November’s sales figures are out, and FoMoCo’s treading unfamiliar waters. For the first time since, well, ever, Dearborn’s darlings find themselves off the sales podium. The General, Toyota and both parts of the DCX German-American hybrid surpassed last year’s sales totals. Despite pre-Christmas gains north of the border, Ford’s U.S. sales sank nearly 10%. Their declining market share dropped them into fourth place by total sales volume. “This is an area, frankly, of disappointment,” George Pipas, Sales Analysis Manager for Four’d pronounced. “We had our sights set higher.”
On the heels of November’s results, CEO Alan Mulally’s mob announced that an additional 15k units aren’t going to see their way off of Ford’s leveraged lines. If the slowdown was due to the void left by 38k clock-punchers as they punched out permanently, hey, no problem. But these cuts were made this month; before Ford’s assembly liners leave the building. To justify the increased production reduction, Glass House representatives reiterated their Chrysler anti-matter approach: match supply to demand. Or: we ain't gonna go out and "chase sales simply to pump up [the] volume."
Yes, well, a dozen more FoMoCo models equipped with an additional thousand in Mulally minted bonus bucks beg to differ. In an effort to, uh, chase sales and pump up the volume, Dearborn is using the only sales strategy with a hope in Hell of moving the moribund metal. Buyers can now score up to $7k in cash rebates on nineteen different models. Ford’s hoping bribed consumers will blow the dust off the over 90-day inventory and end Ford’s decade long market decline.
There are plenty of reasons why the situation sucks. Now that the long forgotten (by Ford designers) Taurus has met its matador, fleet sales no longer offer a buffer against retail implosion. What’s more, sales of the profitable Explorer have rolled-over and died. November was the worst month for the former mainstay since the SUV’s introduction in 1990– down some 55k units from 2005. And to be blunt, the Edge is arriving a day (or 365) late and a dollar short.
Even with all that leveraged capital keeping the company coffers full (for now), Dearborn’s December needs to show some positive market share movement– even if the net result is a negative bottom line. Banc of America analyst Ronald Tadross and friends indicate that every point of market share Ford loses behind the couch sucks a billion bucks in operating profits away from Ford’s ‘09 return to profitability target.
According to small Ron, “Anybody can close some plants and fire some people… Right-sizing is almost self-defeating if you don’t fix the business.” Mulally’s movements, while dramatic and sweeping, have not lead to the Glass House re-org that is badly needed to meet its profit obligations. Analysts call for public deadlines for global product integration, transparency regarding reducing purchasing costs, and an abandonment of incentive based sales (that render resale values lower than Ford’s S&P rating). As if.
One item on the money men's to-do list that may actually occur: the long awaited deconstruction of Ford’s overseas imbroglio: the Premium Automotive Group (PAG). Recently released Wall Street whiz kid Kenneth Leet is rumored to still be on top of the sale of Bond’s favorite Q-toy provider (his pockets awaiting relining). So much for Aston Martin. But what of Jaguar? Hidden within the legalese of FoMoCo’s disclosure: a clause that lets the cat out of the PAG.
In fact, Jaguar and Land Rover were one of the few Ford “assets” exempted from their recent collateral catchall (which includes their logo and Bill’s bronze desk sign). In Jaguar's case, this could be due to the fact that mortgaging nothing generally renders nothing. Still, flogging the feline to anyone willing to take it off Ford's hands makes a lot of cents. As the Brits say, when you’re in a hole, stop digging. Besides, a Jaguar sell-off would send a clear and welcome signal to skeptical observers (i.e. Ford stockholders) that the automaker is finally serious about getting its house in order.
The sum of all fears seems to be $4b. Although that's a bit low for a multinational automaker's mission critical operating liquidity, Ford is bound and determined to keep its head above this level. To keep on truckin’, Dearborn is quite literally risking it all. Ford’s beancounters have increased the company’s collateralized credit facility from $18b to near as dammit $23b. At the same time, the year’s largest bulk of stock-bond hybrids have hit the trading room floor.
While these bold moves have bought The Blue Oval Boyz a bit more time, it doesn’t do anything to change the fundamental problems challenges besetting Henry Ford’s legacy: products, brands, dealers and unions. Especially product. If Ford doesn’t find some automotive magic bullets, if it can’t build some tangible, tantalizing new toys in double quick time, the company’s new-found leveraged life could prove to be nothing more than borrowed time.
Ouch! That’s gonna leave a mark!
“Anybody can close some plants and fire some people… Right-sizing is almost self-defeating if you don’t fix the business.”
At least it reduces the bleeding. It also aligns supply with reality. It’s not like Ford is creating scarcity for their products: there’s still tons of stock, lots of cars being build and everyone who wants one will get one. Unfortunately, there are not many that want one. Or at least they would rather want the car from another manufacturer.
Fix the business? that’s gonna be hard. You need better products, faster model refresh, flexible manufacturing, absolutely no rental sale, better resale value, better desirability.
Good luck!
Hello! I fully realize that the following statement shows I have a remarkable grasp of the obvious, but…
GM–Ford–DCX– NOBODY WANTS YOUR CARS!!!
Sure there are exceptions, Corvette comes to mind, but for the most part, the Big 2.5 is like Denny’s Restaurant. as David Brenner one said..”Nobody GOES to Denny’s, they END UP at Denny’s”
And yes, people buy the domestics largely because thay always have(until the offspring went import), maybe a misguided sense of patriotism or they thought they got the deal of the decade.
Yes, their trucks are excellent, but by and large, their passenger cars are for the geriatric set.
Reading all the DW articles, I have come to the conclusion that for the Big 2.5, the only way out is…OUT!!!
Before you all pile on old Ter’ with the domestic producers’ sales stats (I’m looking at you Kaisen), understand his basic points: the Big 2.5 are preaching to the converted, they’re selling on price and patriotism and they need to re-think their business model.
Or something like that.
As the unoffocial automotive historian around here, I can tell you that Ford was in 3rd place behind General Motors and Chrysler in 1947 (Ford, Mercury, Lincoln: 536,517 cars; Plymouth, Dodge, Chrysler, DeSoto: 831,710 cars), and 1948 (Ford, Mercury, Lincoln: 488,235 cars; Plymouth, Dodge, Chrysler, DeSoto: 884,880 cars). Interestingly, it was the virtually new (engines carried over) 1949 Ford which literally saved FoMoCo. What was that I heard from the back of the room, again? "PRODUCT PRODUCT PRODUCT", was it? In fact, Ford outsold Chevrolet in 1949, 1,118,308 to 1,010,013. However, overall FoMoCo was a distant second place, still, to GM. (GM: 2,104,834 cars, Ford, Mercury, Lincoln: 1,493,136 cars; Plymouth, Dodge, Chrysler, DeSoto: 996,511 cars; Chevrolet, Buick, Pontiac, Oldsmobile, Cadillac: 1,493,136 cars.) But even here, you can hear the distant sound of newly emboldened Ford executives saying "yeah, if ONLY we had another brand!" (For those not in the know, this did come about in the fall of 1957, when the 1958 EDSEL cars were introduced).
Ford’ biggest problem is horrible management – chasing customers that are very unlikely to buy their products and being completely politically correct in their advertising, hiring and promotion practices, while telling their current customers they no longer matter by letting the products they buy die of old age and neglect (Taurus, Ranger, Crown Vic, Grand Marquis, Town Car, Thunderbird, Cougar, Continental, Mark VIII, etc. – I’d like to see a total of what those models sold in 1996 vs 2006). Hard to believe how much sales they have walked away from just in those models.
Oh yeah, the Focus more recently as well.
Bad management leds to bad product, and bad middle management. I see little reason to be optimistic – they are still chasing people who will not buy a Ford.
Ford may have some decent product, it is just in the wrong place. All you really need to know about a dumb firm: Pay big bucks to feature a Mondeo in the opening of the new James Bond film, but make sure nobody knows what it is, and for goodness sake, don’t have any in America. Uhmurikuns won’t buy that sorta thang, tain’t a pickup. Sigh. So Glenn A, is the Edge the new ’49? Fusion? 500? Bueller? Somehow, I just don’t think so….
The current reality of 2.5 is looking a lot like a replay of the situation in the ’50’s and 60’s with Studebaker, Nash, Hudson, Kaiser, etc. In hindsight, none of them had the vision, resources, volume, talent or financing to survive against the big 3. The outcome was inevitable. I think in 20 years from now, we will likely be saying the same thing about the 2.5. Given their global reach, they (or their names) may not just dissappear overnight, but than Willys, Kaiser, and Ramblers lived on in other countries for years. We will read about Buicks being built in China 20 years from now and recall with nostalgia about when Buicks were still sold in the USA.
Ironically, Ford’s fall has been the fastest. As a former Californian, (and CA has been a very reliable predictor)it was easy to predict GM’s future problems: the only reason Chevy dealers existed there by the mid ’80’s was to sell trucks, Suburbans and Corvettes. Ford was still a viable car franchise there until they dropped the ball on their car lines by the early-mid 90’s and bet the farm on big SUV’s.
No. Ford should be ONE CAR. As in the new Mondeo, and built in America. Mustang should be it’s own marque. Mercury should be an updated Australian Ford Falcon for those who want rear drive, built in America. Escort (as in – “a person or vehicle accompanying another to give guidance or protection or to pay honor”) could be the small-car brand, kind of like Scion. Believe it or not, some less than well to do Americans still have fond memories of their Escorts.
Make maybe two Ford branded SUVs, instead of however many there are. Badge the crossover as a Mercury. Ditch the minivans as they can’t seem to get it right anyway.
Hit the high marks. Offer hybrid versions of everything for North America (diesels will NOT take off – too many people remember the GM diesel crap-heaps).
In other words, do the opposite of what most car companies are doing (with tons of different choices).
Product product product … hmmm, I keep hearing this over and over … could it actually mean something? GM, Ford, Chrysler are you paying attention?
And more to the point, product that people want to buy.
To go a bit off-topic, on the subject of Aston, I find it amusing that they got into an argument with MGM and Toyota over who would have the right for branding in Casino Royale. After a lot of desperation on Aston’s part, Ford got the gig (and blatantly made a note of it and sneered at Toyota in a recent press release). After all this time and effort, the end result? In the movie, all you see is a Mondeo for a few seconds (mind you, not even a pre-production prototype, just an exterior shell with air conditioning, but no real interior) and we see the famed Aston DBS, but only for a few minutes, and even then, all we see it do is mainly rollover a few times and get damaged. Personally, I don’t think that’s the best way to showcase a new product.
There is one piece of good sales news. Sales of the Ford Ranger are UP 64.6% this year in Canada.
How sad is that?
Source: National Post Fri Dec 8, 06 page FP1
Glenn A: I'm not so sure about the One Car Fits All philosophy, but FoMoCo NA is a bit, um, product heavy. I count 15 Fords, seven Lincolns, six Mercurys, eight Volvos, three Land Rovers, nine Mazdas, four Jags, and four Astons. That's 56 products in all. If you wanted to refresh them all every two years, stagger them out and you'd launch a refreshed model every two weeks or so– forever. Clearly, that ain't right. How about Ford builds the F150, Fusion and a small car; Lincoln makes one big ass luxury sedan, and Volvo sells (wait for it) an SUV? Sell/kill all the rest of the brands, and call it good. Nobody shares engines or showrooms. Zero overlap. Spend the money to make each vehicle the best there is. Offer mass customization. Variants are acceptable (wagons, hybrids, SVT, etc.). Could you capture Ford's old market share with this line-up. Doubtful. Could you capture enough market share to stay in business? Depends on your costs. Go have a word with the UAW on that score– after Chapter 11.
Woah Woah, put the cart back behind the horse. I realize everyone likes to jump on the bandwagon, but look at the situation realistically. The status quo seems to be “Big 3 will die because they make cars no one wants”
The reality is, it appears, by statistics, that the mojority of the world’s car market wants either a GM, Ford, or DCX vehicle. They sell a ton of cars and most of their product is great, by comparison. The problem, since we’re speculating, is that the trend nowadays is brand shopping. Since many customers have been burned by the traditional automakers here in North America, they turn to an alternative, who will eventually, will burn them aswell. So what happens when the mass market finally figures out that all cars, regardless of origin, are machines? Your guess is as good as mine…
Big 3 deathwatch coloumns are a little premature.
Interesting that Ford of Canada is doing somewhat better that the parent company.
There are many factors to this I suppose but I think some factors lend credence to the fewer nameplate/brands idea.
FoMoCoCan is running on the strength of: Focus, Fusion, Mustang, Ranger, Escape,F-150/250/350. Other lines like Five Hundred, Freestyle, Freestar, Explorer,Sport Trac, Expedition do dribs and drabs (larger SUV’s never caught on in Canada like they did in the US)
With the exception of the Grand Marquis, there is no Mercury up here.
Surprisingly, Lincoln is doing rather well at the moment and I wonder if some of that is old (and I mean old) Mercury business gravitating upwards.
So if Ford of Canada can have good year-over-year success with 50% of the lines and one franchise less… should there be a lesson here?
Different markets I know but there are lots of similarities too.
Woah Woah, put the cart back behind the horse. I realize everyone likes to jump on the bandwagon, but look at the situation realistically. The status quo seems to be “Big 3 will die because they make cars no one wants”
The reality is, it appears, by statistics, that the mojority of the world’s car market wants either a GM, Ford, or DCX vehicle. They sell a ton of cars and most of their product is great, by comparison. The problem, since we’re speculating, is that the trend nowadays is brand shopping. Since many customers have been burned by the traditional automakers here in North America, they turn to an alternative, who will eventually, will burn them aswell. So what happens when the mass market finally figures out that all cars, regardless of origin, are machines? Your guess is as good as mine…
Big 3 deathwatch coloumns are a little premature.
When all the Big 3 domestic makers continue to rack up big losses, burn through cash at an alarming rate, and continue seeing declines in worldwide marketshare without any signs of a slowdown or turnaround, it’s cause for concern don’t you think?
And it’s naive to think that China will be the silver lining that GM, Ford, and Chrysler have all been looking for. China, due to all the various joint ventures non-Chinese automakers must adhere to, can push out foreign competition at any point. It’s unlikely, but remains a possibility given China’s government.
Also, Toyota has set a large focus on China, and aims to be market leader there in a couple of years. Chinese analysts are saying the same thing. This is significant of course because generally the Chinese don’t have a very favourable opinion of the Japanese, so Toyota must definitely be doing something right in China to be making such kind of gains. They are already I believe either 3rd or 4th in terms of marketshare in China.
Glenn A: I agree that Mustang should be it’s own marque, although the obvious downside to this would be when Mustang decides it has to have an SUV in its lineup “to make the dealers happy.” The Mustang Explorer will be a rear-wheel drive (only), 5500 lb, 12mpg behemoth with a 400 HP Hurricane engine, leaf-spring rear suspension, live rear axle, and have the handling characteristics of a big rock sliding down a bobsled run; you’re just along for the ride.
Ford should not be one car, I think, but rather 3 cars (the German was posted here once before; it translated to “one sausage, three sizes”). The Mondeo (mid-sized, sporty(ish), affordable), a (redesigned) Escort (compact, 35-40 mpg, entry level), and the Crown Vic (old-school American land yacht, V8, RWD, rides like an 80mph couch). In addition, keep the Explorer, but do something with it; make it desirable again. Drop the Expedition and the Excursion.
If they simply must have a CUV, make it a variant of the Mondeo. In fact, variants are a good thing. Offer an Escort hatch and 4-door. Offer a Mondeo wagon. AND NO MINIVANS!
For the Mustang brand, steal whatever you can from Jag and Aston Martin before cutting them loose, even if it means breaking into their offices at night. Aston’s wonderfully refined engines would be a place to start.
Dump Mercury. No one cares about them, anyway.
With Lincoln, they have a decision to make, They could either:
1. Follow the sausage theory and offer something the LS (which was good, so they killed it) on the $30K end, a new Town Car on the high end ($55K or so), and something in the $40-45K range). Keep the Navigator. Kill evreything else. And no badge-engineering (platform sharing is OK and encouraged).
2. Become essentially a two-car brand, and offer the Town Car and the Navigator.
Either way, forget the “bling” trend that makes me want to scratch my eyes out; think “class, sophistication, classic style, luxury.” Ditch all offroad pretenses, even if your Navigator is built on a platform that can do it.
Hybrids should be offered where they make sense. An Escort hybrid is too expensive for that market, but Mondeo and Crown Vic, and the Lincolns would work (though I suspect the mileage in a hybrid Town Car would still reek, just not as bad). If you have to buy/license decent hybrid tech, do so.
I disagree with you about diesels, though. I say push them. Make it a point of telling the public that these aren’t the old dirty, smelly, GM craptastic diesels they remember from the 80’s (I’d like to mention, in passing, that my family had an early 80’s Cadillac Sedan deVille diesel, and ours was fantastic). There are a great many buyers now who are too young to remember the awful GM diesels; they are the future.
I’m not a truck guy, so I’ll leave those to someone who is.
And stop building/badge-engineering products because the dealers keep whining about wanting this or that. Keep focused, and don’t let your model portfolio get out of hand.
The problem Ford is in right now is not because they don’t have any good new products. It’s because the good products they had a few years ago were neglected, just as taxman100 listed. The Fusion/Milan are very good product right now, and their continually growing sales seem to reflect that.
Ford needs to follow the successful examples of Honda and Toyota and keep refining what they have. It’s not a quick fix, but it’s the way to get Ford off its Death Watch.
This focus needs to come from the top. The man at the top has to have the fortitude to make the hard choices that are good for the long run. Mr. Farago seems to think Ford might now have the right man to do it: “Ford’s new go-to guy seems to be doing an excellent job in both the courage and honesty departments.”
While brilliant new product is great, Toyota is doing so well because of the Camry, not the FJ cruiser.
And speaking of Toyota, engine overlap is not a bad thing for a car company (though maybe a car enthusiast.) The 2GR-FE is in the Camry, Avalon, Rav4, Lexus ES 350, and the Lexus RX350. It would be a horrible, horrible business decision for no one to “Nobody share(s) engines.” If you have a great engine, put it in what ever you can.
In fact, if you think about it, maybe Ford shouldn’t have mortgaged the farm. Maybe they should have declared bankruptcy, taken their knocks and hit reset.
Maybe it isn’t the last man standing that wins. Maybe it’s the first one with a federal judge.
All I can say is this. Once Ford put a mortgage on their U.S. operations, I knew it was going to be “party over” eventually.
Just as about 15 months ago, when GM had a “fire sale” giving “employee prices” to everyone with a pulse (yet before this had been losing $2800 per vehicle sold), I knew it was going to be the end (relatively) soon.
As for DCX, I think it was when I realized they’d left their brains at home and did the sales-bank thing after having Lee Iacocca swear off of this practice (which nearly bured the company at least twice before, in the mid 1960’s and then in the late 1970’s). Maybe Lee Iacocca and Kirkorian trying to take Chrysler over in about 1998 would NOT have been such a bad move after all… it’d still be an American company and who knows whether they’d have made a go of it? Too late to worry now…
It’s going to be funny-peculiar without the big 3, or some ghost-like facsimile of same.
If I were British, I’d be taking bets on who would bail first. In fact, I’d guess that the Brits already are taking bets right now… (I’ve lived there – they’ll gamble over ANYTHING).
Alternate path to recovery.
Consider: of the Big 2.5 Ford might be the best positioned from a brand standpoint to take on Toyota and Honda.
Step One: kill Mercury. Cold Turkey
Step Two: Give Ford car lines that go right up against the competition in all segments. Using Toyota as the bogey. Ford B-Car to Yaris, Focus to Corolla/Matix, Fusion to Camry, Five Hundred to Avalon, Ranger to Tacoma, Edge to Highlander, Escape to RAV4, Expedition to Sequoia, Fairlane to Sienna, F-Series to Tundra.
Take the Hybrid technology you’ve got and put it in lines that make sense (Focus, Fusion, Escape, Expedition, Edge). One Prius is enough.
Mustang is virtually a brand unto itself anyway so let it be.
To all those Mercury dealers upset at the loss offer them this: Lincoln/Volvo/Land Rover. Lincoln is: MkZ, MkX, Mark LT, Town Car. Volvo is: S40/V50/S60/V70/XC90. Land Rover is: LR3, Range Rover
Sell Aston and Jag to some other sucker.
CJ
Robert,
You touched on the subject I was hoping to read more about in the Ford DW. What was the logic in betting the whole company on 1-2 years worth of extra cash? Even in the best case scenario Ford begins making a profit in 2009 minus a huge ass loan payment. How long would it take to pay that loan off? What is the interest on that loan? Never mind the concession preventing effect of having a seemingly huge bundle of cash on hand for the 07 UAW contract negotiations. Or that all of the cash seems to be directed at downsizing, while product development investment remains constant. Alternately, there is no product coming out in 2009 that will regain the lost Explorer/Expedition volumes or profits and other than F150, which at best could maintain status quo, there aint anything coming out in 09. How is it that Bill didn’t just give away the family business?
I have been guilty of it too just thinking killing Mercury is the solution – but the big 2.5 need to radically rethink their entire businesses.
Ford is in the best shape with great models in Europe that look competitive to the imports. However, is it worth it – can Ford just survive off of trucks? You want a car? Buy a Volvo or Mazda. Doesn’t Hershey exist to fund a trust – maybe that should be GM’s new purpose – retirement benefits?
As my generation mid 20s to early 30s gets older – so many kids have never had the big old Buick in the driveway and can only relate to the Accord or Camry in the driveway. How can GM and Ford attract new owners who have no experience with their product?
K.
“Since many customers have been burned by the traditional automakers here in North America, they turn to an alternative, who will eventually, will burn them aswell.”
The premise that all automakers burn their customers simply isn’t true. Now if you were talking about Ford customers who tried VW then you might have a point. However, if you look at customer loyalty rates, Toyota is the highest in the industry in the US. Chevy and Ford have reasonably high loyalty rates for their pickup trucks, but for everything else, not. Honda is well known for stepping up to the plate and covering the cost of out of warranty repairs when Honda is at fault (i.e. recent transmission troubles). The 2.5 are well known for playing duck and hide in those situations.
So besides the product, product, product chorus we need a customers, customers, customers backup band. Stop wasting money on movie product placements and give that cash to the people who make decisions on goodwill adjustments for customers who get burned by just-out-of-warranty fiascos.
In August, the Wall Street Journal, had a well written and researched article on how badly Jaguar is doing, and what a drain it is on Ford. Ford might have screwed the pooch when it decided not to allow Jaguar to build a genuine, two-seater, open sports car. Now it is time for Ford to admittedly lose face and sell both Jaguar and Aston-Martin. And much as it pains me to say this, to whomever has the cash to do that (think someone or some consortium in China). What really pains me, as an automotive enthusiast, is the idea that Jaguar may not survive; be that as it may, Ford needs to cast a truly jaundiced eye on those members of the Premier Automotive Group. If that doesn’t give Ford the cash it needs to invest in new products, then they also (probably) need to sell Volvo. They can more easily find someone to buy that marque – not for as much as they paid for it, which was silly money. However when one is going through a financial crisis, one does what one has to, whether one is an individual or a collection of individuals operating as a major corporation. Which leads to the inevitable thought: is Ford really a major corporation anymore? Time will, as the saying goes, tell.
I have read many opinions on Ford, but never have I encountered the idea that perhaps Ford should actually keep Mercury. As a born contrarion, I thought I’d posit the pro-Mercury argument.
I support a Mercury that is essentially a “Ford with Chrome” division. The product consists of upscale versions of the Fusion, 500, Crown Vic and an SUV. The only differentiation from Ford is that the base model Mercury is equivalent to the midlevel of the Ford product, and it has unique grill, taillights, badging, etc.
The branding is simply Ford with chrome, with ads featuring that hot brunette and focusing on moms in their 40’s. The dealership experience is a cross between Saturn and Lexus — respectful and focused on consumer needs rather than ‘the deal’, but not full-on pampering.
Why?
Well, it doesn’t cost much to engineer a grill and taillights. But it allows dealers to survive — they can’t live off 100K units of Lincoln only. And it gives Ford an extra 200k in sales on their volume lines. Revenues good.
The final reason for keeping Mercury as “Ford with Chrome” is that the alternatives stink. Use it as a platform for European Ford? Well, we tried that with Merkure, and it failed. Given the dollar’s weakness, Mercury Mondeos would cost $35K. Yes, they look cool, but for that kind of dough, no one buys Mercury.
The other alternative is to sink the division. OK, but explain to me why you would give up 200k in annual sales, spend billions buying out dealers, and kill Lincoln in the process?
Doesn’t seem to solve the problem. Mercury has trouble selling the Marquis and Mountaineer because the underlying Fords are lousy product. Fix that and improve the dealership experience, and you’ll fix Mercury.
Regarding Ford’s sales in Canada, It may just be coincidence, but I find Ford Canada’s TV advertising ( lifestyle ads, Wayne Gretzky etc.) to be much better than the US spots. The US spot that really drives me crazy has the guy driving on the side of a building with his bobblehead girlfriend and an annoying techno pop soundtrack, I had to see the spot numerous times before I even realized it was about Ford. It is almost as bad as the “Johnny” campaign for the Aveo.
Glenn A.:
Believe it or not, some less than well to do Americans still have fond memories of their Escorts.
Cheap, sturdy and dead-reliable. My wife’s former ’89 cost about $6000 new, got over 40 mpg on the highway, was tough enough to drive off-road and ran more or less trouble-free for 12 years. When it needed new parts, they were cheap and simple to intall. Sure it was slow and handled like a truck, but so what? It was a great car for its purpose. I’ve always thought there was a bigger market for a utilitarian car like that if it was marketed right — especially since VW long ago abandoned its “people’s car” roots — they could focus on people who like simplicity and classic style for their own sake. Instead, they tried (with the Focus) to build a Honda Civic and failed.
Kids never want what their parents drive…unless of course its a Trans Am with a sceaming chicken on the hood
SherbornSean-
I think the hot brunette has been brought up as Mercury’s saving grace a few times.
Ford’s car advertising at least in Northern Ohio is abysmal. My favorite spot is this guy sitting at his computer surfin’ the net. He apparently has no money to go out so he is reduced to…
Okay ready – I am not making this up…
Lifting a tiny barbell with his mouth.
What does that mean? Apparently, since he is broke then he should get an ugly, outdated Focus because it apparently gets good mileage?!
K.
The best example is the panther platform. Decent car, and when GM phased out thier last RWD platform ,they had the market to themselves.
So what did Ford do?
Nothing.
No updates, no refinement, no new motors (A 4.6 L egine in a Lincoln? Fer Chrissakes, put in the 5.4)
They let it whither on the vine and soaked up the short-term profits. And walked away from long-term success.
Now they’re losing out, and have no money to develop the next-gen Panther.
Hey, there’s a big market for large, plush cars. May not be my cup of tea, but those buyers trade in every couple of years and they pay list. And they finance easily and pay their debts.
Ford walked away from all of them. And gave us the 500. A car that literally disappears as you look at it, it’s so bland.
I’ll keep buying Fords as long as they keep making Crown Vics. Not the most exciting car on the block but, parts are cheap, interchangeable, are everywhere, the car is durable, and gets decent mileage. Just keeps goin no matter how hard you hit it.
A sheetmetal update would be nice, more power, more gears…but keep the solid rear axle and full frame, they make the car what it is.
I don’t know. I think killing the Mercury division is the way to go. If Ford has to make a choice about these things (and I’ll bet they’re looking hard at it) then Mercury is the first obvious choice.
What does the brand represent. If as stated above, it is “Ford with Chrome” why do you need an entire division to sell some chrome? Just add a Limited line to all the Ford products.
If as stated above, Mercury needs better underpinnings than the Fords’ the lines are based on, where are they going to get them. Better to spend the money from Mercury on improving Ford platforms!
If you take Mercury too far up the food chain it runs into Lincoln (which has more brand identity than Ford with Chrome). Better again to improve the Lincoln line.
The Canadian arm axed Mercury in 2000 and it was (and still is) one of the most painful experiences for many dealers ever. It has soured dealer/factory relations to no end. However, the inital solution was to make all the dealers Ford dealers and the Merc dealers kept their Lincoln franchises. There were lawsuits and bankruptcies and mergers. There was likely a much better way to handle it but I could not imagine how hard it would be to sell both Ford and Mercury’s here today.
It was the right thing to do.
Ask our Chrysler Dealers up here who have to stock Calibers, Compasses and Patriots. Grand Cherokees, Durangos and Aspens. 300’s and Chargers. Not an easy thing!
Killing Mercury isn’t the only thing Ford needs to do, but it is one of the first things they should do.
Regarding Ford’s sales in Canada, It may just be coincidence, but I find Ford Canada’s TV advertising ( lifestyle ads, Wayne Gretzky etc.) to be much better than the US spots. The US spot that really drives me crazy has the guy driving on the side of a building with his bobblehead girlfriend and an annoying techno pop soundtrack, I had to see the spot numerous times before I even realized it was about Ford. It is almost as bad as the “Johnny” campaign for the Aveo.
The Ford ads up in Canada are based on a very simple premise: Ford is an “authentic” brand. It isn’t hot, it isn’t necessarily sexy but it is something you can believe in. Wayne Gretzky to Canadians embodies many of the same attributes.
Actually, I always thought the “Johnny” series was a Canadian effort too!
Ford has to get back to its roots if it wants to survive.
Indeed, Ford’s huge collateral loan seems to only be delaying the inevitable. Unlike GM, Ford has almost no product between now and 2009, and Mulally flat out admits that Ford will lose a ton of money in the next two years.
And yes, for the Big 3 to go toe-to-toe with the likes of Honda or Toyota, they truly do need a radical rethinking of their entire business. Compelling product or improved customer service may not be enough.
Suddenly, Chapter 11 seems to make more and more sense to those on the sidelines.
CSJohnston:
Do you guys have Patriots up there? Is there some sort of Canadian time warp? Patriots have not even come off the assembly line yet. If they are out up there where can I find info on actual tests and photos of production models?
Rodster,
Sorry, getting ahead of myself there. What I should have said is that our dealers will have to sell Calibers, Compasses and Patriots (when they land).
I sure hope the Pat is a big improvement over the Compass!
Apologies!
I sure hope the Pat is a big improvement over the Compass!
Besides flatter sheet metal, optional raised suspension and skid plates, what else is there?
Hopefully, the 6 months between introductions have given DCX the opportunity to fix flaws and improve quality.
It could happen?
Good discussion!
I really have nothing constructive to add, except that I have read the article and about 99% of the prior comments. I find this bunch of people to be good thinkers and well-written analysts.
Keep up the good work and the good writing, too.
Here’s some of what we’re missing from Ford in the states and Canada.
http://www.globalautoindex.com/news.plt?no=1582
http://www.globalautoindex.com/news.plt?no=1526
Ford has probably run out of time to save themselves with completely new models, but there are some things they could do right now that would surely help. For starters, put a blown big cube alloy engine in the Lincoln “LS”, give it a proper name, strip the chrome, work on the handling, and price it to make a profit. What you want is a 0-60 of about 4.0 sec. Then make a two-door GT version of the same thing. Take a couple of these to the dragstrip and have them driven by well known NBA stars. There’s your ad campaign – no words needed. Of course continue to offer lower powered versions. A convertible variation with slightly different styling could inherit the Thunderbird name. There is no technical reason why this car couldn’t be made to walk away from an M5 or an E550.
The Focus has been very successful in worldwide rallying but Ford has done a pretty good job of keeping it a secret from the average American. Some good exciting film from those winning rallys would be cheap and effective advertising to boost the sales of this decent car. Bring back the wagon version and turbocharge the ZX3 to keep some interest alive.
Turn the Five Hundred over to the Italians for a major facelift. While there, fix the name and make an AWD SHO version. You will want about 300 HP here.
Continue to produce the GT. From what we read, it is making a profit and it is great advertising for Ford; there are just not enough of them out on the street.
Don’t let the Mustang get stale.
Fire the current ad agency and knock off the PC crap.
Jeffer said – “Regarding Ford’s sales in Canada, It may just be coincidence, but I find Ford Canada’s TV advertising ( lifestyle ads, Wayne Gretzky etc.) to be much better than the US spots.”
I’m a Canadian and I think you are right. Ford Canada’s advertising is phenomenal.. any company should probably research it to find a good strategy. When I think of what car is my ‘home’ brand I think of Ford. Like you said they have the best spokesman in Gretzky for Canadians.. they fund Hockey Night in Canada.. When I think of a Ford driving I think of a working man who could fix your sink if it broke.
And show adds of Canadians using Ford products in tough Canadian conditions. Like snowstorms, freezing weather and so on. Like you said they don’t try to be sexy, hot, or.. urban hip.. They are just billed as dependable vehicles, from a company deeply part of the community.
I see tons of F-150’s every time I go driving, and I live in an urban area, and most of these trucks have nothing in the back. But in the resource towns you need 4wheel drive trucks. The ranger is logical in the face of high gas prices for workers in these towns.
You also wouldn’t believe how much Ford is charging for its trucks here. Imagine 50% more then south of the border.
However I should add in this gleaming review of Ford Canada.. in terms of car sales where I live almost all the new ones I see are imports(but mazda doing well). And in luxury segment the usual suspects.
wow, there are some pretty cool recommendations on this thread,
specifically
[Focus] has been very successful in worldwide rallying but Ford has done a pretty good job of keeping it a secret from the average American. Some good exciting film from those winning rallys would be cheap and effective advertising…bring back the wagon version and turbocharge the ZX3…
and
Canadians using Ford products in tough Canadian conditions. Like snowstorms, freezing weather and so on. Like you said they don’t try to be sexy, hot, or.. urban hip.. They are just billed as dependable vehicles, from a company deeply part of the community.
It does seem that in addition to massive changes required in their product mix, the way these vehicles are promoted and “branded” could use a major overhaul.
Advertisting had a huge role in the resurgance of VW in the USA in the late 90’s early 00’s.
“For the Mustang brand, steal whatever you can from Jag and Aston Martin before cutting them loose, even if it means breaking into their offices at night. Aston’s wonderfully refined engines would be a place to start.”
IIRC the Aston v12 is two Mondeo V6’s strapped together and the v8 is a tweaked Jag motor.
There’s a little piece of information that came out from J.D. Power that alludes to a lot of the points made here.
http://www.autoremarketing.com/ar/news/story.html?id=5857
For those of you too tired to click on yet another link, I’ve provided a bit of a synopsis here…
The retention study revealed customer loyalty to specific brands by measuring the percentage of new-vehicle buyers and lessees who replace a previously purchased new vehicle with another from the same nameplate.
2006 Retention Rates by Make
1. Toyota – 63.9
2. Lexus – 63.2
3. Honda – 60.3
4. BMW – 56.5
5. Scion – 56.3
6. Cadillac – 55.5
7. Chevrolet – 55.3
8. Mercedes-Benz – 53.6
9. Ford – 53.3
10. Hyundai – 51.6
11. Subaru – 51.1
12. Nissan – 48.8
13. Porsche - 46.5
14. Hummer – 44.5
15. Suzuki – 43.9
16. Kia – 42.8
17. GMC – 41.4
18. Land Rover – 41.2
19. Jeep – 40.5
20. Saturn – 40.4
21. Dodge – 40.1
22. Buick – 39.9
23. Chrysler – 38.2
24. Acura – 37.6
25. Lincoln – 37.3
26. Audi – 35.6
27. Volkswagen – 35.5
28. Volvo – 35.5
29. Saab – 33.4
30. Mini - 32.4
31. Mercury – 31.9
32. Mitsubishi – 30.5
33. Jaguar – 29.8
34. Infiniti – 29.0
35. Pontiac – 27.8
36. Mazda – 26.8
37. Isuzu – 4.7
you should be ashamed americans, for your fords are nothing more than japanese mazdas, that have some american designed parts( floor mats, wipers, etc),. and remember the good half of cream will be devoured by japan for profits go there- where the tangible hard work is put in. from thesuperbly poor domestic cars that you still have you dillute that diversity more, . I would suggest mazda to sue ford for calling mazda cars as fords and simulating american products that really don`t exist. fusion, edge, all the rebadge mercury crap- where are your own cars/ in agony ford is desperately trying to suck a european focus into homeland, but even that car is sitting on mazda 3 guts. shame. soon you will be unable even to change the grille, just put a sticker over mazda`s badge- ford. built tough( by japanese sweat)
Put a blown big cube alloy engine in the Lincoln “LS”, give it a proper name, strip the chrome, work on the handling, and price it to make a profit. What you want is a 0-60 of about 4.0 sec. Turn the Five Hundred over to the Italians for a major facelift. While there, fix the name and make an AWD SHO version. You will want about 300 HP here.
Believe it or not Ford actually makes such a beast in Australia called a Falcon that is right wheel driven. Comes in 2 lead foot versions (the turbo straight six and the Boss V8), the luxo barge(Fairlane & Ltd). there is a commercial version with a deck (imagine something along the lines of an El Camino) a wagon. It could entirely replace the 500 and the Crown Vic.
And they have the new euro Focus too
Mercury has always been easy money for Ford, until they screwed it up in the last decade – they made tons of money off of upscaling similar platforms sold at the Ford dealership.
I’ve always liked Mercury because they may only cost a thousand dollars more, but you got a much nicer interior and exterior (think Mariner vs. Escape today). But the big payoff was the dealers – Lincoln service at a lower price.
I know this sounds funny today, but often times the salemen were there for years and years, and you always dealt with the same sales guy – he took care of you because he wanted a long term relationship. If there was a service problem, he greased the wheels without the phony “service consultants” you deal with today. My last Mercury I actually gave my check to the owner of the dealer – he tried to deliver every car personally to make sure you were happy with the sales experience.
Today – all you have to do is see the new Milan ad with the hot girl and the seemingly unemployed guy ignoring her to look at the Milan on-line, because he is a hip, happin’ wireless internet kind of fella. That’s all you need to know to realize who Mercury wants to sell to (hint, it is not guys who would check out the hot woman).
taxman100:
who Mercury wants to sell to (hint, it is not guys who would check out the hot woman).
huh?
After WWII, everybody dreamed of owning a car one day, and from ’49-’50 thing began to happen: car sales exploded in the US. In Europe, this happened ten years later. In the fifties, we had no problems: smoking was not unhealthy, bugs were killed with DDT, the sea was full of fish, and so on. But when everybody eventually really owned a car, the car makers knew they must close down if they couldn’t persuade everybody to dump their old cars for the new and better models. And the car makers were extremely good at persuading, and new and better cars hit the market, and everybody dreamed of the new models.
Now, not yet everybody, but many people dream of a future for the humanity and their children’s children. In fact, many people drive a car just because they have to; and would prefer a life without cars, if they can’t be made pollution-free. And the new cars hitting the market is not better or have more features than the last year’s models, and really useful new features is not easy to come up with anymore. And one car is just about as ugly as the other. So, what do you shop for? Maybe a car that will make less damage to the environment than your old, and one that don’t have to be replaced so often, because cars is expensive, and because cars manufacturing pollutes the environment? Bingo!
The solution for Ford is the same as for the rest of the 2.5:
1) Move to a 4 year product cycle on all models. In this competitive market, no model can be left unattended no matter how big of a hit it is. Conversely, learn that each update doesn’t need to be a “clean-sheet” design, but a 5-10% improvment under the skin combined with a new skin.
2) Sell the last-generation product to the fleet market. Don’t contaminate the image of the current models.
3) Compete hard in every sector of the market: cars, SUVs, CUVs, minivans, trucks, etc.
4) Severely rationalize the engine lineup. Globally Ford makes dozens of engines. Learn how to make a smaller range of engines and transmissions better.
5) Bring over good diesels from Europe, which Ford actually does have. Toyota and Honda are about to introduce diesels and if they get a head start in the market Ford will regret it.
6) Simplify the trim options. For Ford, make 3 trim levels (nothing, comfortable, loaded) with 4 standalone options (Sunroof, Sat-Nav, Leather, 4WD). For Mercury, make 1 trim level with 4 standalone options. For Lincoln, make 1 trim level with everything. Let the dealers upgrade bits people tend to be picky over, like the stereo.
7) Upgrade the warranties to 5/100 B-to-B so people will have more confidence in buying Ford cars. Upgrade the reliabity so that the warranty costs don’t kill the bottom line.
8) Make every factory flexible, so that a retooling takes a weekend at most. Require suppliers to be able to change over in a similar time frame.
9) Make the dealerships more pleasant and provide good repair service. Buyers don’t care if they are separate entities. If a Ford dealer gives lousy service, Ford suffers.
10) Let the dealers order what sells in their market instead of making a predetermined spread of product and forcing the dealers to pick from that.
I’m sure there is plenty of more stuff they need to do right but changing the 10 things I listed would be a good start.
If the economy slips in 07 like some are predicting, not having much new iron till 09 might be a good thing (presuming we’re on the rebound then). Setting the new Blue Oval Products againts the cars that rolled off the line to the clearance aisle for the previous year or two might make Ford’s management look prescient. What’s the saying? “I’d rather be lucky than good”. Now they just have to survive the next couple of years and do well in the 07 talks.
Mr. Farago wrote:
points: the Big 2.5 are preaching to the converted, they’re selling on price and patriotism and they need to re-think their business model.
Warning: twisted (but solid) logic ahead…
I’m glad most of the people on this site are enlightened enough to choose cars regardless of their country of origin. But as an ethnic minority living in this country, let me tell you that discrimination is alive and well in the U.S.A.
In principle, I hate that John Mellencamp’s GM commercials imply that trucks planned by Americans are inherently superior/more appropriate than trucks planned in Japan…
But business-wise, it’s the right move.
The market for Inferior American Branded Cars is shrinking, but is still very much alive. This market may not be big enough to support 3 or 2.5, but I guarantee it can support at least 1.25. Maybe even 2 (GM (1) + Ford (0.75) + Chrysler (0.25))
Having said that, Ford is in deep #$%&. But Ford going down or close to going down won’t mean the demise of GM and Chrysler. I have a gut feeling that if one of the 2.5 goes down, the others will be stronger (in sales) than ever before.
Just a gut feeling.
taxman100:
who Mercury wants to sell to (hint, it is not guys who would check out the hot woman).
jerseydevil:
huh?
I’ve seen the commercial Taxman speaks of. I don’t “take it” that the guy was unemployed. He just had some kind of a rough-shaven look going on. I did find the exchange between the guy and the girl to be a bit odd and confusing. Yeah, I know it’s all about selling the car. It was just weird… And I totally didn’t get the cockeyed look she gives the camera just before she gets in the car.
But that’s marketing…or maybe nothing more than a bit of artsy-fartsy directing, I guess.
I have observed that Mercury has had good looking women in several of their US commercials in the last year or so; more I think than other manufacturers.
Perhaps the cash generated by mortgaging the company will be available for a couple more cycles of executive bonuses and golden parachutes. Have to be creative about what to base the bonuses on however. Don’t think profit, stock price or sales numbers will do. All I’ve heard on this blog are suggestions for product development and engineering. That would only burn up capital that shouldn’t leave the executive suite.
ZoomZoom:
u people watch way too much TV
Nope, not at all. I watched only an hour of television this week.
I was watching a Lincoln ad the other night. It featured a perfect late 20s “professional” woman driving her Lincoln. The ad was obviously trying to get middle aged fat soceer moms who imagine themselves to be hot 20 something professionals to buy more Lincolns.
Great in concept, but in reality, who buys Lincolns? Fat, middle aged white guys, and by the way, their are millions of us in North America, and whether the brain trust at Ford likes it or not, WE ARE YOUR TARGET MARKET, period. There are only so many Black NBA stars, and probably even fewer women, who want a big Lincoln car.
Ford seems to have two fundamental problems. Political Correctness has driven wasp male Engineers out of the Boardroom (and the company), only to be replaced by politically correct managers who spend their days dreaming up ads for customers who don’t exist. Meanwhile, the company’s engineering prowess has been destroyed, and it primary market (Middle aged Bald guys) are buying Toyotas & Hondas.