Join Date: Dec 2001
Location: Jackson, MS
Ford's budget image could cause problems for pricey 2004 sedan
By Rick Kranz
Automotive News / June 03, 2002
Why the Five Hundred will be a stretch for Ford Division
The high price will be unfamiliar territory for Ford Division's budget-minded car customers.
Ford salespeople may conclude the Five Hundred is not worth the price.
The car will compete with higher prestige vehicles such as the Toyota Avalon.
Ford's recent quality problems could scare away customers.
Is a premium sedan trimmed with wood and aluminum and priced near $30,000 too far to reach for the Ford brand?
Ford Division says it can pull it off with the Five Hundred. The front-drive sedan arrives in 2004 and will feature upscale engineering and styling touches never seen in a premium Ford sedan.
Analysts say it's a risky strategy. Ford is perceived as a budget brand, and competition from cars such as the Toyota Avalon, Volkswagen Passat and other sedans in the $25,000 to $30,000 price range is stiff. Also, Ford still is trying to overcome a reputation for lackluster quality.
Yet, Ford's toughest job may be convincing its dealers that the Five Hundred will be worth the price.
"We've seen that fairly often, especially with Ford cars, where the salespeople aren't convinced that a product is worth what Ford is saying the price is," said Art Spinella, an auto analyst with CNW Marketing/Research in Bandon, Ore. The 1996 Ford Taurus was an example of that, he said.
But J Mays, Ford's vice president of design, is certain that the Five Hundred will shake up the sedan segment: "The Five Hundred looks like it costs $10,000 more than it does. It's conservative (in) style, upscale, with a nice amount of wood and aluminum finishes on the interior."
The car's styling will be influenced heavily by German vehicles, especially Audi, where Mays once worked. Mays suggested that the Five Hundred's price would be about the same as that of the Toyota Avalon, which starts at $26,330, including destination.
Higher seats, better view
Ford also is betting that the Five Hundred's interior packaging and seating will separate the car from its competitors. While the car's length and width will be slightly smaller than that of a Chevrolet Impala, Mays said, the Five Hundred will feature a larger, taller passenger compartment.
A special feature will be the seating. The hip point for the driver and passenger seats will be 2 inches to 4 inches higher than in a conventional sedan.
"It has a command driving position," said Mays, who was interviewed at the New York auto show in March. It gives the driver "an authority and importance when you are sitting in the driver's seat that the Taurus doesn't have."
While Ford has not given a sales projection for the Five Hundred, Chris Theodore, Ford's vice president of North America product development, said, "We're not fighting for any No. 1 spot." Ford Division's goal is to sell distinctive vehicles that will have lower volumes and better margins than the Taurus and Mercury Sable and do it without rebates.
Ford produces the Taurus and Sable in Atlanta and Chicago. When the 2005 Five Hundred and the CrossTrainer, which will share what Ford calls an "architecture," go into production in 2004 in Chicago, the Taurus and Sable will be assembled only in Atlanta. The CrossTrainer will combine the attributes of a minivan and a sport wagon.
"The strategy is variations of products," Theodore said. "Instead of trying to sell one flavor of product in two plants" with the Taurus and Sable, "we have two flavors of product and the potential for more in the Chicago plant."
That plant can produce approximately 240,000 units a year.
But competition is intense in the $25,000 to $30,000 segment that Ford wants, including the Audi A4, Chrysler 300M and high-end versions of the Toyota Camry and Honda Accord.
Spinella said that the Five Hundred's styling has done extremely well in focus groups conducted by CNW.
Groups were shown drawings of the car. Ford was not a client for this research.
But Spinella said Ford Division's sedans have an image problem. Ford's car image is value, meaning Taurus and Focus.
"There would have to be some very compelling reasons to not buy some of the alternative products that are out there," Spinella said.
The automaker points to technology offered for the first time in the Ford brand: a six-speed automatic transmission and a continuously variable transmission. All-wheel drive will be optional.
Yet, Ford has no problems selling high-priced trucks that can top $40,000.
"They make good trucks; everyone has known that forever," Spinella said. "But if you are going the other way, Ford cars don't cost $30,000. Mercurys do. Lincolns do."
But the issue that could derail Ford's plans is quality.
Mike Wall, an analyst with Autofutures in Grand Rapids, Mich., says potential buyers will need to be convinced of quality.
"If they continue to have launch issues or bad press with other vehicles," he said, "that will definitely impact how they will be received with this vehicle."