Ford banks on hybrids, small cars, jazzy designs
Executive hammers home idea Ford products have to be 'clear, relevant and distinct.'
Bryce G. Hoffman / The Detroit News
DEARBORN -- Even before the "way forward" plan was unveiled Monday, Ford Motor Co. executives have been hammering home one point: product is the key to the company's salvation.
It was a message they repeated Monday by announcing a new class of hybrids, new investment in pickups and a new commitment to a more sane pricing strategy.
"In many respects, the 'way forward' begins right here, among the sketches, clay models, computer work stations and the designers and engineers," said Ford Americas President Mark Fields, gesturing around the design studio Ford chose as the venue for its announcement. "To stand out in a world awash in car manufacturers, Ford's brands and products have to be clear, relevant and distinct."
While much of Ford's restructuring strategy focused on plant closings and layoffs, Chairman and CEO Bill Ford Jr. stressed that these are only part of the strategy.
"You can't cut your way to success," he said.
The other prong of Ford's offensive is product. Bill Ford said the company's product development efforts have stagnated in recent years
"Our product plans for too long have been defined by our capacity," Bill Ford said. "We developed vehicles to fill plants, sometimes at the expense of creativity. That's why we must reduce capacity in North America. From now on, our products will be designed and built to satisfy the customer -- not just to fill a factory."
Products like the Ford Fusion and Mercury Mariner Hybrid show where Ford wants to go with its domestic products. So do the new products that debuted earlier this month at the North American International Auto Show: the Ford Edge and Lincoln MKX crossovers.
Fields said Ford will continue to invest in innovative new products that take the company into new segments of the market. By way of example, he pointed to a mock-up of the Ford Fairlane concept -- one of a new class of "people-movers" that could replace the minivan. Fields said the Ford Reflex small car concept, unveiled at the Detroit auto show, is another.
"We predict that sales of small cars will grow by 40 percent by 2010," Fields said. "No company today is putting an American stamp on the small car segment. That means there's a huge growth opportunity, if only someone is willing to seize it. Ford plans to seize it, and you're seeing a hint of what's to come with vehicles like the Reflex."
"That's common business sense," said Jim Hall, an analyst with AutoPacific, who said Ford really has nothing to offer in the small car segment domestically today. "It's new business for them. It's a chance for getting more new buyers."
Bill Ford promised more fuel efficient vehicles and reaffirmed his pledge to make more than half of all Ford, Lincoln and Mercury models available as hybrids by 2010. Included in those models are the Ford Five Hundred and Edge, Mercury Montego, Linoln MKX, he said Monday.
"We'll have the capacity to produce up to a quarter of a million hybrids a year and scale up as the market demands," he said.
Ford will slash its average vehicle lifecycle from 4.4 years to 3.2 years by sharing architecture and components among all its global brands and expanding the use of its global product development system, developed by Mazda Motor Corp., Fields said. Ford owns controlling interest in the Japanese automaker and is relying on its technology platforms for many of its new products.
Mazda gives Ford a chance at customers it couldn't capture get any other way, Hall said.
The company also renewed its commitment to all three domestic brands.
"There's more than enough room for Ford, Mercury and Lincoln to each have its own point of view in the marketplace," Fields said. "Doing without one of the three would not result in savings, only lost customers and lost profits."
However, Fields said, each of those brands needs a sharper focus.
"It's about instilling the values and the spirit of America in every Ford vehicle we produce in the same way that Volvo is unmistakably Swedish," Fields said, adding that these traits are already strong in successful vehicles like the Ford Mustang and F-Series pickups. Fields said that Ford has taken a "haphazard approach" to its Mercury brand, but added it has already seen some noteworthy success in differentiating Mercury with more "modern, expressive design" that appeals more strongly to women and a younger demographic.
Lincoln is also in need of some reorientation, Fields said.
"I admit we lost focus and created confusion," he said. "The goal is to make Lincoln the reward for people living the American Dream. Lincoln appeals to different customers from those who need to showcase their success through a brand like Cadillac. Lincoln customers don't need to shout."
Lincoln would become the largest volume contributor in the Lincoln Mercury division, said Fields, but stressed that there are no plans to take the brand global.
Despite reports to the contrary, Ford has no immediate plans to kill its minivans. That was good news to analysts like Hall.
"I don't want to hear them say they're killing minivans off, because that still is a net loss of buyers," he said.
In addition to introducing more, and more compelling, products, Ford vowed Monday to kick the incentive habit once and for all.
The use of incentives got out of control last year as each of the domestic automakers struggled to outdo each other with employee and family pricing schemes, Fields said.
"This must end. We're going to reestablish the value of our products through straightforward and simple pricing," Fields said, adding that the company has already been using this approach with strong selling vehicles like the Ford Mustang and Fusion. Ford wants to extend this practice to every model, by setting sticker prices much closer to the actual transaction price -- a move that he said will increase margins along with resale values, benefiting both the company and its customers, Fields said. "We are committed to it," Fields said, "Even if the competition backslides."