With Ford Motor Company dropping all but one car from its lineup to focus on utility vehicles and crossovers, there’s little reason to run ad campaigns for both. You don’t see Coca-Cola running spots for both Diet Coke and Coke BlāK, as the latter of the two beverages disappeared from store shelves roughly a decade ago. Companies don’t bother pushing products they don’t have, and pretty soon Ford won’t have cars.
Thus, the automaker has ended all nationwide marketing for the Fiesta, Focus, Taurus, and Fusion. Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service, said the automaker intends to use the freed advertising dollars on the company’s current and forthcoming utility models — setting aside a portion for the Mustang. But the Fusion, which is slated to stick around for another two years, will have to go without.
“It allows us to focus our resources,” LaNeve said in an interview with Automotive News. “If we can take that money from sedans, where we have a middle-of-the-road position, to be the leading brand in SUVs, that’d be a really good position.”
While some complain that Ford’s abandonment of the traditional car is shortsighted, the plan is not without merit. Automakers stand witness to the sedan segment shrinking as crossover vehicles grow in popularity, and Ford just wants to get out ahead of the trend and capitalize on the wider profit margins of utility vehicles. However, the success of its strategy is highly dependent upon their continued growth.
Not being able to see into the future is a problem in any industry, and it remains the primary weakness in Ford’s plan. But the company should be credited for foregoing any half measures. It has committed itself to the blueprint it laid out in April. “We clearly have the right strategy,” LaNeve said.
From Automotive News:
The company’s August sales results suggest it’s the right move, executives say. The Ford brand’s car sales dropped 21 percent last month, while pickup and van sales rose 5.9 percent and utility-vehicle sales jumped 20 percent. Mustang sales jumped 35 percent as it continues to dominate the pony-car segment.
For the sake of comparison, Fusion sales were down 35 percent vs August of 2017. In fact, the sedan likely won’t surpass 200,000 deliveries in the United States by the end of 2018. Despite posting 300,170 U.S. sales just three years earlier, the Fusion has fallen on hard times. But it still manages to outsell both the Focus and Fiesta.
Ford says it won’t turn back and push the Fusion as the sedan rides out its last two years before retirement (to use a mild word). However, it is willing to help with incentives. “Obviously, we can’t let the dealers just sit on the inventory,” LaNeve explained. “We’ll keep them competitive on incentives, but we’re certainly not spending money there in a way where we’d be driving the market. We’re accepting the share we’ve got.”
You’ll have to accept it, as well. Though you might already find it difficult to recall the last time you saw any Ford prominently featured on TV that wasn’t a pickup, utility vehicle, or the Mustang.
Given I have zero interest in paying money for a new Ford, I couldn’t care less what they sell. Just don’t go hat in hand begging Congress for my tax dollars when gas goes back to $4 a gallon and you’re caught flat-footed again.
They didn’t last time.
it ain’t so black and white: https://www.factcheck.org/2011/09/ford-motor-co-does-u-turn-on-bailouts/
They will now. The company that did not accept a bailout a decade ago is now the worst US car maker.
Ford – what a disgrace!
They will come a’beggin’. And I sure hope we have a tough President who won’t give them money to save them. I’d almost vote Socialist if I knew they wouldn’t help this giant and stupid member of Corporate America.
Let me eliminate/preempt a few of the responses I see coming….
“Cant believe Ford! I am on my 3rd Fusion Titanium purchased new for $15K under MSRP… they just lost a customer!”
“Stupid Ford… don’t they know market share is more important than profit??? Better to go out of business with a big market share than to let your competitors eat more of the losses of a dying segment”
“something something Jim HACK-ett something something”
Now on to the business of adult discussion of this saga…
If you ask me, there are too many car brands in various segments. FCA is already out, and now Ford. I can see H/K pulling out of the midsize market next. Sonata is down by nearly half of its 2012 peak, Optima is down about 40%. Keep in mind they both just got big refreshes. Not hard to get five figures off of either. What would YOU do?
If you notice it is only the short term thinking American companies pulling out of cars. I guess Skoda and Seat know better.
Ford has now had a stock price under 10.usd for ten weeks in a row. Their stock price is 4 points lower than FCA.
GM stock is nearly 30 points higher!!
This is what one reckless imbecile can do to a once thriving company. Hackett was not even that good of a furniture salesman.
Neither Skoda nor Seat sell small cars in the US, so there’s that.
There’s also the fact that Ford just launched new small cars in the markets Skoda and Seat operate in.
But you have never been one to let facts get in the way of your Ford bashing.
“Ford has now had a stock price under 10.usd for ten weeks in a row. Their stock price is 4 points lower than FCA.
GM stock is nearly 30 points higher!!“
If you think the absolute value of one share has any meaning for anything, I don’t even know where to start. (Okay, here’s a hint – the number of shares times their price is much more relevant.)
“…only the short term think…”
How about no company should burn too much resources on the long term. Besides, only God, Allah and Toyota know the future for certain. For sure “you strike while iron’s Hot”.
A company focusing on what’s hot for now, or a good today/tomorrow mix, could squirrel away a big enough mountain of cash/assets/investment to ride out just about any Perfect Storm you can throw at it. Of course stockholders hate when their corp isn’t pushing it to redline, but that’s when it’s time to go private.
In-N-Out stays family owned for a very good reason. No nugget tenders, burritos, tacos or chile relleno etc. just a fast food cheeseburger that can’t be beat, in limited markets, limited time while people still eat great tasting cheeseburgers and fries never frozen.
In-n-out is massively, massively overrated. the only people talking it up are idiot Californians who want to feel special. They’ve got a better-than-average fast food burger, but everything else on the menu (especially the fries) is total s**t.
Uh, Animal Fries? Animal Style cheeseburger? 3×3? 4×4? There’s others I forget on the Secret Menu, but like anything that people build up too much, you’re in for a letdown.
I wouldn’t call it the best fast-food cheeseburger ever, and nothing that fast-food will set the world on fire, but find me a better one?
Just patty to patty. The closest contender better not be from frozen or it already lost.
The point is stockholders would F-up a good thing, with demands of cutting corners, from frozen, lowest bidders, imitation cheese, preservatives, and of course injecting everything under the sun into the menu.
Maybe you build the best burrito around. Then there’s no need for selling a long list of other junk to bring people in, loss leaders, and all the other free stuff, condiments, etc, that go along with each of those.
What about, Keep it simple, stupid? (KISS)
JimZ, I agree there. Decades ago they used to be decent but they burgers have shrunk over the years and are just average in flavor. They are marketed well, just like 5 Guys, but at least 5 Guys has good fries. The In and Out burger is like the dollar menu burger at McDonalds.
I could get better burgers and fries at Ye Olde Hamburger Stand and spend half as much.
Now that I am not in CA anymore I don’t really care.
Ford is smart for going where the money is, but the Focus and Fiesta could have been money cars had they been marketed like Starbucks or In and Out.
Marketing can put lipstick on a pig, and a few might buy one based on that, but they won’t buy one again. Probably they’re avoid the brand altogether, for life. So automakers better make them good or not at all.
Most consumers aren’t stupid, and demand quality/value for their dollars.
So when one fast-food joint has a drive-thru line of cars at peak dinner, wrapping around the building, parking lot and down the street a ways, while the other famous franchise fast-food places are like a ghost town, and you figure that’s just clever marketing?
Then hit the empty drive-thru and stop off and get yourself some of the greatest fine wine ever made in a 5-liter box.
“I can see H/K pulling out of the midsize market next.”
Wouldn’t this depend on if the Optima and Sonata are making money?
Compared to Ford, other manufacturers may have better synergy (sorry for the buzzword) or better cost structures that allow them to maintain acceptable margins even with lower volume and higher incentives. GM has already claimed as much. If that’s the case it may take longer than you think for companies to pull out of segments.
Between 2015-2017 Optima/Sonata sales fell by about 40%. Mind you, I’m pretty sure they both got full refreshes in that time. And as I mentioned the incentives are thick. So the cars aren’t in an environment which will attract much investment or development, potentially sending them down a catch-22 death spiral.
Some people refuse to let go of the status quo. CAFE and the winds of consumer preference have taken the profits out of cars. Even a fuel price spike won’t make them any more profitable under these conditions. Better to make car based CUVs that are mechanically pretty close to cars that don’t have to hit the same high fuel economy targets for their footprint.
I would argue it’s only the adjustment period that has bad or negative margins. Eventually sales will bottom and even out, and enough manufacturers will have left the segment to make it profitable for those that remain. Of course, who knows how long the adjustment period will last….
I question whether mfr advertising actually helps to sell cars.
Most car ads are vapid wastes of money, especially in the internet age (see also “auto shows”). If hot girls could sell cars, Mercury would be the best-selling brand today.
Probably the most effective car advertising is from the local dealers, screaming about their HUGE inventory, LOW prices, BEST service, and HIGHEST customer satisfaction. YMMV
One popular brand today eschews discounts, dealers, and advertising altogether, and continues to grow volume and market share. Sometimes the product sells itself.
The advertising industry is a farce, but don’t let anyone know or the whole system will crash. TV, radio, the internet… they all depend on advertising. This very site only works because ads pay the bills. Once they learn we don’t actually buy things based on stupid banners or links it will go dark.
Football starts tonight so I except a BIG dose of more car, well I guess now just TRUCK ads I will completely ignore. Well unless they feature hot girls.
@JMII: Folks don’t buy things based on “advertising”?? (I realize you used more specific language but I’m going with your opening.) Don’t know where you live so I can give a good example, but if I would say “best car dealer” a name is going to occur to you. If I say “shoes”, a name is going to occur to you. If I say “ice cream” a name is going to occur to you. Why? You may say personal experience. In truth it’s due to advertising. It comes down to “branding” so that when you have a need – new shoes, something to eat, new/used car – you think of a particular provider. It’s all due to effective (repetitive) advertising. You got there the first time due to some kind of ad be it print/audio/visual/word of mouth.
Last year GM sold 75000 impalas making it the best selling car in it’s class. The new Malibu is slowly inching ahead of the Fusion in sales. GM is still a car company, and Ford is a flaming bag of crap.
Ford – what a f**king disgrace.
FCA sold 88k Chargers in 2017, isn’t it in the same class as the Impala?
How many Impalas is GM on track to sell this year?
Charger…speaking of fleet queens…
“Charger…speaking of fleet queens…”
BUT, also speaking about things that still make money for its manufacturer.
Good short term strategy. I’m not sold on it long-term, though.
But if they fully refreshed the interior – and I’m talking about a 100% redo – I bet it’d be good to go for quite some time. For me, the interior is really this car’s weakest point.
Still a car company..barely…who shut down half their divisions because they didnt sell s#!t…and the remaining ones arnt doing so hot either. Great bailout of a crap car company who hides deadly engineering that killed people.
GM-JUNK!
As a parting shot showing extreme arrogance, they significantly raised the price of the Fusion Sport.
I believe they just dumped in a bunch more standard equipment. With no one buying them anyway, there’s little point in producing stripper models, loaded models, and everything in between. They’re basically doing what Chevy did with the SS.
Seems to me that Ford is chasing the market, not leading it. If there comes a time–and there may not–when either the Congress and/or the public cares about fuel economy and if the national fleet fuel economy declines as a result of the gradual disappearance of cars, it’s certainly possible that the “light truck” category under which SUVs and, i assume CUVs, are treated more leniently under CAFE, will be modified to include only what most people think of as “trucks,” not elevated wagons and 3-row people carriers.
Obviously, I’m prejudiced against SUVs and CUVs, which, to my mind and eye, are the commoditization of the auto business. So, Ford is jumping with both feet into an already crowded category. What unique thing do they bring to that market? Nothing that I can see.
Speaking of Ford advertising:
“Have you driven a Ford lately?”
Yes, I have. It was a CUV. It sucked – bad. And they think their current sedan buyers will spend more to buy it.
Best of luck with the New Ford, guys.
All this excitement over the death of the sedan reminds me of the “Peak Oil” hysteria a decade ago.
Wake me up when it’s over and everything has regressed back to its long-term trend as it always does.
Pendulums swing. When the time comes to find another vehicle I’ll see what’s available. It doesn’t do me any good to froth at the mouth about a manufacturer pulling out of a segment.
It’s the same problem with the reward march of manual transmissions.
All the hostility for Ford! Wasn’t one of the Baruth boys telling us the other day how Ford has a much more upscale image than Chevy?
Upscale image is nice I guess.
But I’d rather have higher EPS and better net margins.
Some here would rather Ford go out of business than operate in ways they don’t agree with. I’d wager most of them are not invested in Ford by stock or product.
deanst, both Ford and Chevrolet have to cut costs where the can to compensate for UAW contracts past and present. About $1500 per car if I remember correctly. Chevrolet traditionally finds cost savings in interior plastics with the cost savings assaulting the senses as soon as you enter the car. GM Cheesy Plastic Dash Division. Ford, in contrast, is more creative in hiding the cost cutting in infuriatingly difficult to repair locations. The Ford looks less cheap, but the beater Chevrolet is less likely to have expensive engine and automatic transmission problems.
Where are all B&B? They are conspicuously absent when discussion comes to Ford. The same actors making the same old, tired statements every day over and over again. Right, fleet queens, sucks, deathwatch, gauges, kill it. Yeah, Ford is going out of business soon – very dramatic I must admit.
The last car ad I remember was a radio ad for a local Chevy dealer. They had a lease deal where you could get two Cruzes for the price of one, but you had to take delivery of both. That’s been 3 years ago.
Otherwise, I watch Netflix pretty much exclusively and the only other commercials I hear come from Pandora or Stitcher. Of those the only car related ads are for Febreze and they make me want to gouge out my remaining eardrum. I’m a tough guy to reach when you’re selling a thing. Unless I’m actively looking for something, I see naught from adverts.
I wonder if Ford is doing what too many corporations are doing–putting stockholders above all else. The problem is that stockholders now want huge short-term payouts–and to hell with two years from now, because by then they will have sold their stock and went on to ruin some other corporation. And as too many know, short-term payouts usually come at the expense of the future–by such things as reducing or eliminating R&D for future products and getting rid of key people (who usually earn their high salaries). I sincerely hope I am wrong that this is the case here.
Stockholders don’t invest in Ford to lose their money. Of course stockholders need to be put above all else.
No different than GM and their faulty ignition switches or any other publicly-held company.
Stockholders come first. All else falls by the wayside.
Consumers have a choice. They can always vote with their wallet and/or their feet.
There are plenty of public owned car companies that make AND SELL great cars. The public corporate structure has nothing to do with Ford’s problems. Ford’s shareholders are no more demanding or short sighted than Honda’s or Toyota’s.
I’m not saying that Ford’s stockholders are any more short-sighted than Honda’s, Toyota’s or anyone else’s. I am wondering if today’s stockholders are more short-sighted than yesterday’s; where before stock tended to be a long-term investment, that we would hope would double in value over the next 30 years, today the trend seems to be to make a huge amount of money today–and if the company folds tomorrow, make sure you’ve sold before then.
I really doubt advertising vehicles works that well nowadays, most people don’t just go and impulse buy a new car.