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Tuesday, June 24, 2003

Ford's new F150 pickup has heavy-duty role in company

By Doron Levin / Bloomberg News

SAN ANTONIO--In coming months Ford Motor Co. will promote its new F150 full-size pickup more vigorously than it's ever promoted a new model, almost as if the automaker's survival depends on it.

It's no stretch to say that the F150, the crown jewel of Ford's lineup, needs to be a hit.

In the last week, dozens of Dearborn-based Ford Motor executives and their aides have decamped to San Antonio to tout the pickup for more than 300 technical specialists, dealers and auto writers.

The No. 2 automaker after General Motors Corp. says this introduction is the largest and most elaborate in its 100-year history. The F150 goes on sale at dealerships in August.

"There's no debate as to how important this is," said Chris Theodore, vice president of advanced product creation. "If we seem a little paranoid, we should be paranoid. We've overstaffed everything to make sure there are no slip-ups."

Ford sold more than 800,000 F150s in 2002; the model was introduced in 1996. Besides becoming the best-selling car or truck on the market, the F150 also accounted for about 23 percent of Ford's unit sales. It may have provided $16 billion, or 10 percent, of the automaker's total revenue.

But in 2001 and 2002, Ford's operating profits were wiped out by write-offs and other costs, resulting in nearly $6.5 billion in net losses.

Several analysts have said that without successful new models, Ford could fail. "This is the first of 65 new Fords, Lincolns and Mercurys over the next five years," said Joe Greenwell, vice president of product marketing. "As we've said, our turnaround is going to be product-led."

The new F150 is larger than the one it replaces, offers a more powerful V-8 engine and thus can handle heavier loads.

The critical mystery is how much customers will be willing to pay. Ford hopes the new model will command a higher price and won't need cash rebates. But auto prices have been falling for five years. Ford will announce the new F150's price in July.

In 2002 Ford sold 90,355 F150 pickups in Texas, more than in any other state; California, with 51,925 F150s sold, was No. 2.

With thousands of ranchers and farmers living in the region, as well as plenty of self-styled urban cowboys, San Antonio is fertile territory for Ford dealers, which make up six of the 16 top-selling U.S. dealers for pickups.

Toyota Motor Corp. also smells opportunity in Texas. That's why the No. 1 Japanese automaker announced on Feb. 5 that it will build an $800 million pickup assembly plant in the state by 2006. Toyota's goal is a 10 percent stake in the U.S. pickup market.

Ford has about 38 percent of the U.S. pickup market. General Motors also has 38 percent with its highly-acclaimed Chevrolet Silverado and GMC Sierra models. The Dodge Ram has about 20 percent and Toyota has less than 5 percent.

But with Ford planning to boost capacity to 1 million units a year and Nissan about to enter the market when a new plant in Mississippi opens something has to give. It could be price.

"We have a very good story, pricing that won't look like a big increase and that won't need incentives to sell the truck," said Gene Brown, a Ford truck marketing manager. Ford's shareholders and lenders should watch closely this fall -- and cross their fingers.
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