Forbes Take on Upcoming Ford Cars

[BMWDave]

Like GM, Ford is getting socked by slowing sales of big sport utilities. So it's scrambling to design a lineup of stylish new passenger cars. If Ford Motor is going to overcome a precipitous drop in its most profitable segment--sport utilities--it desperately needs to win over people like Jennifer. She's a 32-year-old teacher in Austin, Tex., married and thinking about starting a family. Stylish but practical, she shops at stores like Target and Banana Republic. "Jennifer" isn't real--she's a fictional customer conjured up after six months of market research, including the infiltration of consumers' homes by packs of snooping Ford engineers. Ford hasn't seen the likes of Jennifer in its showrooms for years. It's been focused on truck buyers while Jennifer and her friends buy imports like the Honda Accord. But come this fall Ford is counting on Jennifer to buy its new Ford Fusion, a midsize sedan that will cost $18,000 or so. The Fusion--and an array of car-based derivatives it spawned--represents Ford's strategy to climb back into the passenger car segment (in which its U.S. market share has fallen from 22% a decade ago to 14%). If it doesn't work, Ford will be stuck in the same boat as General Motors: pinning its hopes for a comeback on its big sport utilities, a market segment that at the moment is crumbling. "We're not trying to hit a bunch of home runs," concedes Ford Chief Executive William Clay Ford Jr. "We need to hit a bunch of singles." The shift away from SUVs has been "quite breathtaking," says Ford, who says his company underestimated how quickly sales of its once-hot Explorer and Expedition SUVs would deteriorate. Sales of both vehicles are down more than 25% so far this year, one reason Ford's overall U.S. market share tumbled to 17.9% in the first quarter. After forecasting a North American profit of $1.5 billion in January, Ford now says it will be lucky to break even in its home market this year. (Rising commodity and health care costs are also to blame.) Ford executives are under no illusions that an $18,000 sedan will plug the loss of the huge profits SUVs generate. Deutsche Bank estimates Ford's gross profit (before fixed costs like labor, tooling and health care) averages only $5,400 on a midsize passenger car, which is $6,000 less than the comparable figure for a midsize SUV. So that's why the company will build up to 800,000 midsize cars and car-based crossovers off of one common chassis, saving billions in engineering costs. Fusion is the first of ten new Ford, Lincoln and Mercury models that will share a modified chassis borrowed from Mazda, Ford's Japanese affiliate. The Lincoln Zephyr and Mercury Milan sedans also debut this fall, followed next year by two crossovers, the Ford Edge and the Lincoln Aviator. Other derivatives, including coupes, convertibles and wagons, are under consideration. Right now there's a gaping hole in Ford's car lineup. The Taurus, once America's bestselling car, hasn't been a hit since 1995, and production is expected to end early next year. About 80% of them now end up in corporate and rental fleets. The entry-level Focus overcame a spate of early recalls to enjoy reasonable success. But Ford says 10,000 Focus owners defect to other brands each year because it doesn't offer an attractive step-up model. The much-larger $23,000 Ford Five Hundred and its crossover mate, the $25,000 Freestyle, have been gaining momentum after a slow start last fall, but even Bill Ford admits their plain-vanilla styling is too conservative. Ford doesn't want to make that mistake again with the Fusion. Its original--and safe--design mimicked the leaders in the midsize car segment, the Toyota Camry and Honda Accord. But in focus groups during the summer and fall of 2002 the car drew ho-hums from consumers. Around the same time, Ford designers finished their work on a striking new concept car, the Ford 427, that was being prepared for the 2003 auto show circuit. Insiders loved it, so in December Ford officials did the unthinkable: At the last minute they ripped up the Fusion's design. Its bland front end was ditched and replaced with the 427's signature three-bar chrome grille. That change threw off the rest of the car's design, causing changes that rippled all the way to the rear taillights. Such upheaval would typically lead to huge delays and costly overruns. But the Fusion was the first Ford vehicle developed with advanced 3-D digital software that allowed engineers to instantly make the changes and simulate how the manufacturing process would be affected. The result is a bolder, more athletic design. It's no Chrysler 300, but at least the Fusion has personality. Will Jennifer like it? Focus groups showed there was an opportunity for a midsize sedan aimed at people aged 25 to 39 who are single or newly married and very focused on their social lives. Visitors went to consumers' homes--and even peered into refrigerators and closets--to get insights into their interests in music, technology and fitness, says Dean Stoneley, Fusion's former product marketing manager.

Conclusion: Jennifer wants to look good but cares less about what's under the hood. So engineers made upscale features like charcoal-black leather seats and chrome wheels available even with the smallest four-cylinder engine. She does a lot of do-it-yourself projects, so the Fusion comes with rear seats that fold flat with one flip of a switch. And she's active and doesn't want to carry around a bulky key fob, so the automated door lock buttons were integrated into the key. Who knows? Maybe there are 800,000 people like this.

[Catman]

Good read, I think Ford's efforts will pay off in a couple years.  

[BMWDave]

Good read, I think Ford's efforts will pay off in a couple years.

I sure hope so.  They seem to be spending a lot of time now making their cars better.