Ford to Convert SUV & Truck Factories to Cars; Strengthen Role of Mercury

[Ming]

In reversal, Ford veers from SUV's
By Bill Vlasic Published: July 22, 2008
International Herald Tribune



DEARBORN, Michigan: Ford Motor, which devoted itself for nearly 20 years to putting millions of Americans into big pickup trucks and sport-utility vehicles, is about to drastically alter its focus to building more small cars.

The struggling automaker, reacting to what it sees as a rapid and permanent shift in consumer tastes brought on by high gas prices, plans to unveil its new direction on Thursday, when it will report quarterly earnings.

Among the changes, Ford is expected to announce that it will convert three of its North American assembly plants from trucks to cars, according to people familiar with the plans.

And as part of the huge bet it is placing on the future direction of the troubled American auto industry, Ford will realign factories to manufacture more fuel-efficient engines and produce six of its next European car models for the United States market.

The company will also end speculation about its Mercury division by making the brand an integral part of its new small-car strategy, according to these people, who spoke on the condition that they not be quoted by name because of the timing of the official announcement on Thursday.

The sweeping changes are the result of months of strategic discussions by Ford executives, and represent a dramatic response to the woes afflicting Detroit's automakers.

United States vehicle sales have slumped 10 percent so far this year, with Ford down 14 percent, and the industry is headed for its worst annual sales in more than a decade.

Moreover, gasoline at $4 a gallon, or $1.06 a liter, in the United States and a weak economy have battered the market for big SUV's and pickups, and sent automakers scrambling to revamp their product lineups.

No company has more at stake than Ford, which popularized the SUV in the 1990s with its truck-based Explorer and led the boom in pickups with its best-selling F-series model.

After losing $15.3 billion in 2006 and 2007 combined, Ford had hoped to stabilize its operations this year and return to profitability in 2009.

But rising fuel prices and the collapsing truck market forced the company, the second-biggest United States automaker, to abandon its profit target in May and accelerate its shift to smaller vehicles.

Since then, Ford's chief executive, Alan Mulally, has directed an unprecedented overhaul of the company's future products.

Mulally, who joined the company from aircraft maker Boeing in 2006, is committed to reducing Ford's dependence on large vehicles, according to people familiar with his plans.

"We don't have a sustainable company if we don't do this," Mulally recently told members of his management team.

Between January and June, pickups tumbled from 13 percent of the overall market to 8 percent, and unsold SUV's stacked up on dealer lots. The company announced wholesale cutbacks in truck production and the elimination of 15 percent of its white-collar workforce.

Almost every day for the past three months, Mulally assembled his senior executives in his office to pore over future product plans. A consensus emerged to accelerate the switch to cars and further downsize truck production.

The plans will begin to take effect later this year when production of the Expedition and Navigator is moved from the Michigan Truck plant to another factory in Kentucky.

Then, in a move that symbolizes the company's overall change of direction, workers will quickly shift to making body panels for the Focus compact.

Full Article: http://www.iht.com/articles/2008/07/...ess/22ford.php

[steinravnik]

Smart move. That car at the top is hot. Which model is that? Europe gets that and we get a Kia-styled Focus. No wonder they are losing so much money in the U.S. market.

[derrado]

Mercury's biggest flaw has always been that it has no identity whatsoever. People don't associate it with anything or really have any preconceived notions about it. Of course, this is a blessing because it makes the brand malleable.

I suppose having another marque around can't hurt, and using Mercury for small cars is a good idea and a way to increase small car volume. Ford now just needs to drop the notion that Mercury has certain heritage cues it has to keep using. No, the waterfall grille is not needed (it's nice but I doubt it'd look good on smaller cars), no, Mercurys do not need to be more "formal" than Fords.

Really, Mercury has always been a blank canvas that Ford hasn't used (other than to increase volume). Maybe it is time to paint something.

[FoMoCo Fan]

It's the concept version of the Fiesta which will be sold in the US. Small changes to the front fascia. (smaller lower bumper opening)

[63GrandSport001]

GM is still banking on the idea of truck and SUV sales returning so instead of making a similar move they are closing them down for the time being..........

[derrado]

The picture is of the facelifted Euro Focus.

[Ming]

After reading this article I might be getting a Ford in a year or two. That is, if GM doesn't make similarly dramatic moves.

I'm not in the market for an 8-passenger crossover, or a $40,000 Electric Car...or even a 4-cylinder powered traditional mid-size sedan.

The Cruze had better get here quick, and in more than the sedan/coupe configurations GM has settled on since the mid 90's.

If I have to go to Ford for a fuel-efficient wagon (that isn't trying to look like some retro SUV), then I'll do it. I've never had anything against Ford, I just haven't been interested since they were even more SUV/Truck centric than GM.

[Hitman1970]

Maybe I will play pessimist on this and say the "strengthening of Mercury" will only be slapping of a Tracer Badge on the current Focus. Woohoo.

[jcgable]

[jcgable]

Originally Posted by Ming

After reading this article I might be getting a Ford in a year or two. That is, if GM doesn't make similarly dramatic moves.

I'm not in the market for an 8-passenger crossover, or a $40,000 Electric Car...or even a 4-cylinder powered traditional mid-size sedan.

The Cruze had better get here quick, and in more than the sedan/coupe configurations GM has settled on since the mid 90's.

If I have to go to Ford for a fuel-efficient wagon (that isn't trying to look like some retro SUV), then I'll do it. I've never had anything against Ford, I just haven't been interested since they were even more SUV/Truck centric than GM.

Oh, and I've also been seriously considering the Fiesta over the Cruze A) because it is coming sooner and B) because it preliminarily looks to be a lot more fun to drive.

[SpaceCowboy]

I guess the benefit for Ford is that they can easily start building or importing Euro models and they can sit comfortably with the current cars considering that Ford is a global brand and Mercury is now nothing more than a re-badge.

GM on the other hand would have a harder time of this considering it's euro small car offerings are styled by Opel/Vauxhall and therefore would fit fine with Saturn but possibly not so well with Chev, Pontiac or Buick.

Interesting times ahead!

[Ming]

It's a good point, SpaceCowboy. While Chevy goes for retro HHR or bland Cobalt styling, Saturn is married to Opel's Euro looks.

Seemed like a good idea at the time, but Saturn sales and dealer presence are not going to benefit GM in the same way Ford of Europe will (potentially) benefit Ford in the USA.

[derrado]

Everyone has theorised about Mercury being an outlet for European Fords, much like Saturn is for GM. However, with recent news of Ford bringing over European models such as the replacement Focus and the Fiesta/Verve, that sounds the death knell for a Euro Mercury. So that means that a different approach is going to be taken, but what?

Now with this news of small cars, maybe they're trying to go for the young/hip (Scion) and eco (Toyota Prius) crowd.

[vcs2600]

Originally Posted by derrado

Mercury's biggest flaw has always been that it has no identity whatsoever. People don't associate it with anything or really have any preconceived notions about it. Of course, this is a blessing because it makes the brand malleable.

My preconceived notion is that it's an old lady brand.

However, if Ford is going to become more "Euro" and sporty, Mercury could function as the more traditional American-style outlet, with softer rides, plusher seats and so on. They could do that without going overboard on the chrome "formal" styling.

I can't imagine much more than the traditional Mercury inventory of rebadges though.

[Hoboken Tim]

Mercury was always a dolled up ford. Now Lincoln is the dolled up ford, where does that
leave mercury? Maybe Mercury will be the dolled up fords that are too small to be lincolns.