Analysis: Ford's fading future
Until nation's No. 2 automaker jazzes up lineup, it'll continue to lose significance -- and market share
Thursday, June 15, 2006

By Don Hammonds, Pittsburgh Post-Gazette

General Motors Corp. may be struggling, but as far as industry insiders are concerned, financially troubled Ford Motor Co.'s prospects are bleaker. And the reasons are as obvious as the new models on the showroom floor, which are for the most part dull and uninteresting. And those in the pipeline don't seem to be much better.

"I've thought Ford was in worse shape than GM for the last six months or so," said Jack Nerad of Kelley Blue Book. "A lot of us were looking at what we already have from Ford and what we know is coming from Ford, and we are less positive about what's coming up for them vs. what GM has been announcing."

The dissatisfaction with Ford's product offerings is part of the reason why Fitch Ratings last week downgraded the long-term debt ratings for Ford and its financing unit deeper into junk status. Further market share losses and cost increases also were factors. "There is little to point to in terms of a turnaround for Ford in North America through 2007,' said Mark Oline, Fitch managing director.

A look at some of today's vehicle segments illustrates where Ford has problems. "Must have" or so-called "halo" cars and trucks -- products that are showroom traffic generators that add luster to the whole product lineup even if consumers end up buying a different model -- are sorely lacking.

By contrast, rival GM has several, including the Chevy Corvette, Pontiac Solstice and Saturn Sky roadsters. Corvettes have been regularly snapped up for decades, and the Solstice and Sky are sellouts with waiting lists. In fact, GM reportedly is looking for ways to increase plant capacity to build more.

Moreover, sales of Ford's only "must have" car, the Mustang, already have slowed a year after the latest make was introduced. In May, sales were down 21 percent from a year ago, and are down 11.6 percent so far this year when compared to the same period last year.

Things aren't likely to get any easier for Mustang in the next year or two, with Chevy expected to introduce its competing Camaro and Dodge, its Challenger. There is even speculation that Pontiac may bring back the Firebird.

In the heart of the market -- family sedans -- Ford also is struggling. It takes both of its main family sedan models, the full-size Five Hundred and its popular intermediate Fusion, to even come close to the sales of just one GM product, the full-size Chevy Impala.

According to J.D. Powers and Associates, Chevy's new Impala sold 23,702 units last month, vs. only 8,204 Five Hundreds, its direct competitor from Ford.

The SUV market, long a source of profits and health for both GM and Ford, is another area where the nation's second-largest domestic automaker has its hands full. For example, sales of its Explorer line fell 13 percent in May, following a 47 percent plunge in April, J.D. Power figures show. And sales of the larger Expedition model plummeted 45.3 percent in May. Only the smaller, gas-friendlier Escape saw sales rise -- up 19 percent from May a year ago.

There were bright spots for Ford in May's industry sales report.

The Mercury Milan and Ford Fusion are selling well, and the aging Ford Focus subcompact still had a 13 percent increase in sales last month, largely because of concern over gas prices.

The Lincoln division, buoyed by strong sales for its all-new Zephyr, had an 8.2 percent increase in sales. And its Town Car, one of the oldest designs in the American auto industry, had a 9.9 percent increase in sales in May.

Still, analysts worry that Ford isn't learning important lessons about how the vehicle sales market works -- and they say it's hurting the firm in lost sales.

For instance, Ford introduced 2007 repla

 

Maybe there challenger can help them pull out of this rut. Im surprised with the recent release that people are still predicting the end for Ford

 

Same here. I actually think that GM will be in worse trouble once the new truck line hype dies down. Ford's line is for the first time in about 10-15 years, competitive. The new Taurus offers very impressive fuel mileage and good power along with safety for a reasonable price much to an improvement of the Five Hundred. The styling although not my favorite is much better than the Five Hundred of any other Taurus made since 1996. The Fusion needs a power upgrade but not a bad package overall. The Edge actually impresses me. I think Ford should be okay. Its GM I'm worried about. They are going to put themselves into a corner with some of those new engines. I'm not convinced about the reliability of many of their engines.

I hope that the upcoming Phoenix engines will carry over the reliability, somewhat smoothness, and fuel economy of the 3.3L/3.8L/3.5L/4.0L line (note I didn't include the 2.7L on purpose, I'll be happy to see that engine go). I hope the "World Engine" picks up the K-engine I4 lines legacy for good performance and reliability over the half Chrysler, half Mitsubishi design did. I hope these dual-clutch automatics work out well. I hope the new interior will bring us back to the quality of the earilier merger days interior instead of all of this hard plastic stuff.

 

Ford dealers tacking on 20K mark up's aren't helping them either.

The GT When it came out was projected to sell in the high 20's. Tack on another 20K in dealer mark ups. They were going for mid 40's here. That's a car and a half.

Same with the Shelby. Dealers turned a 40K car in to a 60+K car.

If Ford allows this type of business practice from their dealers, let them struggle.

 

sadly living in the south tri-state area of GA/AL/TN you see f-150's EVERYWHERE you look and mustangs are like mini vans here. If ford is doing bad in the north and west i understand but in the south they have such a strong grasp on the market its amazing. Thats why im praying dodge HAS ot sell challengers a little cheaper here because first of all people are so tight with there money (sorry its in our blood) and the fact they will be alittle scared people might not buy them. Not really a middle class around as much as people think and trust me i work in downtown chattanooga and this is the ONLY place you can get a good job around here. when you see the Benz and BMW's you can pretty much take for granted its an executive comming up from Atlanta to keep an eye on his business.

Sorry to go so off topic point is i know ford is in a slump and im like most of you if they allow the huge markups thats where they belong. Its just there not hurting that bad here and the south.

 

September of 05 I passed a local Cadillac dealership...out front sat a USED 2005 yellow Mustang GT convertible. Nothing fancy.. It had on the window sticker... 39K. I think it had 11K miles. Salesman came out... I says... 39K for a used one? Yes he said good price ain't it? I laughed. I said your price is way out of line... No problem he says we will sell it... I said there are fools born every day...

It sat there well into the winter...they reduced it for a "quick sale" 37K...... I have no idea what that was new.. or whatever happened to it but whoever bought it new got shis-ko-bobbed, and the guy that bought it for that price used or close to it...was had.

 

it is sad really, what Ford and other dealerships are doing, I would bet my life savings that all the dodge dealers will put a 20K markup on the challenger.

 

Yeah.....I am afraid too Dodge may mark them up. I hope not but I can see it happening. I will not have my spinchter penetrated.

 

Oh that's normal for Ford to do that. I traded in my 06 Mustang for an 07 Mustang and they turned around and listed it for $27,000, which oddly enough is what KBB said it was. The thing about that is that I didn't even pay that much for it when it was new. It still sits on the lot, since April, and they "reduced" the price. I know I really don't care for Ford dealership's either. It took two months for them to finance me, my other car was sitting on the lot to be sold even though they hadn't paid it off yet, I had to pay a late fee and almost ended up being on my credit, was suppose to get a refund that I never got for that payment that I made and my plates are due Fri and I still haven't received the card to get them. Had pretty much the same experience with the 06 Mustang at a dealership, crappy that is, but that dealership was many more miles away and I took a few trips up there. I love how they treat their customers.