How Will Ford React to July Sales?

[jd-ford-hd]

Does anyone think that maybe Ford will react quickly to the July slump by reinstating the family plan? Will they increase cash incentives? Maybe they will sit it out for another month. Ford has really got some good stuff at the moment and getting it in the hands of the non believers should be formost on the minds of the bean counters.

[Michael Reynolds]

Nope.

 

Figure out why the product isn't moving, and correct it ASAP. Incentives are a short term fix.

[igor]

Ford's inventory is in line, its production is in line .. they will not jump the incentive game again - not even the 0% financing they had last labor day.

 

Igor

[rmc523]

Nope.

 

Figure out why the product isn't moving, and correct it ASAP. Incentives are a short term fix.

 

I think part of the problem is lack of advertising. I can even remember the last time I saw a Fusion ad/Challenge commercial.

[LincolnFan]

Nuke-the-competition firesale on the 6th and the 9th of August.

[FordBuyer]

Nuke-the-competition firesale on the 6th and the 9th of August.

 

In my view, much more advertising and more incentives on vehicles that are floundering. What choice do you have? The new Accord will be out soon and if Ford wants to sell 15,000 Fusions it should double the rebate on Fusion and offer better lease rates. IMO, the $199 lease on I4 Fusion is not good enough to get interest. $175 should bring some customers in. The V6 Fusion will need help to as new EPA ratings make one do double take, especially with bigger, more powerful Taurus sitting next to it. To get the Taurus/TaurusX off to good start, a modest rebate should do the trick hopefully. These rebates will also make it imperative for Ford to get relief from UAW in form of more cost effective new contract. I'm sure Ford is trying to figure out how to tweak their incentives right now, especially with Toyota throwing around big incentives. Ford cannot throw big money on hood, but it has to do something, and rebates are part of game to get customers in showroom.

[630land]

they have to promote that they just dont make trucks, and they don't make cars like Tempos or Pintos anymore.

 

TV ads are not worth much, with TiVO, channel surfing, and the WWW. Have more easy to navigate build your own car sites.

 

The days of only 3 networks and people watching car commericals 'for fun' are history.

Edited August 3, 2007 by 630land

[NickF1011]

Ford is advertising a lot. Just not TV commercials. I was driving through eastern PA/northwest NJ yesterday and must have seen at least 2 dozen billboards for the new Taurus.

 

Here's something sickening I noticed though: Pennsylvania actually has a Toyota-sponsored "Welcome" sign on I-83 now. Says something like:

 

Welcome to Pennsylvania!

TOYOTA

hopes you have a safe visit!

 

[jpd80]

Wasn't July's low sales numbers the result of car makers pumping incentives hard in June?

[bb62]

Ford's inventory is in line, its production is in line .. they will not jump the incentive game again - not even the 0% financing they had last labor day.

 

Igor

 

How can you indicate that Ford's production is "in-line"? Ford's sales losses have been so catastrophic since 2000 that any production figures are bound to be wrong within one year. This makes viable planning an impossible task for the best of managers. Consider the following JULY YTD and US sales totals figures respectively:

 

2000 - 2,544,098....4,202,820

2001 - 2,403,990....3,971,364

2002 - 2,193,544....3,623,709

2003 - 2,047,434....3,483,719

2004 - 1,978,026....3,331,696

2005 - 1,982,131....3,168,156

2006 - 1,792,849....2,918,674

2007 - 1,573,897....2,596,823 (projected - based on average uplift over the last 4 years)

 

 

This shows a average drop of 229,428 units year over every freaking year. At this rate of volume drop, Ford runs out of customers completely by the year 2019. What is interesting is the timeline. From 2000 to 2019 or approximately twenty years is about a generation. This ties to marketing data which shows that young buyers are no longer really interested in Ford; the evidence clearly shows the bulk of new buyers going elsewhere. It has simply become the new "Oldsmobile".

 

What can Ford do to survive? They have to completely re-invent their image. Chrysler has done this a number of times and may yet do so again with their new management. Ford unfortunately has the hidebound and completely conservative family to deal with. Any true mavericks will be culled out early in their careers. Recent profits aside, Ford is not even close to coming out of the woods.

[morgande]

Well, not sure if this is related but Ford has brought back 0%, as well as cash rebates on all models.

 

http://www.fordvehicles.com/2007modelyearclearance/

 

Trucks and SUV's get the option of cash rebate AND 0% ($2007 to be exact)

[morgande]

Also, a quick check indicates that Chrysler is also running rebates and 0% right now. I think GM is doing the same. But is is model year end, so I guess this is to be expected while they make way for 2008 models.

[silvrsvt]

What can Ford do to survive? They have to completely re-invent their image. Chrysler has done this a number of times and may yet do so again with their new management. Ford unfortunately has the hidebound and completely conservative family to deal with. Any true mavericks will be culled out early in their careers. Recent profits aside, Ford is not even close to coming out of the woods.

 

 

But you make it like Chrysler was successful in doing so..if they where so successful, why would they have to do it multiple times? Look at where they are now....

[Noah Harbinger]

Ford is advertising a lot. Just not TV commercials. I was driving through eastern PA/northwest NJ yesterday and must have seen at least 2 dozen billboards for the new Taurus.

 

Here's something sickening I noticed though: Pennsylvania actually has a Toyota-sponsored "Welcome" sign on I-83 now. Says something like:

 

Welcome to Pennsylvania!

TOYOTA

hopes you have a safe visit!

 

 

Wow, I didn't know companies were allowed to advertise on the side of freeways! That's outrageous!

[NickF1011]

Wow, I didn't know companies were allowed to advertise on the side of freeways! That's outrageous!

 

It's one thing to advertise. It's another to be sponsoring the state's very own official Welcome sign. It's as if Pennsylvania is urging its citizens to buy Toyotas over all else. Reeks of something if you ask me.

[Sizzler]

Gas prices are still in a state of flux.

 

Consumers are hoping that they stay reasonable, and WANT them to stay reasonable. It's just that they have a screaming little voice in the back of their head shouting that gas prices are going to sky-rocket soon and "don't lock yourself into a gas guzzler right now".

 

So the consumer dithers.

 

Meanwhile, way back in the 70's, when automakers were toying around with rust-proofing and galvanized metal and thinking about longer and longer intervals between needed maintenance, there was some frank comments about 100,000 mile cars being BAD for business because buyers wouldn't need to replace them as often. Rust was a good thing. New models that made last year's model look dowdy was also a good thing. Turn was the word.

 

Now we have the reality of 100,000+ vehicles, no-maintenance, no rust. This year's model pretty much indistinquishable from last year's model. Consumers don't feel the need to trade-in, buy new every year. What was predicted has come to pass. Quality has slowed the car market.

 

Forecasts used today seem like they're still based on yesterdecades' sales patterns. Quality, REAL quality, has pulled the rug out from under manufacturers who counted on replacing all the cars in America every 3 years or so. Now, maybe the time for a complete turn is closer to 6 or 7 or more years.

 

Quality has killed car sales.

[NickF1011]

Quality has killed car sales.

 

Car sales are still pretty darn near historic highs. It was only a year or two ago that the industry set all-time records for vehicle deliveries in a year. It's not like the quality issue has only just cropped up over the past 12 months. Car sales will bounce back to historic highs before we know it.

[wescoent]

Gas prices are still in a state of flux.

 

Consumers are hoping that they stay reasonable, and WANT them to stay reasonable. It's just that they have a screaming little voice in the back of their head shouting that gas prices are going to sky-rocket soon and "don't lock yourself into a gas guzzler right now".

 

So the consumer dithers.

 

Meanwhile, way back in the 70's, when automakers were toying around with rust-proofing and galvanized metal and thinking about longer and longer intervals between needed maintenance, there was some frank comments about 100,000 mile cars being BAD for business because buyers wouldn't need to replace them as often. Rust was a good thing. New models that made last year's model look dowdy was also a good thing. Turn was the word.

 

Now we have the reality of 100,000+ vehicles, no-maintenance, no rust. This year's model pretty much indistinquishable from last year's model. Consumers don't feel the need to trade-in, buy new every year. What was predicted has come to pass. Quality has slowed the car market.

 

Forecasts used today seem like they're still based on yesterdecades' sales patterns. Quality, REAL quality, has pulled the rug out from under manufacturers who counted on replacing all the cars in America every 3 years or so. Now, maybe the time for a complete turn is closer to 6 or 7 or more years.

 

Quality has killed car sales.

 

Yes, but all of that is offset and then some by the fact that there are far more DRIVERS on the road today than there were back in the day. More people need cars.

 

This is the first month since as long as I can remember that sales didn't increase overall... seems a little soon for doomsday predictions.

[atomaro]

How can you indicate that Ford's production is "in-line"? Ford's sales losses have been so catastrophic since 2000 that any production figures are bound to be wrong within one year. This makes viable planning an impossible task for the best of managers. Consider the following JULY YTD and US sales totals figures respectively:

 

2000 - 2,544,098....4,202,820

2001 - 2,403,990....3,971,364

2002 - 2,193,544....3,623,709

2003 - 2,047,434....3,483,719

2004 - 1,978,026....3,331,696

2005 - 1,982,131....3,168,156

2006 - 1,792,849....2,918,674

2007 - 1,573,897....2,596,823 (projected - based on average uplift over the last 4 years)

This shows a average drop of 229,428 units year over every freaking year. At this rate of volume drop, Ford runs out of customers completely by the year 2019. What is interesting is the timeline. From 2000 to 2019 or approximately twenty years is about a generation. This ties to marketing data which shows that young buyers are no longer really interested in Ford; the evidence clearly shows the bulk of new buyers going elsewhere. It has simply become the new "Oldsmobile".

 

What can Ford do to survive? They have to completely re-invent their image. Chrysler has done this a number of times and may yet do so again with their new management. Ford unfortunately has the hidebound and completely conservative family to deal with. Any true mavericks will be culled out early in their careers. Recent profits aside, Ford is not even close to coming out of the woods.

 

 

 

Plot your results next to the number of "employees" for those years. Not trying to make any assumptions for Igor, but that could be 1 possible explanation, or not. At least it makes sense.

Edited August 6, 2007 by atomaro

[NickF1011]

Plot your results next to the number of "employees" for those years. Not trying to make any assumptions for Igor, but that could be 1 possible explanation, or not. At least it makes sense.

 

Plot it alongside production as well. Ford has lowered production to meet those expected lower results. Ford (particularly Mullaly, Fields, and LeClair) has pointed to leveling off market share as a necessity. The drop over the past 7 years has been prolific, but it was generally expected (at least over the past 3-4 years). Now, Ford needs to level off if they are going to stay in the game. Over the past several months it looks like their retail share HAS been leveling off a bit. This year's overall numbers are going to be completely skewed due to the drop-off in fleet sales, but the worst will hopefully be over by the end of this year.

[bb62]

Over the past several months it looks like their retail share HAS been leveling off a bit. This year's overall numbers are going to be completely skewed due to the drop-off in fleet sales, but the worst will hopefully be over by the end of this year.

 

But my point is that retail sales will NOT level off if you believe the insiders who track demographics. The typical Ford buyer is getting older - much older (Oldmobile anyone). And this is true for all segments within the market. This is very bad news because the Ford name and blue oval itself are becoming associated with older buyers - something the young avoid at all costs. Even the typical Mustang buyer is far older than he or she was back in the mid 60s when the vehicle was first launched. Ford is, of all the brands, considered the most conservative and staid of the brands. Demographics alone could wipe out another million units of US sales by 2012. Now how could Ford US survive on 1.5M units of sales? Ford has to completely change their image to survive as more and more people just cross Ford off their shopping list (never mind the buying list).

 

Consider the potential risks:

1. With a real fuel economy crunch Ford vehicles are the biggest gas hogs in the domestic market and are still likely to lose the most.

2. Ford technology is playing catchup with the other brands - due to a lack of vision over the past 10 years.

3. Ford has limited their potential sales for popular vehicles due to the agreements with foreign PT manufacturers (Aisin anyone?)

4. Ford Europe is just as cyclical as Ford of NA. what if Ford of Europe also starts to tank due to European conditions (even if the product is good Ford of Europe neve had the ROS that Ford of NA has historically enjoyed).

5. What if the market suddenly (as it looks like it might) becomes a 15.5M unit market. The domestics typically suffer inordinately in those conditions.

 

I have to wonder if the prudent investor takes a look at all the issues that Ford has to deal with a sense that their time has come and gone. And this is not necessarily a good thing.

[NickF1011]

But my point is that retail sales will NOT level off if you believe the insiders who track demographics. The typical Ford buyer is getting older - much older (Oldmobile anyone). And this is true for all segments within the market. This is very bad news because the Ford name and blue oval itself are becoming associated with older buyers - something the young avoid at all costs. Even the typical Mustang buyer is far older than he or she was back in the mid 60s when the vehicle was first launched. Ford is, of all the brands, considered the most conservative and staid of the brands. Demographics alone could wipe out another million units of US sales by 2012. Now how could Ford US survive on 1.5M units of sales? Ford has to completely change their image to survive as more and more people just cross Ford off their shopping list (never mind the buying list).

 

Consider the potential risks:

1. With a real fuel economy crunch Ford vehicles are the biggest gas hogs in the domestic market and are still likely to lose the most.

2. Ford technology is playing catchup with the other brands - due to a lack of vision over the past 10 years.

3. Ford has limited their potential sales for popular vehicles due to the agreements with foreign PT manufacturers (Aisin anyone?)

4. Ford Europe is just as cyclical as Ford of NA. what if Ford of Europe also starts to tank due to European conditions (even if the product is good Ford of Europe neve had the ROS that Ford of NA has historically enjoyed).

5. What if the market suddenly (as it looks like it might) becomes a 15.5M unit market. The domestics typically suffer inordinately in those conditions.

 

I have to wonder if the prudent investor takes a look at all the issues that Ford has to deal with a sense that their time has come and gone. And this is not necessarily a good thing.

 

All the analysis will get you nowhere when you just look at the numbers. Ford's retail share is steadying already, despite a lot of outdated product. Ford actually GAINED retail market share as recently as June.

[2005Explorer]

I think one way to address these sales problems is a longer warranty. Instead of throwing more and more cash on the hood, slap a 5/60 (6/70 on Lincoln) bumper to bumper and watch sales pick-up. An improved warranty will actually help re-sale instead of hurt it like too many discounts can. Ford says their quality is greatly improved so as long as they keep working on getting better and better quality it can be done and in the end will probably cost less then increasing rebates.

[FordBuyer]

But my point is that retail sales will NOT level off if you believe the insiders who track demographics. The typical Ford buyer is getting older - much older (Oldmobile anyone). And this is true for all segments within the market. This is very bad news because the Ford name and blue oval itself are becoming associated with older buyers - something the young avoid at all costs. Even the typical Mustang buyer is far older than he or she was back in the mid 60s when the vehicle was first launched. Ford is, of all the brands, considered the most conservative and staid of the brands. Demographics alone could wipe out another million units of US sales by 2012. Now how could Ford US survive on 1.5M units of sales? Ford has to completely change their image to survive as more and more people just cross Ford off their shopping list (never mind the buying list).

 

I agree with you about Ford buyers getting older. That is especially true with Taurus, Panther cars, Lincoln Town Car, MustangGT, and even Focus as more and more oldsters are buying it. But the new Escape/Mariner is certainly garnering younger buyers and in case of Mariner younger women. The Fusion/Milan have garnered their fair share of younger buyers. Ditto for new Edge/MKX and MKZ. The Mustang V6 seems to attract younger buyers and most Freestyle owners I see are younger women with kids in back. Explorer and Mountaineer seem to do OK with younger buyers..most are not senior citizens. And of course the F-150 attracts working males who are not on Social Security.

 

So situation is not that bleak, and Ford's newer products have done will lowering that demographic you mention. The new Flex will attract families with kids along with the new TaurusX and I'm sure as Ford brings out new products over the next few years they will attract younger buyers. So I personally am not worried about age thing as Panther line slowly disappears. I meet young people all the time who like Mustangs and F-150's and other Ford vehicles like Focus and even Ranger. Not every kid loves Tuner cars made by foreigners. Some like American iron.