Feature: September 2009

Ford Forges Ahead

The maker has hot new product, no federal loans, and happy dealers.

By Joan Mooney

The highly anticipated 2010 Taurus is now rolling into showrooms.

Many consumers now look favorably on Ford as the only American car company that didn’t get a federal bailout—and that makes Ford and its dealers very happy. That perception may well have helped boost the company’s share nearly a full percentage point in the first seven months of the year.

At Jack Kain Ford in Versailles, Ky., dealer Jack Kain is seeing buyers who have never been to a Ford dealership before. “They want to buy American, if they can.”

AutoPacific analyst George Peterson thinks Ford will overtake the new GM in sales this year. (Ford’s share was just 2.5 points below GM’s in July, and each month from May through July, Ford has been 2.5 or 3 points above last year, says Autoconomy.com president Erich Merkle.) Two Ford products—Escape and Focus—were among the top 10 sellers of “Cash for Clunkers.”

UPBEAT DEALERS, SLICK PRODUCT
“I don’t think I’ve ever been more positive,” says dealer Pete Greiner, Greiner Ford/Lincoln/Mercury, Casper, Wyo. At Barber Brothers Ford in Morgan, Utah, dealer John Barber wonders, “What isn’t selling?” He’s out of the Focus, Fusion, and Escape. Dealer Jim Walen of Ford of Kirkland (Wash.) is pleased with the balance in Ford’s current product portfolio, which now includes more passenger cars.

A major revamp of the Fusion came out this year and is doing well. Peterson thinks the new Transit Connect van, aimed at small-business owners and buyers wanting very utilitarian vehicles, will be a “surprise success.”

Next year comes the new Fiesta compact sedan, Ford’s first entry in that segment in some time. “Hopefully, it will get us more into the youth market,” says Butch Oustalet, Butch Oustalet Autoplex, Gulfport, Miss. And much excitement has built up around the new Taurus, which has been repositioned as a larger, more luxurious car. Ford “compromised some practicality [of the old 500] to make it sexy, but it will probably appeal to more people,” says analyst Peterson. Several dealers have pre-sold Taurus units. Dealer Marc Bortnick, Ron Bortnick Ford, Upper Marlboro, Md., looks forward to the Taurus, but is disappointed he’ll only get three or four before year-end. “There will be a million-dollar ad on TV to show what a great car it is, and we don’t have them.”

Ford has an advantage over GM and Chrysler because it hasn’t had to defer product launches, says Peterson—so it’s coming out with much more new product next year. And Ford has products that meet “every niche,” says Automotive Consulting Group president Dennis Virag. The automaker’s quality ratings have risen in J.D. Power surveys; plus, Ford’s goal of making every new product the most fuel-efficient in its segment “will become even more important” as fuel prices rise, says Virag.

WORKING TO CUT DAYS’ SUPPLY
Ford plans to deal with volatile fuel prices through flexible manufacturing, allowing plants to build different vehicles as needed. As the automaker puts new product in plants, it is installing the necessary machinery. So as the product lineup gradually gets replaced, all new plants will have that flexibility, says Peterson.

On the dealer end, Ford is working to cut order turnaround time from 8 to 10 weeks down to 3 or 4 weeks, and dealers would need only a 45-day supply, says Barber. Customers could order vehicles with pre-chosen packages. “We’ll see which of those packages are turning faster than others and adjust accordingly,” says Bruce Schindler, Bob Davidson Ford/Lincoln/Mercury, Baltimore, who heads Ford’s Order Complexity Reduction Task Force. Dealer Don Chalmers, Chalmers Ford, Rio Rancho, N.Mex., is happy with the prospect of carrying less inventory. “It’s been a long time since I’ve heard a car company talk that way.”

Dealers are pleased that Ford chairman Alan Mulally has made it clear that the automaker wants dealer involvement and sees dealers as first in line to take care of customers. Still, “as happy as we are, we’re not making money right now,” says Chalmers.

But there’s a sense among many Ford dealers of we’re-in-this-together. “I understand the need for everyone to share in the burden of getting the company turned around,” says Walen. “The approach that Ford has taken has been consultative.” The cost transfers—such as dealers having to put gas in new inventory on their own dime—are “not something we like, but it’s something we have to accept,” says Oustalet. “Our manufacturer’s fighting to be profitable.”

Joan Mooney is a senior editor of AutoExec. NADA Public Affairs senior writer Leigh Glenn contributed to this article.