bzcat

Wage increase has outpaced inflation since end of 2022. We are in a period of very robust economic recovery. https://www.epi.org/blog/average-wages-have-surpassed-inflation-for-12-straight-months/ https://www.americanprogress.org/article/americans-wages-are-higher-than-they-have-ever-been-and-employment-is-near-its-all-time-high/ https://www.marketplace.org/2024/10/30/wage-growth-slowing-outpace-inflation-jobs-earnings-payroll-wage-gains/ But it is also true inflation outpaced wage growth from end of 2020 to 2022.

The footprint rule exist for one reason and one reason only: to accommodate pickup trucks. But car makers quickly figured out you can just make cars fatter and longer so that the vehicle in question can slide down the scale hit a lower target. And that's what happened across the board with every car company and every vehicle segments. Customers didn't ask for longer sedan or wider CUV but the temptation by car companies to cheat is too much to resist.

This arrangement with RTR is interesting. I think Ford has a vested interest in keeping the tuners engaged with Mustang platform and they are probably testing out a few things to see what sticks. If this is really OEM from the factory (all the preview article says it is "factory-tuned"), it is likely just a re-naming and change in marketing of the previous Ecoboost performance package. Not that different than Ford licensing the Shelby name before.

They are not competing with Porsche. They are replicating that business model at a lower price point. If you are not selling as many units as before but you have to keep the model for other reasons (it's part of Ford's icon line up), you have to generate more profit per unit and you have to try to keep as many diehards as possible. In the Mustang context, that means more V8 and more niche performance models that people are willing to pay. And less rental car spec convertibles. Mustang has to become a coveted car not just an affordable sports car. That's where GTD and Darkhorse come in.

Supply (price) is not the issue. In fact, Ford is restricting supply in a big way. Flat Rock can pump out a lot more Mustang. The problem facing Mustang is demand. End of story. It's the same issue facing all other OEMs that used to sell coupes and convertible. The only one immune to this trend is Porsche because they've built up a really big halo on the 911 and Boxster/Cayman line. And that's what Farley is trying to do with Mustang... more upper end performance variants that actually generates demand for the entire model range.

Depends on how strong the Mustang brand is obviously. Porsche has 20+ variants of 911 and every new version just prints more money. The key is to limit supply. As long as you make 1 less than the market demands, you are fine. I can see all of the following Mustang variants working: Coupe, convertible, GTD, Mach E, "Raptorized" lifted coupe, ute, shooting break, "Gran Torino" 4 door coupe. And of course don't forget the usual limited production editions like Bullitt, Mach 1, GT350, GT500.

Yea... The last Civic to be fully designed and for sale before CAFE footprint rule came into effect was the 9th gen (2011-2015) and the footprint was about 42 sq ft. If Honda had kept the Civic at the same size, it will have a 60 MPG CAFE target in 2025.

I'm guessing BMW sells more 4 series coupe and convertible than Ford sells Mustang but I bet the numbers are close. I think one way for Ford to keep the Mustang name relevant but at low volumes is to keep pushing the average MSRP higher and make people chase special performance edition / limited production variants. Basically what Porsche does with 911. Ford is kind of headed that way with GTD but I think there is an untapped opportunity to make Mustang variants that can be certified as EPA trucks which will partially solve the CAFE problem. Mustang Rally - take the GT 5.0 add AWD and lift the suspension by 2". Re-certify this as a "truck" with EPA like Subaru did with Crosstrek and Outback since it should have enough ground clearance to qualify. Since it is a truck, it has lower CAFE target which means Ford can sell more of them. Think of it as a 911 Dakar competitor for 1/3 of the price. Mustang Ranchero - hear me out... if Mustang Rally 5.0 is already certified as a "truck", how hard would it be to chop the roof off, yank out the back seat, install a bulkhead and a cargo bed where the backseat and the trunk used to be? These won't be huge sellers. Ford just need to make enough to keep the Mustang name alive. And more importantly keep Flat Rock in business. If Flat Rock is shut down, Mustang will go with it. Ford is not going to invest in another plant to build it.

You guys are assuming Ford wants to sell more Mustang... I'm not sure that they do. It's not CAFE friendly and despite S650 still based on S550's aging bones, it's probably not that profitable once you factor in Flat Rock's under-utilization. Sure, Ford can lower the price by 20% and sell a ton more but it seems clear to me that they are also constraining supplies so it doesn't create a bigger CAFE hole. What Ford really needs to do is find something else to build at Flat Rock. The single model production line in a modern car plant thing doesn't really work.

Americans aren't buying 2 door coupes. It's not a Mustang problem per se. It is one of the best selling model in a dying market segment. Maverick continues to impress... I knew the model was going to be successful but it has done far beyond my expectation. Bronco Sport + Maverick pairing is probably a far more profitable C2 replacement for Focus hatch/sedan in North America. Ford needs to replicate this kind of success in product development in other regions.

The major distinction is for SDV is that all of the functions are on the same operating system instead of 20+ separate software systems that operate independently in non-SDV. The easiest way to visualize this is SDV is top-down driven logic while conventional vehicles are bottoms up driven logic. In a top-down logic, all the functions follows the code from central electronic control unit (ECU). In bottoms up logic, the native codes are written at the function level and you have silos. Another way to think about this is to understand who actually makes all the components of the car. A traditional car will have seats made by an external supplier who will program its ECU using its own software code. And the HVAC system is supplied by a different company who programs its ECU in a different way. And a 3rd company supplies the mirror and guess what, it also has embedded ECU that is also different than the seats and HVAC system. So the car company then spend all its time integrating it so the two subsystems talk to each other. Now when you press the heated seat button on the HVAC panel, the HVAC system knows how to turn on your heated seat; and when you press the memory button, it know how to adjust the seats AND the mirrors. One drawback of this approach is anytime you want to make a change to the HVAC system, you also need the supplier for the seats and mirrors to be onboard, even though you are not changing those things. You have to coordinate a lot of different moving parts and this all takes a lot of time and cost money. In a SDV, seat controls, HVAC, and door mirrors will be controlled by the same set of ECU that controls that zone so there is no integration required. If you want to change how the HVAC works, it won't impact its integration with seats or mirrors. It can be done in a simple over the air update. This article shed some light on how Rivian has advanced the art of SDV and why VW paid $5 billion to try to get it https://www.popsci.com/technology/rivian-zonal-electrical-architecture/ The bottom line: SDV requires car companies to take control of the design decision on all the component rather than relying on Tier 1 suppliers to make the decision for them. This is why legacy car companies are struggling with SDV - it is fundamentally incompatible with how they've built cars in the last 30 years since the advent of computers in cars. A lot of the major car technology breakthrough in the last 20 or 30 years have been developed by Tier 1 suppliers like Bosch, Denso, or ZF. They have a vested interest to keep the silos so the car companies have to keep coming back to them for integration and licensing.

That's the problem in a nutshell. Explorer was supposed to be the Focus replacement but someone (maybe Farley?) saw that it wouldn't make money at the price VW is selling its ID.3 and Renault is selling its Megane, so Ford Europe is pricing it to make sure it covers its costs. Consumers aren't stupid... these are not compelling products at those price points. The slow sales of the Explorer/Capri twin is direct result of the pricing strategy. It's almost as if someone wanted them to fail... If Ford can sell a larger EV imported from Mexico for lower price then a locally made EV, then what is the point of keeping the local manufacturing footprint?

Ford Europe is the passenger car business and it is indeed bleak. Ford Pro is the just marketing... the van business in Europe is under Ford Otosan. Farley already placed its eggs in the Otosan basket with Puma (the best selling vehicle under Ford Europe) now made by Ford Otosan. Ford Pro in Europe is just a natural evolution of the point #2 I made in my post... van buyers are not as price sensitive as retail B-segment hatchback buyers. And there are fewer competitors (e.g. Toyota and Hyundai are bit players in European van market) so Ford's pivot to Pro business is just a survival instinct... go where the margins are high and competition less fierce. There are only 4 credible van sellers in Europe: Ford, Mercedes, VW, and Stellantis. Renault is now struggling because it lost Opel to Stellantis so I think they will eventually exit the business. Compare this to the passenger car business with a dozen credible player plus the emerging threat from Chinese OEM... it's obvious why Ford doesn't want to sell Fiesta but is all-in on Transit. The van business also less capital intensive because model cycles are long... 10-15 years between major update is pretty standard. In passenger car business, 5-6 year model cycle with 3 year midcycle update is standard. You can see why Farley loves the van business in Europe. If I'm Farley, I would approach Renault and buy its van business. Combine that business with Ford Otosan will be transformative for Ford in Europe.

I posted on this topic extensively before. Ford has 3 challenges in Europe: 1. US GAAP requiring pension costs to be reported as expense at the time the pension is earned. IFRS allows companies to report pension costs as expense at the time they are paid. This is why GM couldn't turn a profit with Opel but PSA can turn a profit in year 1. Has nothing to do with the product or strategy. It is literally just how the costs are reported. 2. Ford doesn't have a premium brand in Europe so it struggles with margin. VW can justify making small margin on a Skoda Octavia because it makes 3 times that on an Audi A3 which is basically identical car. So it has to focus on market segments that are less sensitive to price - in the old days, it focused on "company car" market which were white collar employee perks in all the major European markets. These cars were purchased by the company and given to the employees to use. Employees do not pay income tax on use of car and employer write off the car in full as deductible business expenses. Large companies were often not very price sensitive because they needed the expenses to offset taxable income. Ford dominated the "company car" market in UK as well as a lot of the European countries without native brands - e.g. Belgium, Greece, Denmark etc. Together, it made Ford a major volume brand. The "company car" market has largely disappeared with tax reforms at EU level that gradually make "company car" less attractive employment perk (in most EU country now employee has to pay income taxes on use of company car). For companies that still offer this benefit, it just make more sense to give employee the cash and let them buy their own cars. When that happened, people started buying things like Audi A3 and Mercedes A-Class instead of Ford Mondeo. Ford never really adopted well to the post-"company car" reality in Europe. 3. UK and EU CO2 target. Unlike CAFE in the US, this is a hard target that cannot be cheated by making cars wider/longer. The only way to meet the target is to make cars that is lower CO2 emission - i.e. EV and hybrids. In Farley's calculus, it makes more sense to sell Mustang/Ranger and some EVs then a lot of Fiesta and some EVs. Mustang/Ranger have higher margins than Fiesta - it's related to the previous point but the regulatory framework forces that decision.