Henry Ford knew a thing or two about motivation. “Enthusiasm is the yeast that makes your hopes shine to the stars,” Crazy Henry opined. “The grip of your hand, the irresistible surge of will and energy to execute your ideas.” Yes, well, Blue Oval morale is at an all time low. After watching Billy’s Boyz lose over $24k per second, faith in The Glass House gang is fading. Faced with a failing grade on an interim report and a Way Fordward that needs to be Fixed Or Repaired Daily, Mulally’s masses are about as enthusiastic as Dick Cheney’s hunting buddies.
It’s true; not even Mercury’s curvaceous raison d’etre (a.k.a. Jill Wagner) could rally Ford’s troops at a recent USO show. In a survey included with FoMoCo’s recent NorAm report card, less than 45% of the 15k employees polled expressed faith in the new new turnaround plan. Ninety-three hundred respondents simply don’t believe that the vehicles within Ford’s “showroom of the future” have what it takes to pull Toyota’s next victim out of its tailspin.
The survey-sporting internal audit indicates that Dearborn’s darlings are missing their spending targets. Sales are still falling quicker than Mercury in the cold. Save for one Edgey new product, January saw Blue Oval sales submarine expectations by some 10,600 units.
The reason is (again, still) a “greater-than-expected segment shift out of pickups and SUV’s.” Look for a greater-than-expected 6k more units to litter dealer lots by the time Spring rolls around. For those keeping score, at quarter’s end, an additional 1.5 percent of Ford’s market share will have melted away.
The report also predicts that the first three months of ’07 will suck up lots of Big Al’s newly leveraged liquidity. The Blue Oval’s bean counters have been clamoring for 50% cost reductions. This month’s savings barely scratch 25%. What’s more (much more), FoMoCo’s spending will miss the bulls-eye again in March. You don’t need a magic eight-ball to predict that the highly touted “we’ll be fine in 09” is quickly becoming a [crack] pipe dream.
The negative results are clearly a blow for The Man from Boeing. The report reveals Big Al’s first fiscal kick at the can as a swing and a miss. Not to put too fine a point on it, Ford’s North American unit is still failing, despite Mulally’s humbly mutated metrics.
Unbelievably, despite Ford’s failing grades, cataclysmic losses, epic layoffs, plentiful plant closings and uninspiring products, market mavens have yet to abandon Ford. Right about now, Ford shares are up 5.6% from this time last year. In fact, Ford’s share price is at its third highest market value. Wall Street Journal (WSJ) scribe Robert Schwartz doesn’t get the math.
Mr. Schwartz estimates that even if Dearborn’s Darlings can convince the United Auto Workers to convince its members to slough 25% of Ford’s health costs, The Blue Oval will still be $58b in the hole. Factor in family assets like Mazda, the Premier Automotive Group, Ford Credit and Big Al’s mortgaged moolah, and you’ve still got six billion greenbacks in the debit column.
Note: FoMoCo’s MoCo is MIA from this list. And therein lies the problem.
Market mavens currently ascribe the automotive arm a value of $39.5b. That includes the $17b three-year cash burn just to keep Mulally’s motor runnin’. To hit that valuation, the WSJ figures Ford needs a 4% pretax sales margin on $132b in sales. That’s just to maintain the current downward trajectory. A turnaround is going to be Ford Tough.
Based on the success at Nissan, turning this sum bitch around would require an operating margin of nearly 8%. Yeah right. It took Nissan six years and a Ghosn in the machine to get back in black, and Nissan didn’t have two 800-pound gorillas in the room: a bloated dealer network and a vapid product pipeline.
So, basically, Ford’s employees are right to be shit scared. To date, the fact that the corporate coffers are full and the Hecho en Mexico Edge is firing on all cylinders are the only positive pegs for psychological hat hanging. Or… not.
Ford has just announced that they’ll cough up $500 in dealer cash on an entry level Edge. While the top-o’-the-line 18” clad SEL and SEL Plus cross-border crossovers are commanding sticker price, the entry level model is languishing. Unless this stock imbalance comes good, the glut of entry level incentivized SE’s could end up destroying the model’s overall resale values or worse, end up in rental hell.
Henry Ford may have been a vicious anti-Semite and a generally loopy guy, but he knew business basics. “You can’t build a reputation on what you are going to do,” Hank famously pronounced. Unless and until Ford can live up to its promises, Henry Ford's corporate legacy is doomed.
Well stated, Matthew. The incentives on the Edge are a mistake, and a surprise. Didn't they (along with GM) just recently say they don't want to play with rebates anymore, just price things right from the beginning? Bold Moves so far are just Old Moves.
Hencho in Mexico or Kanada?
You have to wonder how much the mainstream media negative reporting is starting to wear on sales. As has been discussed here many times, who wants to buy a vehicle from a company about ready to file? Gas prices don’t explain it all at this point.
The downward spiral is getting steeper. If Mr. Schwartz’ math is correct, then May the Schwartz be With Ford. Otherwise, they’re toast.
Glad I don’t own real estate in SE Michigan…
With the delayed release of the Edge, it’s hard to fathom how Ford misread market and content demand this badly that they have to offer cash back on a brand new model. Stupidity rearing its ugly head at the Blue Oval.
These guys could screw up a free lunch.
Maybe they over-corrected based on DCX’ blunder with the Pacifica at launch – ie. Too many high priced high content vehicles in the mix.
For all their talk about “Flex” I don’t know that Ford can alter the mix at Oakville fast enough to help. Hence the rebates.
“greater-than-expected segment shift out of pickups and SUV’s.”
Anyone with half a brain… hell anyone who buys gasoline with their own money, could see that one coming from what… over five years ago?
The stupendous levels of mediocrity within the management of Ford (and GM for that matter) astound me. It must take some serious effort to lose THAT much cash, that fast…
–chuck
Well doomed in the short term is ok, cause they always have bankruptcy. And its part of the plan, not that they say it ain’t, its always part of the plan.
My brother fixes flats, and replaces spark plugs for Delta at their main hub. In the last few years we watched them make every stupid mistake possible, and the both of us use to write back and forth about it. Him with his inside view, and me after reading the many business stories written about it online, and with ink and paper. Jokes at the company included analogies to cement row boats and the number of rowers, Vs. the number of boat commanders yelling “row! row!”
Among the things I saw watching this company slip into the business magnifying glass of reorganization, was the repurchase of its assets by the manufacturers of its parts. GE, and others ended up owning more and more of its planes, hangers, etc. Then as they continued to announce more and more red ink, I said to my bro- ” If they sell 2 million more shares of stock they can keep flying for another 3 months” after laughing about it for a week, Management of the flying D announced that they were offering several million more shares of stock. One year later, they were in bankruptcy, and the shares worthless.
Bankruptcy allows all factors of business to be re negotiated. And up till now not all have been on the table. Ford needs an 8% margin, well the big ‘F’ is the only way they are going to get it. And up till now, accepting the differences in the business, Ford is following Deltas plan pretty much just as its been spelled out for them.
Think selling off, or mortgaging the plant is the biggest sin…. Nope, cause when it goes to court, the judge has to approve a plan that allows Fo to keep makin cars.
Right now Ford has the best plan for living past the nest 5 years. And Bankruptcy is the plan, its always been the plan, and its the only plan that will save each of the 2.44.
One of the stories from an online business site included this about Delta From 2004:
“””Terms of the deal with GE Commercial Finance call for Delta to get $300 million in a revolving credit line secured by certain accounts receivable, along with $200 million in a loan secured by unspecified assets not already pledged against other Delta debts. Delta would get the cash only if its chief financial officer certifies that the carrier can hit its cost-cutting target of $5 billion a year without seeking bankruptcy-court protection. Delta also must still have at least $1 billion in cash just before the loan’s closing date, according to a Securities and Exchange Commission filing.
The financing commitment from GE came as Delta pilots began voting yesterday on a proposed five-year contract to cut pilot pay and benefits by $1 billion a year while increasing the number of hours they fly. Pilots are expected to approve the concessions, including a 32.5% pay cut, in voting that ends Nov. 11.
Ratification of the new pilot contract is crucial to Delta’s efforts to turn itself around outside of bankruptcy. Last week’s separate deal with American Express Co. would give Delta a $500 million prepayment for SkyMiles points card users rack up on their American Express co-branded SkyMiles credit cards, but the financing is contingent on the airline completing its new pilot pact. The credit-card giant will provide $100 million of the $500 million in financing arranged through GE. “””
Its no big deal if Ford eventually has to mortgage its plants, they are old and can be given up if needed anyway. Besides as mortgaged, even if the go belly up, there ain’t much value in those assets for anyone but ford.
Another portion of a later Delta story also from 2004 states this:
“””The nation’s third-largest airline also said its cash reserves are dwindling faster than anticipated due to weaker margins and soaring fuel costs.
“If we cannot make substantial progress in the near term toward achieving a competitive cost structure … we will need to seek to restructure our costs under Chapter 11 of the U.S. Bankruptcy Code,” Delta said in its quarterly Securities and Exchange Commission filing.
-row…….
Atlanta-based Delta first raised the possibility of bankruptcy proceedings at the end of the first quarter.
-The guy who said that was told to row more.
Delta, which has one of the industry’s highest operating cost structures, has accumulated $5.6 billion in losses since 2001. In the latest quarter, it lost $1.96 billion.
-Row more……
It is facing surging fuel costs and stiff competition from low-fare carriers such as AirTran Holdings , Southwest Airlines and JetBlue Airways .
To avoid filing for bankruptcy protection, Delta wants $1.02 billion in annual wage, pension and productivity concessions from its pilots. Delta’s pilots union has offered to give up between $655 million and $705 million in pay cuts.
— My comments —
-Assuming most of this story came from the management of the canoe rowing musical group,
the loss is listed at $1.96 Billion ( Thousand-Million ) in the last quarter. And there are Four time periods per year Hence the word “Quarter”. Keep in mind 1.96 is almost 2.
And they are asking for $1.02 Billion in Anual ( Once per year ) in cost cutting from wage and pension costs. Most high schoolers nearing graduation can easily, or near easily see the losses are close to $ 8 Billion for a full year, Plus the $ 5.6 Billion since 2001 from the top paragraph, while cost cutting will shave only $1.02 Billion from that number. I would imagine a bankruptsy filing is overdue, and they should just consider giving up on flying planes.
— End Comments —
“We believe that this approximately $1 billion in annual pilot cost savings, in addition to significant cost reductions from other stakeholder groups, is essential for us to compete successfully,” Delta said in the filing.”””
— My comments at story end to my brother in an email —
-Conclusion: They need a hit record FAST ! Or they need to fly planes without using fuel.
I suggest they use tugs to pull the planes out to the runway. This should save another $.008 Billion Annually. A Navy catapult system may need to be employed in launching the planes, saving part of the fuel normally used to floor it down the runway as they take off. Drawback to this may be increased plane loss if the engine don’t start after the catapult gets the plane into the air. They may need to increase their plane insurance.
-I think they should have another stock offering. If they offered 2.0 Billion more shares
and people baught those shares at $ 3.00 each, that would give them $ 6 Billion more dollars. Enough to fly planes 4 more quarters.
— end comments —
Some of the comments embedded in the above pertaining to rowing, and music were mine, they use to have a smaller airline called Song, and in advertisements made no mention of flying, or transportation, but they did sell CD’s onboard.
Some of these business practices are exactly the same, you just have to look at it as a business, and not a car vs airline business to see the parallels. Delta formed a small airline to compete with another small airline (valu-Jet) it was so funny to see it unfold. Similar to see GM and Ford fix themselves by improving or redesigning their fleet of gas guzzlers while they identify that that segment is shrinking.
You can see parallels here on wage concessions, and pensions, etc. Meanwhile, the company still followed basically the same silly path until the bank and bankruptcy judge took over. In fact, the catapult story also came to be true as well. The company discovered as did AA, that they could taxi out on one engine, start the remaining engines just before take off and save fuel. The reality was, that starting and “flooring” the cold engine caused the turbin blades to fracture, and save a few gallons, but at the cost of an early engine overhaul. Funny, AA picked up the practice after Delta cancelled it due to engine failures.
When I read stuff like this my only thought is “they wanna be out-a-business” and bankruptsy is the terms they want, cause it will allow them to redefine the deal entirely, Plus the execs get to add to their parachutes big time.
While you continue to see stupid moves ( Bold ) over the next few months, remember the goal of “the way forward” is Bankruptsy. You may even find that Fo is thinking or buying Chrysler. Why…. Who gets to bankruptcy faster….. FoChMoCo.
later…..
The “Studebaker syndrome” is already at work in the marketplace.
Ongoing bad press (which these companies deserve because they truly have screwed up royally for years) makes many customers nervous.
“Will the company be around in a year or two? Maybe I’d be better off NOT buying an orphan.” So they scratch certain (read, GM, Ford and Chrysler) off their lists and buy something else.
And it becomes a self-fulfilling downward cycle, spiralling in expotentially faster and faster until inevitably, the ground is met with a rather large CRASH!
I DO have property in Michigan – a home – thankfully in the northwest – and I’m “hoping” that in oh 17 years or so, when it comes time to retire, my house value will be sufficiently recovered that I can move somewhere warm. Because, I can see how Michigan is going to TANK.
Worse than 1980 when we kept saying to each other – “will the last person out of Michigan, please turn out the lights?”
Sid Vicious –
I don’t think it’s the media making me stay away.
I’m tooling around in a 2001 Ford Focus wagon this week, thinking of buying it for my daughter’s first car. Air bags, ABS, and sound handling (plus it’s my brother’s old car, so it’s well cared for) make it a viable candidate.
Ford (of Detroit) couldn’t ruin the sound fundamentals of the Focus chassis, but their cheap interiors, haphazard assembly, and pitifully buzzy 4 cylinder engine sure does. I thought was just this one, but a trip to Carmax proves that all Foci “feature” a resonant frequency at some unspecified combination of engine RPM and speed that rattles every bit of loosely attached plastic (all fading at different rates, although I doubt they were ever really color matched).
Contrast that with the 5 year old Civics, Accords, and Corollas I’ve been looking at – they’re generally aging nicely.
And forget my $5k chump change purchase – when it’s time for me to spend my $40k for my next new car for wife or for me, that’s what I’m going to be thinking – how will it be 5 years from now?
Media, schmedia. Some of the new Ford products are okay (but not great!) NOW, but those are NEW. What about 5 years from now? Ford needs GREAT (not just competitive) products to move in significant numbers to overcome their stigma. I don’t see it happening with this crop of humdrum stuff. Even as competitive as the Fusion is, I imagine it 5 years from now, and I can’t shake this Focus experience.
Ford needs a 4% pretax sales margin on $132b in sales. That’s just to maintain the current downward trajectory.
Will that even pay Ford’s finance charges? Can you imagine all your after-tax income going to pay minimum charges on your credit card(s) and interest-only mortgage.
Again… There is no way Ford (Or any of 2.75 for that matter) can survive selling $10-25K cars. There is very limited profit margins in that highly competitive segment. To even come close to that 4% they will need to sell lots of F-150s and ExplorExpyEdge in the “Limited/SEL” flavor.
Glad I don’t own real estate in SE Michigan…
Lots of banks in that area are receiving house keys in the mail no doubt. I would send my house keys to the bank and move south. Thats gotta suck.
This link may explain why Ford is swirling around the bowl.
http://www.baileycar.com/ford_plug_spitters.html
Re: Chuckgoolsbee –
Sure its bad that they didn’t predict the coming downfall of the big trucks and SUVs 5 years ago. It was a huge mistake, but maybe an honest mistake that can be recovered from.
The real killer is that after the trucks and SUVs have been diving for over a year now, their new predictions STILL continue to REPEATEDLY leave them saying there was a “greater-than-expected segment shift out of pickups and SUV’s.” They are aware of this shift but don’t/can’t correct for it.
They aren’t just Failing on a linear scale, its like Failure Squared (Failure^2), or Derivative Failure (Failure’) for all my calculus fans out there.
Negative media attention (particularly by media outlets that don’t understand cars or the auto business) aren’t helping matters for Ford. But the Blue Oval continues to suffer from a U.S. lineup of (mostly) boring cars and a corporate culture that has forgotten how the sell stuff.
And, really, that sums it all up. Legacy costs, health care – you name it – would all become managable if Ford could move the metal at a profit.
I still have a 2003 Ranger as my daily driver. It’s been a great truck. But I won’t need a truck when the time comes to purchase my next vehicle. And here’s not a single car in Ford’s domestic lineup that I find appealing.
Since I don’t need another truck and don’t want an SUV or four-door sedan, that leaves what? The Mustang? As a 49-year-old empty nester, I’m sure Ford’s market researchers are convinced I want a Mustang GT with which to relive my misspent youth. Wrong.
The Ford marketing types are right about one thing: I would like a sporty, two-door four-place coupe. But not 3400 pounds worth with a solid rear axle and mediocre (at best) fuel economy. Something like that just isn’t relevent for the times.
In the meantime, Honda offers the Civic and Civic Si, the Accord coupe (with improved styling not far off) and Nissan is offering the new Altima coupe. Hell, I can even pick up a Hyundai Tiburon with the V6 and six-speed transmission for under 20K.
I had high hopes when I heard that there would be a Focus two-door coupe in 2008 – something billed as a replacement for the cheap but fun ZX2. I had a Zx2 a few years ago. Yeah, it was clearly economy-car based, but it looked pretty good and was a blast to toss around. Then my heart fell when I realized the new car will be only a reskinned warm-over of the aging domestic Focus – with some questionable styling cues at no extra charge.
Poor Ford, they offer me all kinds of incentives on top of those available to the general public. Ford and Ford Credit have been very good to me and I’d love to help them out. But, at the end of the day, I work too hard for my money to buy a car that just doesn’t appeal to me.
I don’t expect perfection from Ford right now. They’re scrambling for survival and there will be product compromises until completely new designs can hit the market. There’s talk that Ford plans to finally bring its U.S. product offerings into line with Europe. But when will that be? 2009 or 2010? I hope they have enough time and money left to make it that far.
With regard to:
# Gardiner Westbound:
February 19th, 2007 at 4:24 pm
This link may explain why Ford is swirling around the bowl.
http://www.baileycar.com/ford_plug_spitters.html
In his link about the spark plug problem, and the fires that have to do with a switch in the brake line circuit of the cruise control. Funny the recalled fix for the brake line short is to add a fuse to the circuit. Thus ford has escaped the responsibility of fixing the problem, and when the fuse blows and people bring it in they get to charge them for replacement of the defective parts.
As for the triton spark plug problem, for some reason they neglected to disassemble a Honda engine before deciding they can manufacture high compression aluminum heads. They should have checked out the design of a company that has done it for a while, they would have noticed they needed to design a longer plug, and lots and lots of threads ’cause Aluminummium ain’t as strong as steel. And for this problem, the only good fix is to replace the existing heads with a redesigned head with longet threads as Ford is Actually doing, when they fix it for that $3,000. The new heads that have been made for that engine are actually better, and new triton engines suposidly no longer have the launch feature on the spark plugs.
They’re tryin……
a viscous anti-Semite
Matthew, your gear headedness got the better of you.
As a consumer, as soon as I hear ‘incentive’ in the same breath as ‘new model’ I instantly think ‘dud’ (or ‘dog’ or ‘turkey’).
Translation: ‘This is our shiny new model, it’s great, a world beater. And we will throw cash at you to take one off our hands.’
And if what the link above about plugs blowing out is true, you have to figure that might just kill Ford if they are forced into a huge recall.
The report also predicts that the first three months of ’07 will suck-up lots of Big Al’s newly leveraged liquidity. The Blue Oval’s bean counters have been clambering for 50% cost reductions.
If I may play “living spellchecker” for a moment…
“Clambering?” Or did you mean “clamoring”?
Clamber: An awkward climb.
Clamor: A loud or strident noise.
I guess it goes to this: Would the bean-counters climb or scramble, or would they shout or scream (thereby causing others to climb or scramble)?
Honda is making plans for a new plant in Ohio, and the given reason is the drain of tallent in the south. So as for Michigan, the dwindling of property values will continue for the next 5 or so years. As the little 2.43 continue to shrink, and either gain some footing as nitch players, as it seems they are making plans to become, or go away completely.
Taking their place will be the New Big 4 from over seas. As they move in, the new depressed areas will not be the south, as farming becomes something for lower wage countries to take on, but the north as the new depressed area will be willing to take on manufacturing as paying rates readjusted for the new third world the WTO and out wothless politicians have brought us to.
The wages paid and complained about at the new Toyota, Hyundai, and Honda plants across the country (us) are competitive for the area they are now in. While they could not pay that in a plant in Michigan today. Once the last of the little 2.41 are gone, refrence wages will be what Wal-Mart is paying, not GM. So new $18./hr auto manufacturing wages will brighten up Michigan a few years from now.
I watched the news of the new honda plant and its reasons to go north on PBS’s Nightly Business Report one or possibly 3 weeks ago, and I bet you can find it again on their website, I think its NBR.com.
I just finished reading the article. Yup. Vapid product pipeline is an understatement.
Something for additional analysis:
My just-retired folks recently bought the “biggish” Merc sedan (Marquis?), and probably on the employee-family S or X plan…whatever that’s called (I don’t know, I never buy Fords).
But if layoffs continue, our last FoMoCo family member will no longer be able to be used to get “deals” (such as they are). What happens to those “gimme” sales then?
And they ARE “gimme” sales. My folks would never consider a non-Ford because they perceive that there’s money in it for them. Or savings; whatever…it’s all smoke and mirrors.
In any case, once nobody in the Family no longer works for Ford, there goes the so-called “free money.” That’s when “In the market for a new Ford” becomes “In the market for a new car.”
Interesting times are ahead.
Incidentally, Dad probably had one vote and Mom probably had one vote plus veto power on that decision, as long as it was a Ford or a Mercury (because of the aforementioned incentive). Yeah, that’s how it works out in my family. If Mama’s not happy, NOBODY is happy!
As adorable as she is, I doubt that Jill was a motivating factor in Mom’s decision. :eyeroll:
The Blue Oval has a problem, however. They made this sale, but my parents may not be buying too many more cars in their lifetimes, and if they do, it’s a lot less likely to be a Ford!
FoMoCo now has to compete on more levels than just S or X. They had better get the lead out on new products, and soon!
No real excuse can be made for the piggery that the UAW, or top Execs at auto manufacturers claim for compensation for making the inferior products we consumers will no longer purchase. Just as no excuse can be made for our politicians who stupidly decided that while they can't balance their state budget, they should rebalance the world and thus rebalance world wages, resource prices, resource allocation, etc. just because they thought the world would buy more of our debt. As long as the little 2.40 keep playing like there is no global warming, an endless suply of gas, and consumers have no history ( or memory ) of the crap they are trading in, they will eventually go away. The market has pretty much spoken on that topic. What is left, is for the idiots at those companies to be replaced by clear thinking business professionals, even if they turn out to be real car guys. Who actually practice "Quality is job 1" and for the UAW to be replaced with a balanced payscale so the company(s) can survive. It's not just detroit, the business methods used in the US and A are not working, and we will git it soon. Its as if not only detroit, but the entire country is making and buying its own cars, storing them and declaring a profit, and spending it. Forgit bein car nuts, to understand detroit you guys need to read the biz reports. Boy holidays are fun….. what one was this….. I have to go check a ford dealer ad in the paper….. later……
If Mullally’s $35 mil. wasn’t bankruptcy proof I imagine his, um, anyway, something would be getting real tight as this swirling motion keeps increasing in speed and amplitude. In the short term, there are no solutions. The Mondeo and latest Euro Focus are money losers if they are brought over here, there is money on the hood for their latest “savior”, and the domestic product pipeline is only good for world class echoes.
Luckily, as Hondaboy pointed out, Ch.11 is sitting there waiting, and the airline industry has proved that one can operate for quite awhile as a judge sits empowered as a combination majority shareholder and executioner.
Meanwhile, Mulllally is due to go sell cars for a day, will he be the greeter, the closer, hand off the ‘lay-downs’ to the impoverished salesmen, or sit in the owner’s office drinking coffee? I would suggest a Tuesday, so he can hear the wind whistling through the empty (of people) lot and stare at the Sat. ads and try to figure out how the $13k list Focus (that the mfg. ain’t making a penny off of at that price) is being advertised at $8999. Explain that bait and switch thing again please….
I would have liked to have seen some panic at this point, instead mgmt. is still frittering (see Mull’s salesman bit). For what it is worth, I remember Enron selling for double digits literally days before the implosion (the day they went t-up, only one WS firm had a sell on the stock – and a couple still had Buy recs).
Personally, I don’t make a lot out of the incentives on the Edge. It’s only $500 (vs. typical $4,000 incentive for Ford), its only on the strippers, and it goes to the dealer, not directly to the consumer. If they are otherwise selling 100K units without incentives, then the Edge is a much-needed successful introduction.
Otherwise, I have to say this was an excellent, well reasoned article. Thanks, Matthew — for the first time I actually got scared for Fords.
“Nissan didn’t have two 800-pound gorillas in the room: a bloated dealer network and a vapid product pipeline”
Ghosn did have one 800 lb gorilla to deal with. Nissan’s lineup in the U.S. market was rather dull and inspiring as I remember it back then. No 300ZX, no 240SX, not even a Sentra SE-R, just a pedestrian Sentra, Maxima, and the Altima before it became cool.
I will say this about Ford. True they are missing their targets, but at least they are being honest with themselves about it. I see Mullaley as a good thing for this company in that he is giving management an honest look in the mirror.
The question is whether he’s just too late to save them.
No 300ZX, no 240SX, not even a Sentra SE-R, just a pedestrian Sentra, Maxima, and the Altima before it became cool.
True, but the upcoming hot(ter) Altima was already being drawn up when Ghosn took over.
I think Mullaly is doing a great job, probably the best anyone can realistically expect. He’s on the ball, listening, trying, giving it all he’s got.
Too bad it’s too little too late. Ford doesn’t need a great new boss they need a great new board, management and maybe even employees. They needed that 5 years ago, 2 years ago, sooner than it happened.
If Mullaly pulls it off, he’ll probably be recognized as a savior and turnaround genius, but that still doesn’t strike me as “likely”.
Car companies won’t operate in bankrupty like airlines do: plane rides last a few hours, at max 20h if you’re taking the scenic route to Timbuktu. People aren’t going to buy cars at $30k/ea from someone who could cease operating anytime.
In most countries outside the USA, being in “bankrupty” means doors are closing forever – Chap 11 which allows reorganization isn’t an internationally understood concept and would likely still cause an international sales meltdown.
It is way too early to pass judgment on Mulally’s management. Companies such as Ford are massive corporate monstrosities that do not change direction easily. Even the worlds best CEO could not turn Ford around in less than two or three years. There is so much entrenched culture at all levels from the rank and file to C level executives to be overcome in a few months.
Mulally may or may not have a viable plan but it remains to be seen if Ford has the cash to ever see the results.
Glenn,
After reading much material on mises.org (What has govt done with our money, etc), I’m wondering: If such a melt down occurs, where do people put their assets? I know, I’m sorry if this is a bit off topic…it’s just fascinating. I mean, do you put it in the stock market? Hold worthless cash? Gold? Real Estate? How would one pay the slave tax on said Real Estate even if you owned it outright?
Just share a few thoughts. Thanks!
And to touch upon FoMoCo, GM, and Chrysler…
The sad thiing is it never had to be this way. Yes, all Three of them are facing the prospects of a meltdown. Greed, sloth, etc…aren’t these some of the 7 Deadly Sins?
What ever happened to producing the BEST? We USED TO (America). These corporate swine making 30-zillion times the average working guy, and is owed a weekly flight to a warm climate on top? I don’t know…but like I’ve said many times before…I come from a GM family. And I will not shed a tear when either (or all) of the Big 2.5 end up in the sewage treatment plant.
I don’t know..but the attitude I see daily (In everyday life, not just the auto industry) seems to read: Screw You…I’ve Got Mine. Is it any wonder the output of such a “process” yields trash motors who eventually close forever?
I just love that quote: “You can’t build a reputation on what you are going to do”…it fits my description of Hyundai last night to a T (Model-T?).
But, yeah, 15 trillion of debt is “non-payable”. As in the United States itself is bankrupt.
It is $53 trillion of debt which is approximately 4X GDP. A counterfeiter cannot go bankrupt, think Hyperinflation instead. I was in the country of Turkey in the early 90s where 1 “dollar” would buy 17,000 Turkish Lira. By the year 2001 I think it was 1.2M TL to the “dollar”. I think “Lira” in Latin means “Print Me!”. Inflation, created by our Central Bank Owners/Rulers, is just another method of robbing us since taxes are politically unpopular.
Chapter 11 may just be the best strategy for 2.75 although it might cause 2.75 customers to shop elsewhere… Ugh. On a lighter note, Diamler is peddling Chrysler at about $6B… Any takers here?
Rastus: I’m wondering: If such a melt down occurs, where do people put their assets? I know, I’m sorry if this is a bit off topic…it’s just fascinating. I mean, do you put it in the stock market? Hold worthless cash? Gold? Real Estate?
invest in guns. if all turns out well then worst case scenario they’re worth what you paid for them. if the shtf, then their value skyrockets.
Rastus: Think of gold as portable real estate. If you purchase real property then the maggots will just steal it from you in the form of property tax. Gold is the best hedge against inflation and if/when the BM hits the turbine then you can pack gold up and leave. One must live like a pirate to escape the “legal” pirates called Government. When I was in Turkey, the Turks would not even except their own Lira. They only wanted to deal in US Dollars, German Marks, Swiss Francs and, of course, gold coins/ingots. The Lira did not even make for good toilet paper.
By July 2001 the Turkish Lira was worth 2,000,000/$1. Ford’s devaluation seems similarly paced. Where are they going to make profit? F series can’t pick up the slack as it slacks, the Nav’s nasty, the new models aren’t hits, just when then next generation of vehicles should be being developed all the talent’s jumping ship and the rest are working on decontenting the slow sellers to profitability, and Ford’s president of the America’s lives in little Cuba. And Ford’s stock is up? Yeah, who wrote them that $17 billion check? Are they just gonna lose all that money to Ford’s grand chapter 11 scheme?
RE: Rastus:
I don’t know..but the attitude I see daily (In everyday life, not just the auto industry) seems to read: Screw You…I’ve Got Mine. Is it any wonder the output of such a “process” yields trash motors who eventually close forever?
Ding! Ding! Ding! That sums it up right there, and not just what’s wrong with the American auto industry but what is wrong with America. “Screw You, I Got Mine!”, should be the new national motto.
The merits of a Gold standard are best appreciated and most enthusiastically promoted by those who have never had to live with one.
My memory of Economics is somewhat fuzzy (it has been a long time) but there’s a clear distinction in the frequency and severity of business cycles (in terms of unemployment rate, bank closures, measures like that) before and after the Great Depression and the establishment of our current “fake” monetary system. Since we cut loose from gold, the frequency and severity of the downturns has been much reduced. The fiat monetary system has been working very, very well for us.
Ford needs to reexamine it’s vehicles.
Example: Ford Focus
What’s special about it? What does it do for me? Why do I(or would I) want one? Is it fast? Gets good mileage? Cheap?
In what way is it better then a Civic or Camry?
It needs to be better in one or more ways for it to sell. Right now, it’s just a blah car. And blah cars don’t sell well! I will never buy one as it is right now. Who has bought one and why did they buy it?
It’s like Ford just builds some cars and throws them out there and thinks they will all just magically sell well.
I live in a large city in the midwest and I’ve never seen a Ford Edge on the street. I may have seen a glimpse of one at a dealership as I blew by it doing 70 on the interstate though.
As an aside, I have also never seen a Jeep Compass or Patriot on the street. Also new Corollas are a rare sight. How does Honda have all the import aftermarket(Civic/Integra) and Toyota has zero(excluding the Supra)?
If the Ford Focus cost $5,000 new; would it sell as many as they could possibly build? Or would sales still not be good? That’s pretty sad if so. What would the situation be if a new Civic cost $5,000?
One of Ford’s many problems is that they abandoned all the old names, which means that when a new product comes out with a new name nobody has a clue what it is. Today there are so many new vehicles to choose from that it is very, very hard to stand out in a positive way and be noticed.
How many people realize that their car needs to be replaced and start by thinking to themselves, “hmmm, maybe I should get myself a Ford Edge” ? Answer: Almost nobody.
Whatever the collective strategic marketing spending is at FoMoCo, they would have been better off not spending it! This company has trashed it’s customers and it’s brands for decades now.
The problem isn’t that they made lots of money on trucks and SUVs. The problem is that while the truck gravy train was running they practically stopped investing in their cars. Toyota and Honda do major redesigns on their best selling cars every 4-6 years like clockwork. Each generation is in most ways much better than the one before. Ford builds products like the Escort/Focus, Tempo/Contour, Taurus/FiveHundred and lets them die of neglect. The neglect is so bad that when it finally does come time to replace them the vehicle either gets euthanized completely (Thunderbird, Mustang for a time, Continental, etc.) or is given a completely new name.
I guess they keep renaming the cars because they are so embarassed of the prior long of tooth model.
At this point Ford should just shut down all US car making and focus a new 1/2 sized company on trucks. Build everything from a Ranger class up through dump trucks. Build SUV variants off those platforms where there is a market. The Ford truck brand is still strong. The F150 still has it’s name. Ford truck buyers are mostly proud of their rigs. Nobody is proud to own a Focus, Fusion, Five Hundred or MKZ. If your customers cannot be proud they bought your product then you are done for. Ford’s only chance for US survival is to simply give up on cars. Here in California that is pretty much what the Ford dealer network has already done. I have never seen a Ford dealer here which has less than 80% of it’s inventory investment in trucks. The Ford and Lincoln Mercury dealers who own valuable real estate are simply throwing in the towel. Swanson Ford in Los Gatos, CA and Joe Kerley Lincoln Mercury in San Jose, CA both have given up the game recently after many, many decades in the business. Their real estate is worth plenty while their ongoing business was worth next to nothing.
There is probably no way for Ford to restructure without going into bankrupcy court, which means a complete wipe out for the stockholders. I guess that the many Ford heirs might have to actually start working for a living and may have to do so by competing for jobs at companies where they don’t have any pull.
At any other company as messed up as Ford the person with the title: “Director, North America Product Marketing, Planning and Strategy” would be fired by now. Normally such a high position would require more that a BA in business from New York University. But, if your name is Elena Ford the normal rules don’t apply.
http://media.ford.com/article_display.cfm?article_id=12330
I’ve been trying to figure out why Mazda, Volvo and Ford Europe have model lineups that are so much better than Ford/Mercury/Lincoln of North America?
Any Ideas? My Theory is that Ford USA have failed to invest in worker training and upgrading auto plants to the point where they simply can’t build to the same standard anymore.
There’s a scene at the end of the movie “The Sand Pebbles” wherein which the late Steve McQueen, playing a sailor on a boat guarding American missionaries in the old, pre-revolutionary China, goes ashore to save some missionaries; as the people are about ready to throw out the Brits, Americans and other colonials, circa 1926.
McQueen is shot, and as he is dying, he shouts out, “What the hell happened!”
I find myself feeling like McQueen in that scene. In 1999, Ford had such a huge cash surplus they bought Volvo cars for what was it, $33 billion? And now, they are stuggling to survive.
The problem, to my mind, is simple. They bet the farm on SUVs and trucks, all manner of them. Yes, they built cars but their soul wasn’t there anymore; and surely the profits weren’t.
Someone at the top, just kept saying, “Oh we’ll shift emphasis someday” and then $3 a gallon gas hit. “Someday” had arrived.
Then too, the products in North America just got too long in the tooth – not really terrible, but not as competitive as they once were.
So now, we are here, recalling what a man Henry Ford the first was. But the thing is, he too kept building a vehicle, that had been a major cash cow, too long: the model “T.”
Ford Motor almost went broke as the factories were shut down, in late 1928, to shift from building the model “T” – once the most popular car in the world – to the model “A.” That they made it through that time, was akin to a miracle. The Depression probably helped them, as much as anything. People again needed a cheap, dependable car – if they could afford a car, at all. The model “A” was it, as Bonnie and Clyde attested (in a famous letter to Henry Ford).
Can Ford make it this time? In the words of a song off the Beach Boys album Pet Sounds, God only knows.
Title “They Knew It was Coming”
In 1979 I worked at St Thomas Assembly Plant as a Production Supervisor, I think that was the start of Quality is Job 1 era. The papers were full everyday of how the North American auto worker did not build a quality product compared to the Japanese and Germans. Anyone else remember? The Japanese plants did morning exercises, had ping pong tables and sang the company song. We built Pinto’s at that time and we had one day when all the supervisors were called to the Final Quality Audit area. There sat a Honda Civic, a VW Rabbit and a Toyota. The plant manager, Quality Director and Production Manager told us all how if we did not build cars like this with their attention to details like door margins, seat stitching fit and finish that 20 years from now we would be out of business. I guess I sealed my future with Ford when I remarked that no matter how careful you put the parts together at the end of the line it is still a Pinto. After that we all had to bring our hourly employees to the the same cars and go over them pointing out how they were superior to the car we were building. Well, our plant manager was a little premature, it might be 30 years instead of 20 but they can’t say they didn’t see it coming.
daro31: I guess I sealed my future with Ford when I remarked that no matter how careful you put the parts together at the end of the line it is still a Pinto.
Probably. But you at least have the satisfaction of knowing you had a better feel for what was wrong than virtually anyone in Oakville or Dearborn. (Not that you can retire on satisfaction, but still, it is something!)
I recall that Volvo cost Ford something more like $7 billion. The purchase netted the large car platform for the 500/new Taurus/Freestyle and safety tech including Roll Stability Control.
Sadly, Ford NA hasn’t been successful with engineering their own car platforms. Although Mustang has been a sales success, the 2 other passenger car recent projects are the Lincoln LS/T-Bird/Jag S-Type and the late Taurus/Windstar. A lot of their other products come from Ford Europe (Focus, Contour) or Mazda (2nd gen Escort, Escape/Mariner).
Mullaly has been dealt a very bad hand in NA thanks to middling product and underdeveloped engineering resources. Problem is, there’s no bluffing allowed in this high-stakes game of Global Auto Poker. The Joker card is high gas prices, BTW.
hal There's more emotion in design from those companies (Americans have lost the passion for design, look at the influx of foreign designers into studios here now, what happened to the glory years of American design) and a stubborn/ American arrogance that has always denied that cars are done better else where. Why Ford and GM have not brought their euro models over sooner is beyond me (and why somebody has not been held responsible is even more puzzling). Finally that arrogance is dying with the realisation that the companies are dying because of this. As said before if the Opurns, euroFords and Holdiacs are a way of treading water until they can build better product here then so be it. But these are superior vehicles to US creations whether you like it or not. If it means your global cars are designed elsewhere for the NA market thats the way it is. Why should companies specifically design for a specific market when business sense says spread the cost and tap into talent elsewhere?
BostonTeaParty:
I think it’s a fallacy to suggest that a superior Euro -product will be a hit stateside. There is certainly plenty of evidence to suggest that automakers import their foreign darling do so at their peril. Merkur anyone?
It’s simple Darwinism. Products must evolve to match their enironment. America’s legislation, geography and culture are different from that of their European “allies.”
Honda learned that lesson. Toyota learned that lesson. Yes, niche products may translate, but more often than not, they don’t.
And I agree 100% that a car’s style should be native. Putting Brits at the helm of Ford’s design department is lunacy– unless they’ve mastered the American automotive idiom. Which clearly, they have not.
Daro31 has it part right, its 30% design, and 30% assembly, 30% dealer service. I may have said this once before, but here it goes again. My brother and I were really big Ford fans in our early days. My first was a 73 mustang, his was a 71 Mach1. Both we did our best to restore, yet drive every day. And we D-R-E-A-M-E-D of a new GT! In 90 I was ready for a new ride as the ’73 was pretty well rusted, and burning a qt. of 20-50 every week. My Bro and I went looking at the new GT’s and one thing I could not get over was not only that my buddies ’82GT had to have the floor replaced cause the seats fell through, but that as we looked at those 20 stangs on the dealer lot, no two had the doors lined up with the front fenders.
I pointed out some of this to my bro, he was under the spell a lot more than I was. And I expected the car to last. I took my time and picked my cars well, and was entirely happy with my picks. I could still have that ’73 if it were made like a honda.
My sister was the strange one of the bunch. She had Chevys. Two of them, and one she drove while the other was at the shop. I don’t know how she did it, but it was her bag. We both felt superior to her, because her 81 camaro with the 2.8 v6 kinda looked like the two did not belong. Not just that the 2 foot snorkel that ran from the engine fan to the radiator looked like it was outaplace. But when she changed her spark plugs, it was an all day thing, and included removing the front tires.
A few of these things struck me as things a car owner should not have to deal with. Constant repairs, fenders that were not aligned on almost every car on a NEW car lot.
A friend of mine also had a prelude, it was fast, really fast, probably not faster than a GT, but now I know Civics are outrunning lots of cars twice its price. And one of those other car mags said in a review of the Fit, that it did the slalom faster than a corvette. And that thing would corner better anything I had ever been in.
Well in 90 or 91 I got an 89 prelude, still have it, original clutch, 265,000 mi. Over the next few years I got lots of fire from bro for gettin that rice burner as he put it so often. in late 96 He got a 95GT off the Carmax lot 16,000 miles on it and the clutch was broken. It was a b-e-a-u-t-i-f-u-l bright yellow just like his mach 1. Since I ended up working fleet mechanic for a few landscapers I knew about broken Ford clutches, it was no big deal, but I knew he most likely will never actually wear out a f-clutch, they will break instead. His AC got the black death, his convertible roof tore from a piece of trim Ford refused to fix when he won the fight to have the roof replaced. The week he decided to sell it, happened when he was gunna take a trip, and decided to have ford do the service before the trip. Oil and coolant change. They only hand tightened the one oli drain plugs, hand spun on the oil filter, and forgot to refill the radiator. 2 miles from the dealer it over heated, he discovered the coolant, and the smoke from the dripping oil got him worried. He took it back to the dealer, and on the lift, he had the guy that worked on it stand there while my bro- tightened the oil filter with the service manager standing there. Tightened the one oil drain plug, and as he put the wrench on the second drain plug, the Ford certified mechanic said……. “This car has 2 drain plugs….” I guess it was the final disappointment, he went from there to the dollar store for a “for sale” sign. I did not list all the problems he had, but I think the chore of owning this car just to be too much. It really was not a fun car.
I remember the 91 Ford challenge. Dealers had 91 accords right next to Taurus’ss on the lot and somehow this comparison got Ford to have the best selling car for a few years. Personally I don’t know how they did it. I used that comparison to sell my uncle an accord. My Bro- was there and this was pre 95GT so he was still on his rice burner kick. While I suggested they look at both cars carefully, then go buy the Honda, Bro got hot and said “name me one thing that is better on the accord”. Without getting into either car, I took from my experience with my stang, and the new prelude, and I blurted out “interior trim screws” Everyone looked at me, and I said “you will not find an exposed interior trim screw in that accord” All the doors opened, and they all were off to find, or not find that I was right or wrong.
Bro replaced his 95GT in 99 with a 89 prelude I happened to drive past on my way home from work. He paid $4,000. I told him he got a good deal, it was a nice looking car, just go right to the dealer and change the timing belt. Honda drove him to work that day, called him a few hours into the day and asked him if he would ok changing a few more things that would be a good idea to do while they were “in there”. He called me and could not believe the ride to and from work, or that the dealer had his best interests in mind. I said calm down. A few years later he took it in to have the AC fixed, and the trans. flushed. They GAVE him a car for the day, yet again he called me freaking out at how good they treated him, and for a used car he did not even buy there.
I asked him about the dealer experience one day, and since I had owned one longer than he I said ” how many people were complaining about having to fix their car that day?” he said “none” but instead they were happy, and talked about how many miles the car had, and how regular maintenance was something they felt obligated to do for something that serves them so well over the years. My dad and sister now also own Honda cars, she still has her Camaro, and I have a Dakota pick up. But we call ourselves Honda People now. And its not just the car, its the parts department, its the service department, its the service manager if you got something that seems to be outaplace. My dad even has a 99 accord and has had the tranny replaced, along with the well known ABS, and SRS problems. And he is still happy, and its because he got treated better than he was when he had recall items on his fords.
Bro’s Prelude has 340,000 miles and will need a new tranny in about a year or less, and he may just get it done and keep it.
I kinda like the 500, but for me to consider any US and A car, it will have to be around for another 10 years, and the entire line of their cars had better have the right color dots when I look it up in Consumer Reports, and I had better not hear about the fighting consumers have to go through to get a warrantee item repaired. And I think less than a cars looks, its that all this owner experience is there in a person’s mind when they think about a new car. And in that case, I think for the most part F, C and GM won’t be around too much longer.
As for the economic melt down, its gunna happen like this. We are for a time going to have to raise interest rates on treasury bonds to get that 70 Billion influx to pay interest to international investors. W is gunna spend tons on his hobbies over seas, maybe even start a new one. Gov. costs are going to keep going up, and that 70 billion is going to go up to 72, and 73. When we finally go down the toilet, the World bank will have to do a hit the big reset button simply because there is no 15 or 50 trillion dollars anywhere on the planet. And after the reset button, I think the US and A will go on a “pay as you go” plan which would be a good thing, we would have to re evaluate spending on the military at 30X or 50X or 100X what the rest of the planet spends on war preparation. We will all have to save money, and not spend 20% more than we make annually. It will require all the world to re adjust as consumption also adjusted lower to acomidate the US and A’s new pay as you go economics. I think the melt down will be a good thing 50 years out.
Respectfull; to Robert, and Bostonteaparty:
Econonics keep most companies from importing products from their sister companies over seas. And its not so much the cost of designing a few components to meet different emissions, or crash standards. To build a world car, you simply design the car to the tightest standards you have to meet. For Honda and Toyota, they learned its better to just meet California emissions for example, and then just make one vehicle, and sell it in all 50.
GM and Ford, if they imported a car and it was a hit, even a prius killer, they still have one really big problem. They still have to pay UAW people to stand there and do nothing 40 hours a week, while selling that import. In effect taking that import with US:EURO exchange rate ratio growing steeper daily, and NOT in our favor. And then adding to that, the same cost they are complaining about now with respect to retirement, and health care. Plus management would have to watch UAW people do less than management. And that one they will NEVER sign off on.
later.
Well put, RF. As much as We (car enthusiasts, that is) would absolutely love the EuroFord lineup here in the US, there is NO evidence to suggest the American buying public would also embrace those models.
A list of the top 10 best selling cars in the US is all the evidence I need to believe that the EuroFord models would simply be niche players. And exchange rates guarantee they would be money losers, too (Saturn Astra, anyone?) Fortunately, Mullaly seems to be smarter than Lutz in that regard.
Automotive design tastes haven’t really changed since the days when the Olds Cutlass and Ford Escort were the best sellers. They were stricly average, conservative designs at best. The Camcordtima’s are nothing if not modern day Oldsmobiles (and a nauseous combination of safe, bland, and conservative design elements, to boot.)
Yes, Ford NA has to bail out the mothership- Not FordEurope. Whether the Fusion, Edge, Mustang, F-150 will be enough (even in the short-term) is becoming more obvious with each passing month, and the answer seems to be No. Not being privy to the “Showroom of the Future”, I have no idea if Ford has a game changer in the works… For the sake of tens of thousands that would be affected by a belly-up Ford, I hope they do.
Speaking of “The Showroom of the Future,” can anyone who attended this event comment??? Even just an Yay/Nay will suffice!!
The man at the helm of fords American design is American, need I say more.
RF, America is becoming more europeanised with the shift from the traditional American market of the SUV and pick up, the American dream of the big car is dying and as a nation you’re moving to smaller euroesque cars, so it seems that tastes will also progress that way. Europe had bland vehicles (you couldn’t tell apart a Sierra from a Cavalier from any number of Japanese vehicles) but peoples tastes and appreciation for design changed, customers complained and companies listened, standing out from the crowd, identifying yourself from your neighbours vehicle was all important and something that is already happening here. Your vehicle is a window of your personality, not everyone wants to be a librarian driving a Camry (sorry for flaming librarians). Style will increasingly sell vehicles, and the best stylists are generally European, many are British.
America has lost its way with design, which is a look at its society as a whole. Wheres the inspiration for a nation gone? Look at the flowing lines of old Fords and GM’s and the inspiration from the space race, now we have strong bland boring vehicles that represent an insecurity where you want to protect number one, you and forget everyone else and what they think. There’s almost a lack of confidence that relates to both. America needs its renaissance again.
RF lets look at the heads of automotive design that have not been “natives” that have been successful.
Moray Callum, head of Mazda, look at the success there, amazing what a Scot did in Japan wouldn’t you say. He got dragged back screaming to the mother ship to help out NA design. Oh and his brother did the AM Vanquish and DB9.
Peter Horbury, was head of Volvo, most of what we see and what people have complimented Volvo on (yes on this site too) is down to this English gentleman. Captured Scandinavian design and Volvo philosophy beautifully.
Gerry Mcgovern, ran Lincoln, found American contemporary automotive design again with stunning concepts, fair enough the production side has not lived up to expectations but this is down to bean counters and changes in management, not willing to follow the dream through.
On paper a great team, so why is Ford lacking designs that truly inspire you to buy product?
To be a designer you need to appreciate multiculture aswell as native design and to do it with a flair. Maybe fords problem lies with the reliance on a designer at the very top relying too much on his VW past for designs definitely lacking passion and emotion. Product sells, yet the ones under his guidance aren’t. Maybe its time for him to move on, a lot of people in the industry think so. As with most problems they start at the top, that’s where they should start fixing this ship. The captains changed now lets look at the rest of the bridge crew.
Does anyone have the data? Is the Edge selling well or is it too early to judge?
I’ve only seen one “in the metal” in an area where I would expect to see far more.
Pete: Does anyone have the data? Is the Edge selling well or is it too early to judge?
So far Ford has sold about 7,700 Edges. In contrast, Toyota sold 10K Highlanders and almost 12K RAV4s in January alone.
BostonTeaParty,
I agree that American brands have lost their way with design. Ford has a good team in place, I can’t blame them because the problem seems to be that Management doesn’t allow for any design risks anymore(did the ’96 Taurus burn them THAT bad?)
Ford only needs to look at it’s own history to discover that taking some risks with design had separated them from the rest of the market, and subsequently saved them from falling into the abyss every time. (’83 T-Bird/Cougar, ’84 Mark VII, ’86 Taurus/Sable, ’05 Mustang…)
What I want to see is new models that look like the company that designed them is HUNGRY to SAVE the company via a compelling design/value statement! That is the only thing that would give me some confidence that all the right things are going on behind the scenes…
Pete,
It’s too early to judge. Many dealers still haven’t seen enough stock to make a qualified judgement this early.
It’s too early to judge. Many dealers still haven’t seen enough stock to make a qualified judgement this early.
If dealers haven’t seen enough stock, it’s their own fault. Ford has a 71 day supply of Edges in their inventory and they built over 17K of them in January – 12,000 more than they sold in the same month.
Ford only needs to look at it’s own history to discover that taking some risks with design had separated them from the rest of the market, and subsequently saved them from falling into the abyss every time. (’83 T-Bird/Cougar, ‘84 Mark VII, ‘86 Taurus/Sable, ‘05 Mustang…)
Steve-O: problem is, I’m not sure today’s management has that level of enlightment. Designers had more creative freedom and corporate empowerment back then.
That Ford Interceptor concept looks like a Chrysler 300 with a Super Duty front end on it. All I see is more of the same old committee think.
I can’t blame them because the problem seems to be that Management doesn’t allow for any design risks anymore(did the ‘96 Taurus burn them THAT bad?)
They’ll soon realize that “bad” by 1996 standards is pretty good these days. That car had a lot of expensive materials (lower margins?) in it, but sold well for a little while. Future corner-cutting and fleet sales didn’t help at all. Lesson learned?
Maybe GM can buy Ford as well as Chrysler. That way they’ll be back to 50% market share in the US. For a minute at least…
In most countries outside the USA, being in “bankrupty” means doors are closing forever – Chap 11 which allows reorganization isn’t an internationally understood concept and would likely still cause an international sales meltdown.
Kablamo, that is an excellent point. I never understood the Chapter 11 thing in the US. As you said, in most countries it means you are DOA.
And although for Ford the question of parts availability may not be as critical (i.e., aftermarket suppliers would step in) people would still worry. Especially those that had the misfortune to buy a Daewoo, Renault, a French sourced Eagle, or anything from the former Eastern bloc. (Speaking of which, is there any chance TTAC can be persuaded to do a retrospective of the eastern European imports that flooded into Canada? They’d have a field day.)
Last. Hondaboy55 your doomsday scenario aligns pretty well with my own. Reminds me of an old joke. Guy falls out a 20 story building. On his way past the 10th floor someone yells ‘How is it going?’, he yells back ‘Not bad so far!’
It needs to be better in one or more ways for it to sell. Right now, it’s just a blah car. And blah cars don’t sell well! I will never buy one as it is right now. Who has bought one (Focus) and why did they buy it?
My brother has a 2002 Focus ZX5 hatchback and a 2004 Focus 4 door sedan. I had a 2003 Focus SVT that I bought used and sold a year and a half later.
My brother bought his first Focus because it was a 5 door hatchback. Other than the PT Cruiser and the Toyota Matrix, there weren’t other cars out there with this configuration. The Focus trumped both of those cars by being faster, better handling, and much tighter feeling. That it was also the cheapest was a bonus. Sport package, power windows, locks, and mirrors, ABS 4 wheel disc brakes, keyless entry, 6 disc changer built into the dash radio, A/C, etc, less than $16,500 new.
He bought the Focus sedan based on 75,000 trouble free miles on his first Focus and the low price. Power windows, locks, mirrors, A/C, keyless entry, auto trans, 6 disc in-dash changer, less than $12,000 new.
I bought the Focus SVT because it was a high performance hatchback. The only other cars that qualified were the Volkswagen GTI and the Honda Civic Si. Based on my brother’s experience with his car, I bought the Focus. It was cheaper than comparable versions of the other two cars, and had a good supply of aftermarket support (this car was for foolin’ around with).
Both the SVT and the ZX5 were exceptional handlers and great fun to drive. I found the interior’s quirky design refreshing and upmarket in appearance. Even the materials had a good look and feel to them.
While the SVT is gone (at a profit I might add), both the sedan and ZX5 are still around. The ZX5 has reached 150,000 miles while the sedan has hit 75,000 with no trouble.
hondaboy55: compare your Honda experience to the Buick dealer I had to argue with about a free oil change. Yes, they had given me something when I bought the car saying I got a free oil change. When I took the car in, they said, oh, we don’t do that any more. No expiration date on the piece of paper. Had to argue. Let’s see, $22k car, oil change costs them, what about 5 bucks? Oh, and yeah, the Buick was a POS also. Bye bye Buick (and GM).
John
I was wondering, what if Ford took some of its US models to Europe? Maybe just the Edge or the Mustang, this cars would have a high added value in Europe and at the actual exchange rates and what it cost to make them I guess they could make a big profit even if they didn’t sell that well, anyway, the Ford Europe lineup is lacking in a few segments if they want to grow or compete with Toyota and the like. The Mustang would enter in a niche which is for cars at double the prize of it, and my bet is that the Edge would sell very well with a diesel engine. Sure they don’t fit very well aesthetically with the rest of the lineup but in my opinion the don’t in the US either so…
That said, I don’t really think this are good cars, but it could be good for Ford Europe, if it works Ford will earn money and they won’t have to reduce of workload in the NA plants of lay off more people
It needs to be better in one or more ways for it to sell. Right now, it’s just a blah car. And blah cars don’t sell well! I will never buy one as it is right now. Who has bought one (Focus) and why did they buy it?
I bought a 2000 Focus. Had a record number of recalls, but I liked the car. Having a family made me part with my RX-7 and get the Focus Wagon. The dealer experience was good. They fixed 2 or three recalls with each visit, and washed the car for me at the same time.
The car handled great. Not as high a limit as the RX-7, but pretty close, and with better steering feel.
I wouldn’t go near a Ford right now. I don’t think the Focus is much different than when I bought it, and the competition is just so much better. Having said that, I was always happy with the Focus. Never had any problems over my three years with it. (My wife was pregnant, and the “new car” smell made her sick to her stomach, but I won’t hold that against Ford)
Martin, I’ve wondered that too. Or more to the point, why aren’t they making EuroFoci in Wixom and shipping them to Europe where they can either undercut their made-in-Europe competition on price, or realize a larger margin for FoMoCo?
Frank Williams:
February 20th, 2007 at 1:25 pm
Pete: Does anyone have the data? Is the Edge selling well or is it too early to judge?
So far Ford has sold about 7,700 Edges. In contrast, Toyota sold 10K Highlanders and almost 12K RAV4s in January alone.
I realize it’s near the end of its run, but based on the number of 07 Highlander’s I’ve seen in “Rental Car Hell”, I’d guess Toyota is making way more Highlander’s than it can sell at retail.
The current Highlander is so bland; I’m surprised you don’t fall into a coma instantly when you step inside one.
To answer your question Cavendel. . . “who would buy a focus right now?”
The answer is: More people than buy ANY other car PERIOD. The focus is the best selling “car” in the WORLD since it’s introduction in 2000.
If that doesn’t impress you well, frankly, you’re not impressionable.
Sure, they don’t have every feature. . .they’re not supposed to. They are supposed to be affordable.
Now, compare them to the imports, honda and toyota are much more expensive and have even LESS in the interior and under the body.
Nothing feels like a Focus, and the sales prove it.