Join Date: Feb 2001
Location: The Hills of North Georgia,USA
Nameplate drought crimps Ford; product shortfall will hurt during next 18 months
By MARY CONNELLY
DETROIT -- Ford Motor Co., desperate for fresh products, is entering a new-nameplate dry spell that will last 18 months.
In the 2003 model year, Ford Division will offer no new nameplates, while Mercury, Lincoln and Volvo will offer one each. The three vehicles will sell about 86,500 units combined, according to an Automotive News analysis. The competition will offer 15 new nameplates in the United States in 2003 with estimated sales of 512,000.
The review includes only new nameplates, not redesigned or updated replacement models.
The problem gets worse in 2004. The only new nameplate at Ford Motor will be the Ford GT40, a sports car with estimated sales of about 1,000.
The new-product shortfall is particularly difficult for Ford Division. Under the administration of ousted CEO Jacques Nasser, Ford Motor poured development dollars into its luxury brands, not Ford Division and Mercury. Nasser's strategy made Ford Motor vulnerable in North America, the company's chief source of profits.
Caught off balance, Ford is forced to cost-cut its way to financial health. This week, the automaker will begin a second round of austerity measures. The company sorely needs the revenue generated by a high-volume product hit, a vehicle such as the original Ford Explorer. But no such salvation is at hand.
Ford employees have voiced concern about whether the company has the product needed to restore its fortunes, Nick Scheele, Ford COO, said in a July broadcast to employees. Developing new products will take time, he said.
"We've got some good products in the market, and we have more good products coming," Scheele said in the broadcast. "But we do have to acknowledge that this is a ramping-up process. Our share isn't where we'd like it. We'll have to take it back, and that means a fight. And that means over time."
Ford lost $5.45 billion in 2001 and $524 million in the first half of 2002, although the company has said it expects to eke out a modest profit this year.
Despite its struggle to cut costs, Ford will maintain capital spending at $7.4 billion annually through the middle of the decade.
Ford is throwing its product development might into the redesigned 2004 Ford F-series pickup. The F series accounted for 22.6 percent of Ford Motor's 2002 U.S. sales volume through July. But the automaker has said that the new F-series trucks will cost more to produce than the current models, exacerbating financial pressures.
Also weighing down the balance sheet are some costly redesigns by the luxury brands. For example, in the 2003 model year Land Rover fields a Range Rover redesign. And Volvo offers the XC90, a seven-passenger sport wagon that charts an important new direction for Volvo. In addition, the redesigned Jaguar XJ flagship arrives in the United States in the spring.
Nasser's focus on high-end brands at the expense of replenishing Ford Division showrooms contributed to his ouster in October 2001. The strategy outraged Ford dealers, undermined critical North American profits and left the company's powerhouse Ford brand in the lurch.
For example, Ford had planned to redesign the Ford Ranger for the 2003 model year. The update was delayed until the 2006 model year and now may be put off until 2008 or later.
The scarcity of new high-volume nameplates threatens Ford's image, volume and profits as competitors sell fresher products.
"The next two years are really trying times, especially at Ford Division," said Jeff Schuster, director of North American forecasting and product analysis for J.D. Power and Associates. "It is essentially facelifted products until mid-decade That is a big risk."
In the 2003 model year, Ford Motor will offer three new nameplates, the Lincoln Aviator, the Mercury Marauder and the Volvo XC90, representing a combined volume of 86,500 units - equal to a slim 2.2 percent of Ford Motor's 2001 sales in the United States, according to Automotive News estimates.
In the 2004 model year, the only new nameplate will be the two-passenger $100,000-plus, 500-hp GT40 sports car. The unit likely will account for 1,000 sales or less.
In the 2003 and 2004 model years, Ford Motor retailers will sell against a raft of competitive new nameplates. In the 2003 model year, the list includes the Toyota Matrix, Hummer H2 SVT, Chevrolet SSR, Honda Element, Nissan 350Z and Infiniti G35.
In the 2004 model year, new nameplates include the Buick Rainier, the Cadillac XLR roadster and SRX sport wagon, the Pontiac GTO, the Chrysler Crossfire two-seater and Pacifica wagon, and a Nissan full-sized pickup and sport-utility.
The Pacifica, billed as a modern interpretation of the station wagon, is expected to generate more than 100,000 sales in the growing sport wagon market. Sport wagons combine the packaging of sport-utilities or minivans with the ride and handling of a car.
The 2004 Pacifica arrives in the second quarter of 2003 . Ford will not have the similar 2005 CrossTrainer until early in 2004.The competition already is eroding Ford Motor sales. Through July, Ford Motor's U.S. sales were off 9.1 percent from the same period of 2001, to 2,120,175 units. Ford Division's sales have declined 9.3 percent to 1,754,149 units in the same period.
Ford is spending to bolster Ford Division. By the 2005 model year, Ford will develop the seven-seat CrossTrainer and the Ford Five Hundred premium sedan, and it will bring the Ford Fusion into the U.S. market. By the 2006 model year, the Ford Taurus will be redesigned or replaced.
In the meantime, Ford developers are under the gun to cut costs. Ford executives want to generate $7 billion in pretax profit by mid-decade. To hit its goal, Ford is slashing an average $700 per unit from U.S. vehicle development costs by mid-decade.
And Ford still is counting heavily on its upscale brands to propel sales and revenue momentum after 2005. By mid-decade, the automaker expects Lincoln, Jaguar, Land Rover, Volvo and Aston Martin to account for one-third of Ford Motor Co.'s profits.
Lincoln will field a new convertible and a rear-wheel-drive vehicle that is a cross between a sedan and sport-utility, both likely as 2006 models. Land Rover gains the Challenger sport wagon and Volvo the C50 coupe in the same period.
Through July, sales of Ford's five luxury brands were off 1.8 percent from last year, to 210,452 units. The combined share of Lincoln, Jaguar, Volvo, Land Rover and Aston Martin in the U.S. market fell to 9.9 percent in that period compared to 9.2 percent a year ago.
This week, Ford CFO Allan Gilmour completes a departmental review of the company's global operations, an exercise expected to result in additional cost cutting.
Product Editor Rick Kranz contributed to this report
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....