Jim Farley: No, you hit on it. And I’m glad we’re getting into some of the strategies. I mean I would think of China business similar to what we’ve done in South America and IMG. Small but profitable, focused. We’ve been in the past in China kind of small but focused on everything. And Lincoln and our commercial with JMC is very profitable and an important business, but they have to make the EV transition. And I don’t think you can be globally successful in the EV business if you don’t compete with the Chinese. I mean they’re going to come to Europe — they’re already there. They’re going to come to the U.S. a powerhouse. Geely, there’s so many others. And so we believe China is very strategically important for us. But to win there, we have to make those businesses transition profitably to EV, but I would think of it as kind of small and focused, maybe even more than past.
And Europe is definitely — we have a great CV business, commercial vehicle business that now is getting electrified. So we’re like making that transition now. We have a new Ranger, the electric version of one-ton. Transit, and all of them, we have a new manufacturing site in Romania that’s really scaling up now in commercial. So we have a really strong business. And the decision really is how much do we need how much — how many engineers, how many people do we need in Europe and how big of a profile do we need in passenger cars? That’s the decision. We’ve already electrified Cologne and that’s really the decision. It’s not the right time to talk about where we’re going to go, but we know exactly our strength in Europe, and we know what we need to do.
So — and you won’t have to wait long to hear from us on these things.
Operator: The next question comes from Rod Lache from Wolfe Research. Please go ahead.
Rod Lache: I think, John, you said in response to Adam’s question that variable costs would come down by at least $1 billion. But at the same time, you’re acknowledging that pricing could easily be more than $1 billion negative for $100 billion North American business with 5 points of average transaction price decline. Can you maybe give us a little bit more insight into that? And can you provide a few specific KPIs that would demonstrate progress on structural costs they were up another $2 billion in 2022?
John Lawler: Yes. So on the pricing, we do see the broad market coming in at about transaction prices falling about 5%. Some of that’s going to come out of the dealer margins, of course. It’s not all going to come from us. But we also have upside, Rod, with some of the launch of the new vehicles. We won’t see as much of a price compression there. So, we see pricing net-net for us next year being about flattish. And so don’t think about it as we’re working through ’23 as being a negative $1 billion. And then I would say that when it comes to the cost reductions, I think what we’ve got to start showing is, one, that we’re getting leverage out of the business if we’re growing the business that our cost of goods sold is growing at a much slower pace.
