BW: Ford Losing $4500 On Every Focus Sold; New Bronco Info

[Perian]

Link: http://www.businessweek.com/magazine...aign_id=search.

Business Week: June 19, 2006

Article quote:

In May, an otherwise dismal month for Detroit, Ford Motor sold more than 20,000 Focus subcompacts, the fuel sipper's best showing in nine months. That's great news, right? Not really. Ford lost an estimated $4,000 to $5,000 on each Focus it sold.

Article quote:

Ford has belatedly learned its lesson and is now playing catch-up. Come 2008, says product development chief Derrick Kuzak, Ford will have a "portfolio" of subcompacts in the U.S. as it does in Europe. Kuzak is coy on specifics, but people with knowledge of Ford's plans say the lineup will include a five-door sedan and a small SUV the company may call the Bronco. A third subcompact is being debated, too.

Full article at link.

[Perian]

Focus: Wow.

Bronco: If it looks like the model at this years auto show - Grand Slam home-run on the way.

Interesting to note that ALL of these new models will be made in Mexico.

[VGT]

Do they still suffer from the "Cruise Control-O-Death"? Or was that a different model?

[Darc Requiem]

Now we know the REAL reason they aren't bringing the Euro Focus over. If they are losing $4500 to $5000 on the current Focus, I don't see how they could possibly make any money on the Euro Focus. I don't understand...how are they losing that much on each Focus? Is there a $9999 discount sale going on that I don't know about?

[69Firebird400]

What's the point of even continuing to produce and sell the Focus if they are losing that much money on them? It seems that financially it would be smarter to just drop the Focus and, ahem, "focus" on its replacement instead.

I also don't understand how they can lose $4,500 on each Focus sold if the rebates are less than $4,500. Can anyone help me understand that?

[JVal14]

Holy geeze. What's going on over there at Ford? It could not possibly cost so much to make since the design is essentially a decade old. Are they putting massive rebates on their highest mileage car? If that's the case, the Focus' reputation must be in critical condition. I drive a Focus and I think it's at least mid-pack of the compact car segment, I don't get why they can't sell them.

[nadepalma]

What irony. Just when the subcompact market is heating up, Ford can't make money on a car acclaimed for its taut handling and decent 26/32-mpg fuel economy. The auto maker's Focus problem (pun intended) is an object lesson in how Ford continues to be hamstrung by high labor costs and tired product design. By choosing not to remake the Focus for the U.S. when it had the chance, Ford misread the road ahead. Now the auto maker is working overtime to bolster the Focus, albeit not until 2008, with a face-lift plus three new small cars.

I really liked the Focus there for awhile and thought the update (while boring) brought it in line with the FiveHundred and the rest of the Euro lineup.

But Ford was stupid for moving production of this car from Mexico to the US -- wouldn't it make better sense to have left the Focus at the plant in Hermosillo where you can make more of a profit on a cheap car than move it to the US where they would have made a much much slimmer margin (and now it seems, no profit at all)?

I know that there have been pics of an updated Focus with the new 3-bar grille running around in some locations.



If you ask me, they can't get this refreshed version out soon enough.

[JVal14]

As for the Bronco, even though ford needs progress in the crossover/small SUV market, I really hope they don't besmertch the Bronco name by tagging it on some watered-down, FWD, commuter SUV. It should be a worthy competitor to the Wrangler.

[BrickTamland]

Focus: Boldy Mov(e)ing where few cars dare venture - into the money pit.

Here's a Bold Move Ford - Get a Focus over here that does not date to 1998! I know I have mentioned numerous times before that the current Focus we get is outdated, but it is worth mentioning time and time again. The Focus is an entry level model, which people buy and when it comes time to replace, they move up to the next price/size class. Or that is the concept. Ford can not grasp it. When the competition has newer vehicles out, they are the ones who reap the benefits of trading up. Ford can not, however. The Focus is the oldest car in its class. It has been witness to three generations of Civics - 2000, 2001-2005, and 2006-.

[TiburonJT]

FusionSVT, who usually has good inside info, said that Ford loses money on every Ranger as well.

[nadepalma]

Originally Posted by nadepalma

But Ford was stupid for moving production of this car from Mexico to the US -- wouldn't it make better sense to have left the Focus at the plant in Hermosillo where you can make more of a profit on a cheap car than move it to the US where they would have made a much much slimmer margin (and now it seems, no profit at all)?

I guess I should have read further into the article. See what they say about the future small-car plans:

Originally Posted by BusinessWeek

Ford insiders say the new trio will be built in Mexico, where labor costs are lower and where the auto maker is already building the Fusion, Lincoln Zephyr, and Mercury Milan.

So I guess what I wrote wasn't needed cause they are planning on building them in Mexico anyway.

But what sense did it then make for them to move the current Focus FROM Mexico TO the US a few years back? Is Ford so short-sighted they didn't anticipiate that the car would lose money in the US market if it was produced here? And now they're saying they want to move it back to Mexico -- and probably into the same plant that they were building it to begin with (which is were they are building the Milan/Fusion/Zephyr.

I tell you, I don't know what their product planners and logistical folks are doing to make this kind of a mistake and lose 4K or 5K per vehicle.

[TiburonJT]

Originally Posted by nadepalma

I really liked the Focus there for awhile and thought the update (while boring) brought it in line with the FiveHundred and the rest of the Euro lineup.

But Ford was stupid for moving production of this car from Mexico to the US -- wouldn't it make better sense to have left the Focus at the plant in Hermosillo where you can make more of a profit on a cheap car than move it to the US where they would have made a much much slimmer margin (and now it seems, no profit at all)?

I know that there have been pics of an updated Focus with the new 3-bar grille running around in some locations.



If you ask me, they can't get this refreshed version out soon enough.

It might have made sense for Ford to move production to the US so the Fusion could be produced in Mexico. IIRC, only the ZX3 and ZX5 were produced in Mexico.

As for the refresh, I don't see a new grille and headlights making much of a difference. Another problem associated with the other refresh is the indication that Ford will not redo the Focus until at least the end of the decade. And then Ford is re-using the greenhouse on the next Escape. If Ford can't redesign their vehicles completely then there are going to be some major problems in Dearborn.

[kenman923]

It doesn't make sense that the Focus would be losing money. Only Ford.

It would be nice to see a new Bronco. I wonder if it will be retro, like the old Bronco. They can even have the rear access doors like on the Toyota FJ Cruiser.

[megeebee]

I wonder if this article was written before the news we read this week about the dealys at Ford?

http://www.leftlanenews.com/2006/06/...cancellations/

[usa1]

Originally Posted by 69Firebird400

What's the point of even continuing to produce and sell the Focus if they are losing that much money on them? It seems that financially it would be smarter to just drop the Focus and, ahem, "focus" on its replacement instead.

The one and ONLY reason is CAFE. Corporate Average Fuel Economy mandates fuels standards for Ford's entire car fleet. Trucks have their own separate standard. The Focus is needed to keep Ford within the target set by CAFE. For every Mustang sold, a Focus needs to be sold, etc. Importing a small car from Korea would not count to the CAFE standard for Ford. Only domestically built vehicles count. I think making them in Mexico counts, but I'm not sure.

This is why GM keeps selling small cars too. I'm sure they make no money on the Cobalt. I sure hope they don't lose $4,500 per unit though!

Mark