021, the company has a 10,718 dealers network in the US and globally.


Ford Weaknesses 2021:

  • Failure in the Indian market.

    Ford has operating losses of $2 billion in India and consequently, stopped its operations and discontinued multiple brands including Aspire, Figo, Eco sports, and Freestyle. Mishra (2021) pointed out that Ford’s global operations lack focus on productivity, performance, and understanding of customers’ requirements. 
  • 2.5 Million Vehicles recalls in 2020.

    According to Bloomberg (2021), Ford has nearly 2.5 million vehicles recalled including Ford F-150, Ford Explorer, and Lincoln models in 2020. The company has a history of quality troubles and recalling multiple models each year.
     
  • Dependence on US and European markets.

    With a focus on the US and European markets, Ford limits its revenues and profits. The saturated US and Europe markets have fewer opportunities for customer base and sales expansion. According to experts, emerging markets will provide the majority of future car sales (McKinsey & Co, 2021). 
  • Lincoln lacks brand appeal.

    Santos (2021) stated that Ford luxury brand Lincoln has a poor brand image and reputation. According to experts, Lincoln cars lack quality, appeal and it has rebadged old ford cars in the luxury sedan market. 

Ford Opportunities 2021:

  • New alliance and partnerships.

    Traditionally, the car industry had pressure for fuel efficiency, reduce costs and emissions. However, new entrants such as Google, Apple, and Tesla force traditional car manufactures to compete on new priorities. The new dimensions are driverless cars, artificial intelligence, and robotic ground vehicles. Thus, the alliance, partnerships, and consolidation in the industry present new business and technology opportunities for Ford (Burcicki, 2020).   

  • Virtual showrooms.

    kvander (2021) elaborated that the augmented and virtual reality presents new opportunities for automobile retail processes. The virtual showroom eliminates the need for the dealership and facilitates consumer decision-making through customizing cars, being part of the production process, and explore new models.

  • Expand customer base.

    Ford has an opportunity to expand its customer base through internationalization. The product development in emerging markets would allow the company to grow its customer base in new markets. Moreover, the autonomous car market has a project value of $62 billion with a CAGR of 23% which offers future growth potential for Ford (Wired, 2021). 

  • Digital marketing.

    Whitney (2021) discussed that the emergence of social media platforms such as TikTok, Instagram, Youtube, and Facebook present new marketing opportunities for Ford. The marketing through social media channels would allow Ford to expand its customer base, respond to competition, and increase customer engagement.   

Ford Threats 2021: 

  • Car-chip shortages.

    Henry (2021) analyzed that the semiconductor shortages threaten the revenues of the company. Being a strategic component for the car manufacturer, the semiconductor shortages halt the production and reduce revenues until 2023. The data shows that new vehicle retail sales dropped 25% in September 2021 due to semiconductor shortages (YahooFinance, 2021). 

  • New environment regulations.

    President Biden has pushed emission regulation from the Obama era and reinforced that half of the cars sold in the US by 2030 should be electric. Ford has strong criticism from the environmentalists for selling sport utility vehicles and gasoline-guzzling trucks. Ford needs to comply with environmental regulations and make environmental improvements (Shepardson, 2021). 

  • Commodity and energy prices volatility.

    Reuters (2021) pointed that a rapid increase in crude oil prices and iron ore demand has increased the cost of input for the company. The unexpected price movement in oil and steel price present new economic challenges f and is likely to affect the revenues and raw material costs of Ford. 

  • Downward sale trend in 2020:

    According to Statista, the automotive industry has experienced a significant sales decline in Europe, China, and the US as shown in the diagram below. Overall, there is a 6% decline in sales in China, 15% in the US, and 24% in Europe in 2020. 


Ford SWOT Analysis Conclusion:

Ford is a leading automobile company in the US with a strong financial position, brand equity, and market dominance. Ford faces economic, technological, and environmental challenges in changing the automobile paradigm. However, with an abundance of dynamic capabilities and market knowledge, Ford can maintain its market position through product innovation and leadership.

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References:

  1. Bloomberg (2021). Ford Motor Co. Bloomberg.
  2. Bloomberg (2021). Ford Recalls 2.5 Million Cars and Trucks. Bloomberg.
  3. Burcicki, Doug (2020). Automotive Industry On Course To Disruption And Evolution.
  4. Carlier, Mathilde (2021). Ford’s vehicle sales market share in the U.S. 2015-2020.
  5. Cook, Rebecca (2021). Ford plans $11bn electric pick-up truck investment with battery makers. Financial Times. 
  6. Ford (2021) Ford Motor Company — 2020 Annual Report. Ford Motors Company.
  7. Ford (2020). Ford wins 2021 green car and truck of the year awards with all-electric mustang mach-e and all-new f-150. Ford Motors Company.
  8. Henry, Jim (2021). Computer Chip Shortage Hurts September Auto Sales, Drives Many Shoppers To The Sidelines.
  9. kvander (2021). The Virtual Car Showroom is Now A Reality.
  10. McKinsey & Co (2021). Emerging Markets. Mickensey. 
  11. Mishra, Simi (2021.) How Ford’s dated product line-up, low demand left it uncompetitive and led to its India exit.
  12. Reuters (2021). U.S. manufacturers grapple with steel shortages, soaring prices. Reuters.
  13. Santos, Joe (2021). Lincoln Blackwood was a Unique and Utter Failure.
  14. Shepardson, David (2021). Environmental groups pan Biden planned vehicle emissions rules rewrite.
  15. SyncForce (2021.  Ford — Rankings per brand.
  16. Whitney, Margot (2021.  Automotive Marketing: 9 Strategies to Drive More Sales.
  17. Wired (2021). The WIRED Guide to Self-Driving Cars.
  18. YahooFinance (2021) U.S. new vehicle retail sales set to fall 25% in Sept – data.


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