New Ford cars are slow to catch on in U.S., Analysts remain skeptical

[Ming]

New Ford cars are slow to catch on in U.S.
Analysts question success of models auto firm is banking on
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DETROIT - Ford Motor Co.’s new vehicles have yet to meet targeted sales volumes, compelling analysts to question the success of models the automaker is banking on to stem its bruising U.S. market-share losses.

The second-largest U.S. automaker hopes to sell more than 200,000 of the new Five Hundred and Montego sedans, and the Freestyle wagon this year. But four months after their launch, the annual selling rate for the three cars built at Ford’s Chicago assembly plant is only 167,000.

Rod Lache, an analyst at Deutsche Bank, said a bullish case on Ford — that new products would drive improvement in market share, vehicle mix and pricing — is losing steam.

"The trends on mix and share have been running counter to those assumptions, implying downside risk to earnings expectations,” Lache said in a recent note to clients.

Ford’s new vehicles are central to its strategy for boosting U.S. market share and increasing much-needed automotive profit.

The automaker had dubbed 2004 the “year of the car,” but the new cars arrived at dealerships too late in the year to stop Ford’s car sales from dropping 14.3 percent in 2004.

Ford ended last year with a U.S. market share of 18.3 percent, the lowest in more than three decades.

To reach the targeted selling rate for the new models, Ford needs to increase sales of Five Hundred, Freestyles and Montegos by 55 percent to at least 17,000 in February from 10,921 last month. U.S. sales of the cars increased 5 percent from December to January.

"Investors remain highly skeptical about the Chicago products,” Merrill Lynch analyst John Casesa said in a recent note to clients.

Ford executives, however, are still optimistic about the vehicles. The challenge for Ford, is to convince consumers they can buy sedans at its dealerships, and not just noteworthy pickup trucks and sport utility vehicles.

Some analysts say the new models, which compete in a market heavily dominated by Asian automakers, fail to make an impression on consumers because of their conservative styling.

Full Article Here: http://msnbc.msn.com/id/6953362/

Also See: http://forums.gminsidenews.com/showthread.php?t=4696

[SUPERBADD75]

i don't think enough people are seeing and driving these vehicles. the Five Hundred is a great vehicle, looks good, seems to be built well, and is supposed to be a very nice drive. the Freestyle has been complimented in every article i've read about it. i think people expect the same thing in the Five Hundred that they saw in the Taurus, and are just not willing to even give it a chance. i haven't had a chance to drive the Five Hundred yet, maybe i'll do that in the next week or so. i've seen it and sat in it, and everything i've seen and touched is way better than the Taurus in every way, and it's based on a Volvo platform, so i'm sure it drives way better. i plan to be the judge myself, and find out why people aren't interested.

[Mikkoo]

I tend to agree with the analysts, the five hundred doesn't have styling that sets it apart from the bland offerings of Toyota and Honda,
and it can't compete on resale value, or offer the bullet proof
reliabiltity that the Accord and Camry bring. I see big rebates coming
in the horizon for this new entry from Ford.

[amark329]

Wait aren't they doing well if only 4 months after the release they sold 167,000? Wouldn't that mean that they have 8 months to sell 33,000? I'm conused but any bad news for ford is music to my ears.

[GReekBoy]

I think 167000 is what they expect to sell going by the numbers they see.

[Garmar]

I think the the 500 looks great, although some may like something a little less conservative. Ford needs to put on a crash program to develop and produce the rumored 3.5 V-6 NOW. A 203HP Duratec V-6 isn't sufficient in this market.

It'd be a good idea to put in a 300HP V-8 (with DOD) so that in the future when they race 500 "look-alikes" at NASCAR races on Sundays they will sell some 500s on Monday. Their AWD apparently is very popular now and would be even more so with a V-8.

[Perian]

Note: The Sunday New York Times (02/13/05) contains a positive review of the Freestyle.

Will post quotes as soon as possible.

[GM_Guy81]

I guess its called the freestyle "Because its FREE to be anything it wants to be" except something that meets sales goals.

[Slack]

I think a major problem is that the automotive press as a whole has blasted this car for its weak engine. Considering that most consumers don't know a thing about compression braking, threshold braking, weight transfer, or suspension loading, the engine is the only performance gauge they have. In the case of the Five Hundred, it sucks.

[Bravada]

Originally Posted by GM_Guy81

I guess its called the freestyle "Because its FREE to be anything it wants to be" except something that meets sales goals.

Not exactly. It's called Freestyle because it's free from any style. I think I will start praying for Mercury to get a Mondeo wagon. This is the worst thing Ford came up with in years. And call me whtever, I really like the Taurus wagon (and the fact that Ford seemed to be the last American automaker who remembered what a wagon is).

[AndrewGS]

I really think these cars are great, I even like the Mercury Montego. I think the problem is that there are no ground-breaking innovations or technology in them nor an engine more powerful than adequate. They do have the CVT and 6-speed automatic, but that's alomst becoming common today.

They really need to offer navigation, satellite radio, and an OnStar-type communications service (all of Ford needs this), along with a more powerful engine. I really think they could sell these things with some common technology and power.

[Maverick]

Originally Posted by Mikkoo

I tend to agree with the analysts, the five hundred doesn't have styling that sets it apart from the bland offerings of Toyota and Honda, and it can't compete on resale value, or offer the bullet proof
reliabiltity that the Accord and Camry bring. I see big rebates coming
in the horizon for this new entry from Ford.

Actually, projected resale value is pretty good: http://www.detnews.com/2004/autosins...b01-289470.htm

Ford isn't selling to rental companies, and that helps a lot. And most Five Hundred owners are very satisfied, from what I've read at www.myford500.com.

[desmo9]

Originally Posted by amark329

Wait aren't they doing well if only 4 months after the release they sold 167,000? Wouldn't that mean that they have 8 months to sell 33,000? I'm conused but any bad news for ford is music to my ears.

No, that means in four months they have sold about 56,000 units. To annualize, put it in terms of 12 months (multiply by 3).

[uujjj]

I think its simply that you don't buy the first year of anything from Ford. I certainly wouldn't. The experience of people with 1995 Windstar or 2000 Focus or 2002 Escape gives buyers pause. Ford simply isn't that good at product introductions.

Unfortunately, this fact makes Ford slow to bring out new products. The problem is that Ford needs to introduce new products regularly to stay competitive.

The irony is, the reason Ford does poorly at product launches is because they do it so rarely. If Ford would bring out new cars at the rate that Toyota or Honda do, they'd be good at it too.

Wait two years, and the 500/Freestyle/Montego will be fine.

[johnriley]

I thought part of the problem was that demand for AWD was stronger than anticipated and they couldn't get the AWD parts from Volvo in sufficient numbers.

I know they weren't the same transmission, but the fact that GM pulled the CVT from most VUE's doesn't give me confidence in the CVT in such big vehicles.

I do like the Freestyle though. I think it is a nice, clean design. I don't have a problem with the styling on it or the 500. I think the 500 is Audi-like, as many mid-size fords have been since the first Taurus.