Ford and Stellantis Make Brilliant Moves to Gain Market Share. Is It Too Little, Too Late?

Maybe you've already heard, but the U.S. new-vehicle market is heading toward a crisis, as new-vehicle prices continue to rise and now sit around $50,000. Total automotive debt has reached an all-time high of $1.68 trillion, and almost 25% of buyers are taking loan terms of 84 months or longer. Nearly 30% of trade-in vehicles carry negative equity, which is often rolled into new high-interest vehicle loans, sending average monthly payments soaring.

That has left the more affordable price range drastically underserved amid pent-up demand, which is why Ford Motor Company's (NYSE: F) and Stellantis' (NYSE: STLA) strategic moves to address this affordability crisis are brilliant.

What's the strategy?

While it will remain hugely important for Ford and Stellantis to continue producing high-margin SUVs and trucks, more affordable models could quickly gain traction and become high-volume sellers. Both Ford and Stellantis could use a jolt to their market share, and additional volume will only improve factory utilization, which supports margins more broadly, even if these vehicle sales are less lucrative.

More affordable vehicle products should complement the high-margin SUV and truck business. Image source: Ford Motor Company.

Less than a year after Ford announced it was discontinuing its entry-level Escape, to the dismay of many dealerships wondering what its replacement would be, Ford is now preparing to tackle the growing affordability crisis. Recently, at a private meeting in Las Vegas, according to Automotive News, Ford showed early designs of a small crossover that is expected to start around $25,000. The more affordable model will have multiple powertrains, gasoline and hybrid, and is expected to go on sale in 2029.

That upcoming model would instantly become Ford's most affordable vehicle, checking in noticeably cheaper than its $29,000 Maverick pickup and its recently named $30,000 electric pickup due in 2027, the Fathom.

Further strategic details are few and far between; Ford doesn't give too much information about future products, but the automaker also showed a prototype of a four-door Mustang with a promise of a price tag under $40,000. Ford's Fathom will be the first vehicle to use the new Universal EV Platform. Eventually, five vehicles will be built on that platform, potentially opening the door to more profitable and more affordable options.

Ford is definitely taking steps to develop and deliver multiple affordable options that could boost its factory utilization and scoop up market share in an underserved price range, but Stellantis is also pursuing this strategy with significant investment.

The turnaround plan

Stellantis has struggled in recent years, and under former leadership, the company hiked prices while cutting costs by slashing features, leaving core consumers unimpressed and dealerships filled with excess and unsold inventory. Under new CEO Antonio Filosa, Stellantis is prioritizing volume, better pricing, and improved factory utilization over short-term profits.

A big part of that, and of its global $70 billion turnaround strategy, is pushing nine new vehicle models in its North America profit engine that will be priced under $40,000; those vehicles will launch by 2030. Two vehicles will be distinct crossovers priced under $30,000.

A slew of high-volume, more affordable vehicles will help Stellantis in a couple of ways. It will help it achieve its target of 80% factory utilization in North America, which will go hand in hand with its ability to achieve North America EBIT margins between 8%-10% by the end of this decade -- a huge move considering its recent unprofitability in 2025. Further, Stellantis' sell-off over the past three years allows investors to buy low before its turnaround gains traction.

Will the strategies work?

Stellantis is making a massive push to deliver a long list of products to more affordable price ranges, and it stands to gain much volume doing so, but it does hinge on one aspect: Is the quality there? Stellantis, and to a lesser degree Ford, still have to convince consumers these more affordable vehicles still offer solid features and high quality, or the otherwise brilliant moves might not gain enough traction.

It's also fair to wonder if by the time these more affordable vehicles are launched, they'll be the early birds to get the worm or not. Either way, for investors, Ford and Stellantis racing product to an underserved and potentially high-volume market is a great move and will improve factory utilization and almost certainly market share.

Daniel Miller has positions in Ford Motor Company. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.