Ford to shift focus to small cars

[todras]

From AutoNews:

http://www.autonews.com/apps/pbcs.dl...4/1176&refsect



Report: Ford to shift focus to small cars Automotive News

July 22, 2008 - 1:00 am ET

DETROIT (Reuters) -- Ford Motor Co. is about to alter its focus drastically and build more small cars, the New York Times reported today, citing people familiar with the plans.

Ford will make the announcement on Thursday, when it releases quarterly results, the newspaper said. The story echoes similar reports that began circulating in the media this past weekend.

Ford is expected to announce that it will convert three of its North American assembly plants from trucks to cars, according to the sources, the Times said.


Ford will realign factories to make more fuel-efficient engines and produce six of its next European car models for the United States market, it added.


The company will also make its Mercury brand an integral part of its new small-car strategy, the newspaper said, citing the sources, who did not want to be named because of the timing of the official announcement on Thursday. A Ford spokesman did not return a telephone call seeking comment.

[Pre98]

Small European Ford cars in the US. Will our wish come true for the RS?

[ryanblacksvt]

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[todras]

Small European Ford cars in the US. Will our wish come true for the RS?

Doubtful.

1 Fiesta
2 Focus
3 Transit Connect
4 Transit
5 Kuga
6 C-Max

[Dyoel182]

Mercury?!? If you're gonna buy a small car anyway why would you buy a slightly more expensive Mercury version?

[Nezerconezer]

Because euro cars are generally more expensive, with more features then a typical American car. With fits right in with mercurys mo.

[sigma]

Mercury?!? If you're gonna buy a small car anyway why would you buy a slightly more expensive Mercury version?

Because, with the loss of the exhorbitantly profitable market segment that is Trucks/SUVs, the only chance in hell that Detroit has in making it more than another 10 years is if they find a way to make a decent margin on small cars, a segment they make little to no money in currently in this country.

The way to to that is to sell compact cars with higher feature levels and a little badge premium doesn't hurt either. It's a heck of a lot easier to sell a compact $22,000 "Mercury" than a compact $22,000 "Ford". That's not to say that it's "easy", just easier.

With the current business model in place, even if Ford or GM actually put some hugely desired small car on the market, they'd still be in trouble. They just can't make money selling a $14,000 Focus, no matter how many of them they sell. There's just no profit in it for them with the staggering overhead and labor costs they currently have to contend with. They have to be able to sell a $20,000 Focus that costs little more to make than that $14,000 one, it's just full of profit-laden features.

[JaTo]

That more than anything else is what worries me about the turnaround plans the Big 3 are cobbling together. Present cost structures for the type of cars that consumers are responding to just don't deliver the margins ANY of the companies need to survive, much less thrive in the marketplace they are faced with.

Couple that with general business and manufacturing overhead that is higher than their competition, labor costs that are generally higher, pension and healthcare burdens that are nothing to sneeze at, etc., etc...I simply can't see a way for any of these to become a healthy enterprise in the next 5-10 years without practically gutting themselves in the process.

Even if gas were to drop back to $2/gallon, I think consumers are shell-shocked enough to where they would not flock back to the truck/SUV segment as it stands today. This is BAD news (at least for the manufacturers) since there was so much bloody margin built into those lines. It was the lynch-pin that basically propped up the Big 3 and now that's gone, the scramble is on.

They either have to come up with a truck/SUV that is functional and gets 30 MPG to keep that segment growing or sustained at historical rates or they have to completely shift their mindset and go after a market they have historically abandoned (in comparison to foreign competition) and have been traditionally weak in.

[ZoomZoom Diva]

I agree with Sigma. While people are not only willing, but demanding to downsize their cars, are they really willing to give up the amenities they have become accustomed to on larger cars? Mercury can make a lot of sense as a badge for premium smaller automobiles that provide the amenities customers were used to in larger cars packaged in smaller more fuel efficient designs.

Even the Ranger axe has been delayed due to a resurgence of sales for the compact and relatively fuel efficient pickup.

[morbid]

I think Ford's spread too thin. They should phase out Lincoln and Mercury.... and instead of those cars being completely different make/models, they should just be options for the Ford version and sold as the Ford version. Actually.... aren't Lincoln and Mercury kind of redundant in that they're both "luxury" versions of the Ford vehicle? Anyways... they could have the luxury options (Lincoln/Mercury), sport versions (svt/rs/st/sho), econo-versions (um, did Ford every have a cheap variant company like Geo or Scion?), etc...