Ford Motor Company (F): Why The Automaker Has to Bring Back the Ranger

I consider management to be the biggest factor when choosing which companies to invest in. The best products in the world will fail if the company is run by idiots. Ford Motor Company (NYSE:F) has great management, but its decision to stop selling the Ranger in North America is a mistake. Trucks bring in the majority of profits for Ford and General Motors Company (NYSE:GM), making it the most important segment to the Detroit companies. It’s a segment Ford has long dominated, and killing the Ranger gives its rivals – like the Toyota Motor Corporation (ADR) (NYSE:TM) Tacoma – a chance to grow revenues. So far management has stuck to their guns and the Ranger is only available overseas, but I strongly believe Ford Motor Company (NYSE:F)will change that – maybe as soon as this year.

You can look, but not touch. Meet the most impressive truck you can’t have.

Photo source: Ford Motor Company (NYSE:F)

Downsizing
In the U.S. market the trend is vehicle downsizing, as pointed out in a survey by J.D. Power. They recorded that 27% of consumers purchased a smaller vehicle than their previous ride. Following that logic, we could potentially see a future rebound in the midsize truck segment, which has been in decline for years. Killing the Ranger eliminates the midsize pickup truck option for Ford’s loyal customers and that’s costing the company money.

Efficiency
Some argued that Ford Motor Company (NYSE:F)’s trimming of platforms to create a leaner operating structure is why the Ranger was killed. That couldn’t be further from the truth. The Ranger is sold in 180 countries and will remain a core platform down the road. It’s become a hot commodity in Australia and has a chance to be Ford’s No. 1 seller in the country this year. It’s also gaining popularity in parts of Asia and looks to play a role as that region’s sales explode.

Competition
Ford defended its move by saying loyal customers would simply step up to the F-150. That was a bad assumption – as the Ranger made its market exit the market share of the Tacoma jumped 16% in 2012.

The fact is that not everyone needs or wants an F-150. For some it’s just too big to be a viable option, or too expensive. There is the crowd that uses these trucks as tools for work; those consumers will always buy the large pickup. That said, there’s a large crowd of people like myself who would like to own a smaller truck for the few times I need to haul something – while still having a viable ride in the city.

Currently the Toyota Tacoma and Nissan Motor Co., Ltd. (ADR) (PINK:NSANY) Frontier are the only options for us, but GM confirmed that a redesigned Chevrolet Colorado will resurface later this year. When that happens, expect the Colorado to quickly take the sales lead in the segment and follow it up by sticking its tongue out at rival Ford. I then expect Ford to hastily set up a press release stating plans to bring the Ranger back to the U.S. market – maybe as soon as next year.