![]() ![]() Neither Ford, nor Chevrolet nor VW has the brand equity for that sort of vehicle that Subaru has spent 30 years building. ![]() It sells at a tenth of the volume of the Subaru Outback. The VW Golf wagon “Alltrack” is the same idea, jacked up on it’s suspension with plastic cladding. I found one in metro Chicago and 2 in LA. Searching dealer inventory, I found no Spark Activ’s in stock anywhere in metro Detroit. I didn’t even know it existed until another person pointed it out today. For the last two years, Chevrolet has offered the Spark “Activ”, which is the same idea. I seriously doubt the US will ever see the Focus “Active” either. One look at the trend of US big three market share over the last 40 years shows brand loyalty does not count for much. I would not bet on “brand loyalty” to salvage a significant number of sales for Ford, when they don’t offer what that 300,000 customers/year want. While Ford is thinking it may be trading a 3% profit Fusion sale for a 10% profit Explorer sale, the reality may be that person does not want an SUV and, instead of getting the 10% profit sale, or a 3% profit Fusion sale, Ford gets zero, because the customer bought a Camry instead. By offering a variety of body styles in a variety of sizes, automakers pick up marginal sales. Automakers build a variety of models because one style does not fit all. Then what? Retreat again to only making large pickups? And how long before Toyota and Nissan step up their game in that segment?Ģ-the assumption that every Fiesta, Focus or Fusion prospect that comes in the door can be pushed into an SUV. The US big three will be right where they started: facing vigorous competition from other brands, and razor thin margins. Will there come a point, when all the NAFTA zone production capacity, plus imports, from US and foreign brands, are all SUVs, that production capacity exceeds demand? When production catches up to demand, the profits will evaporate as everyone competes for sales to keep their plants running. So far, demand has grown enough to absorb an increasing number and variety of SUV models. I see two flaws in the thinking behind Ford’s decision.ġ-that SUVs always bring a higher profit margin than passenger cars. Tell us what you think in the comments section and poll below: Rather, it hopes that those consumers will be tempted into its crossover models instead, which is not an unreasonable expectation given the strength of brand loyalty and, arguably, the higher utility offered by five-door higher-riding models with an image coveted by most buyers. The key thing is that by pulling the Fiesta, Fusion and Taurus from market, Ford is not telling 300,000 customers to go look elsewhere for their new set of wheels. Ford is not leaving 300,000 customers hanging And it is not just the list price – sales of mainstream models, especially mid-sized and large ones, have long been driven by high discounts offered by dealers, further squeezing their profitability. This is where crossovers dominate the mainstream models – the public is willing to pay considerably more for what is, from an engineering perspective, a car that is not much more expensive to manufacture. One thing that public reaction often forgets is that volume is necessary but not sufficient for a company to make profits – it also needs for each vehicle sold to be profitable on its own. Ford’s move can be seen as simply getting ahead of the curve. Which gets at the heart of the issues – crossover sales in the US are booming (up 14% in Q1’18), while those of mainstream models are slumping at an alarming rate (down 11% in Q1’18). By comparison, both the aging Escape and Explorer crossovers sold around 300,000 last year, the best performance for the current generation models. But, if you start to think about it, the Fiesta and Taurus both sold fewer than 50,000 units last year, while the Fusion, while still popular at a little over 200,000, still sold considerably less well than the 300,000+ units at its peak in 2014. While speculations of Ford not replacing the Fiesta, Taurus, and even the Fusion have been circulating around for a while, the shock factor is generated by the announcement of the chop arriving simultaneously for all three models. We dive in to see whether there is any merit to this decision. Due for the chop are the Fiesta, Fusion and Taurus, three Ford staples that combined in 2017 gave the company almost 300,000 sales. In a move that is as shocking as it is eerily reminiscent of a similar move when FCA killed off the Chrysler 200 and Dodge Dart two years ago, Ford just announced that it will kill off most of its non-crossover cars in the US. ![]() The only models to survive the purge are the Mustang and Focus Active ![]()
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