February 4, 2015 / 11:49 AM / 3 years ago

Ford CEO worries cars may get commoditized like mobile handsets

BOCHUM, Germany (Reuters) - Ford Motor Co Chief Executive Mark Fields said carmakers faced the challenge of avoiding becoming dependent on someone else’s business model as companies from new industries increasingly enter the auto trade.

Mark Fields, CEO of Ford Motor Co., speaks at his company's keynote at the International Consumer Electronics show (CES) in Las Vegas, Nevada January 6, 2015. REUTERS/Rick Wilking

“There are others who we never thought five years ago would be competitors for us,” Fields said on Wednesday, stopping short of naming which companies were emerging as sector rivals. Software maker Google recently unveiled an autonomous vehicle.

“Guess what, they are looking at our industry, not taking anything for granted, they are questioning tradition and they are knocking down walls. I want to make sure Ford doesn’t end up like the handset business,” Fields told an automotive conference in Bochum. He added that most mobile phone makers had become reliant on the business model of telecom providers.

He did not elaborate on his point. But as cars evolve technologically and become more connected to smartphones and similar devices, opportunities for new business models - such as car sharing - are emerging. These put less emphasis on owning a particular brand of car and opens up the industry to new competitors who rent out fleets of cars in large cities, charging users a fee for time spent in a car.

Ford must stay on top of innovations to remain competitive, Fields emphasized. “There is always that pull to take things for granted. And to say that is the tradition. Our opportunity is to take those blinders off,” he said.

Separately, Fields reiterated that Ford was adjusting output to lower demand in Russia. “Russia will continue to be a drag on our earnings,” he said. This, combined with higher pension costs, were the main reasons for Ford’s losses in Europe.

Ford was working together with its local partners in Russia to mitigate the fallout from the crisis.

“We are making sure production is matched to demand,” Fields told Reuters on the sidelines of the conference. “We are making sure we are making appropriate cuts to overhead costs, but continuing to serve the market.”

Reporting by Edward Taylor; Editing by Mark Heinrich

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