Ford Nearly Completes Car Purge

[akirby]

1 hour ago, Roland said:

 

No, sorry.  I don't buy that Ford is just writing off half a million passenger car buyers a year and not trying to move them into something that they're still making. 

How many vehicles was GM selling every year when they went bankrupt?  I think it was somewhere around 2.5 million.  Just because you sell a lot of something doesn’t mean you make a lot of money.  Sometimes you’re better off not selling anything instead of losing money.

[T-dubz]

5 minutes ago, akirby said:

There is zero evidence that consumers will switch from CUVs to cars.  Today’s teens and twenty somethings grew up in SUVs and crossovers.  It’s what they like and it has nothing to do with image.  There is no image in an escape or edge or Ecosport.  As folks like me get older they have trouble getting in and out of cars.  And fuel economy is a non starter with full sized trucks and SUVs in the low to mid 20s, mid sizers in the mid to upper 20s and smaller ones and hybrids in the 30s.   It’s not happening just because you want it to happen.

I wish I was getting those MPGs. I’ve had a 2013 fusion with 1.6L that averaged 24 mpg over the life of the car. The wife had a 2017 escape with 2.0L that’s averaging 21 mpg and a 2020 explorer that’s getting 18 mpg. I drive fast so that explains why the fusion is low but my wife is your average driver and doesn’t speed and she still gets terrible mileage.

[Trader 10]

I’m hoping that within the next 3 years Ford is making a CD6 4 door Mustang (and Lincoln)and a C2 based Fusion sedan. The CD cars should be able to command high enough prices to make good margins at relatively low volumes. The mid sized car market has declined in volume but there is more than enough potential for Ford to have an entry. There is no reason why Ford cant make an acceptable margin on 100,000 or more Fusions with low cost labor(Mexican plant). A new Fusion should be able to return better margins than Escape. 

[T-dubz]

6 minutes ago, Trader 10 said:

I’m hoping that within the next 3 years Ford is making a CD6 4 door Mustang (and Lincoln)and a C2 based Fusion sedan. The CD cars should be able to command high enough prices to make good margins at relatively low volumes. The mid sized car market has declined in volume but there is more than enough potential for Ford to have an entry. There is no reason why Ford cant make an acceptable margin on 100,000 or more Fusions with low cost labor(Mexican plant). A new Fusion should be able to return better margins than Escape. 

Look at the escape and focus. Aren’t they basically the same vehicle with a different top hat on? The interiors are pretty much identical. With that much part sharing and the volume of sales they had, I don’t know how they couldn’t  be profitable.

Edited December 3, 2019 by T-dubz

[Trader 10]

1 minute ago, T-dubz said:

Look at the escape and focus. Aren’t they basically the same vehicle with a different top hat on? The interiors are pretty much identical. With that much part sharing, I don’t know how they can’t be profitable.

 

I’m not arguing that the Escape isn’t profitable - just that a new Fusion should be more profitable being built in Mexico as it should be able to be priced at least as high as the Escape is. 

[T-dubz]

I wouldn’t mind more cuvs with a sedan shape. One of my favorite recent concepts was the skoda vision. I think it’s one of the best implementations of the coupé style cuv. 

 

[T-dubz]

4 minutes ago, Trader 10 said:

 

I’m not arguing that the Escape isn’t profitable - just that a new Fusion should be more profitable being built in Mexico as it should be able to be priced at least as high as the Escape is. 

 Oh I was agreeing with you. If you are sharing the costs of parts over several vehicles (in the case of escape and focus its almost the entire interior), why couldn’t they all be profitable. This was the reason for the baby bronco and escape right? Basically the same vehicle with a few modifications that can be marketed to different groups and make a profit. Why couldn’t you have the focus, escape and baby bronco all on the same platform to share the costs?

[silvrsvt]

1 hour ago, Trader 10 said:

 There is no reason why Ford cant make an acceptable margin on 100,000 or more Fusions with low cost labor(Mexican plant). A new Fusion should be able to return better margins than Escape. 

 

The Fusion and Escape are virtually priced the same, with the Escape (assuming here) being a cheaper product to manufacture. 

 

About sedan sales:

In 2019, S.U.V.s and pickups are grabbing a record 70 percent of the market, with 5.9 million sales through June versus 2.5 million for cars. Sales of midsize sedans have nose-dived, from 3 million in 2012 to 1.9 million last year. One of every five cars sold was a midsize sedan in 2012; today it’s barely one in 10.

 

https://www.nytimes.com/2019/09/12/business/suv-sedan-detroit-fight.html

[Trader 10]

13 minutes ago, silvrsvt said:

 

The Fusion and Escape are virtually priced the same, with the Escape (assuming here) being a cheaper product to manufacture. 

 

About sedan sales:
 

 

 

https://www.nytimes.com/2019/09/12/business/suv-sedan-detroit-fight.html

 

A new Fusion will be able to generate higher ATP’s  - the current model is discounted because it is not competitive with newer competition. I don’t think the Escape is cheaper to manufacture. - i believe the Mexican built Fusion is cheaper to build. (Also an assumption). A market totaling 1.9 million vehicles/year is still huge.

[Assimilator]

It costs Billions to develop an all-new car and it has to earn that money back and then some over an extended period of time.  With an outlook guaranteeing declining sales and commanding lower prices, I would be more alarmed if Ford DID spend money on new sedans, it's a guaranteed money loser on a belief that the market could come back with zero evidence that it will or could.  Opening up new plants also costs hundreds of millions and Ford needs those plants to make vehicles that earn money.  So not only do they need the capital to go into growth avenues, but they also need those plants to make profitable volume.

 

I'm sure Ford is also facing a Conundrum with Fusion, it's too expensive to make because it was designed with higher margin customers in mind who are simply buying utilities now.  But it also costs a tremendous amount of money to develop a new cheaper Fusion and then dedicate valuable floorspace for it.  So sure, Ford could make higher margins if they can make Fusions cheaper, but they also have to spend a fortune to make that Fusion...and they will still be filling their factories with a negative growth margin killer.

 

And the Escape IS cheaper to make!  It's built on a high volume global c-semgnet architecture with lower cost components.  Think of it this way, the Fusion and Edge are companion products with similar costs, yet the Escape and Fusion cost the same and the Edge costs way more.  That can't be fixed by Mexico, although Ford tried.  

 

 

 

 

 

Edited December 3, 2019 by Assimilator

[Trader 10]

I can’t imagine a new Fusion being built on anything other than C2. It would cost billions to develop on C2 using the same power plants as the Escape? Looks to me looks Ford’s issue the next few years will be excess production capacity not the other way around. 

[Gurgeh]

14 hours ago, Roland said:

 

Absolutely.  But this is also why people are foolish to think that the CUV trend won't reverse because they're not as vulnerable to fuel price increases as the full sized SUVs were.  Wagons became unfashionable.  Minivans became unfashionable.  It will happen again because CUVs are just pointy mom vans.     The response I see that Ford will be able to respond quickly this time because they have world platforms is laughable.  That's what they say ever time.   The Ranger took forever and it's nearly indistinguishable from what already existed.  The Bronco is taking forever.  Ford is still glacially slow even when they have an existing platform. 

 

You make points well worth considering, except for one. Wagons didn't die because of changing fashion or because demand died for a roomy vehicle able to haul a good sized family and a buncha stuff. It died because EPA regulations made it impossible for automakers to keep selling them. They were replaced first by minivans and then by more flexible SUVs/CUVs.

 

See for instance (quotes below):  https://www.futureofcapitalism.com/2019/07/how-regulation-killed-the-station-wagon

 

"Stringent fuel economy regulations imposed on cars in the 1970s had made it practically impossible for automakers to keep selling big station wagons. Yet many Americans still wanted roomy vehicles. The answer, Mr. Sperlich and Mr. Iacocca realized, was to make family vehicles that were regulated as light trucks...

"Four years after the introduction of the minivan, Mr. Iacocca led the acquisition of American Motors. He then oversaw the development of the roomy Jeep Grand Cherokee, a sport utility vehicle that became a runaway best seller in the 1990s...

"Best of all for Detroit, the federal government limited foreign competition: Japanese automakers were initially kept out of the minivan and S.U.V. markets by an obscure 25 percent tariff on imported light trucks that was imposed by President Lyndon B. Johnson."

 

 

Edited December 3, 2019 by Gurgeh

[HotRunrGuy]

If only the last-gen Crown Vic had been offered as a wagon,,,,,,     But, it seems as though the last year of the full-size LTD wagon only sold 4000 copies, so not much incentive to keep the SW version alive, even though the sedan continued on until 2011.

 

HRG

[silvrsvt]

10 hours ago, Trader 10 said:

I can’t imagine a new Fusion being built on anything other than C2. It would cost billions to develop on C2 using the same power plants as the Escape? Looks to me looks Ford’s issue the next few years will be excess production capacity not the other way around. 

 

Here is the problem-the only Fusions that are selling are lower end models with additional discounts on them, because of lower demand and competition in the marketplace for sedans, which torpedoes your higher ATP argument-if people are going to spend say $36K on a new car, they are going to buy what they think is most versatile/bang for the buck, which means a CUV. 

 

That is part of the reason why the next gen Fusion is going to be reborn as a  sport wagon/Subaru competitor-it will be a "unique" without much competition, but yet command premium pricing. 

[silvrsvt]

4 minutes ago, HotRunrGuy said:

If only the last-gen Crown Vic had been offered as a wagon,,,,,,     But, it seems as though the last year of the full-size LTD wagon only sold 4000 copies, so not much incentive to keep the SW version alive, even though the sedan continued on until 2011.

 

HRG

 

WTF is that? Did someone cut the rear roof off a Taurus Wagon??!?! 

[akirby]

10 hours ago, Trader 10 said:

I can’t imagine a new Fusion being built on anything other than C2. It would cost billions to develop on C2 using the same power plants as the Escape? Looks to me looks Ford’s issue the next few years will be excess production capacity not the other way around. 

 

It's cheaper than starting from scratch for sure but you still have to create a longer wheelbase chassis (maybe wider too) and that weighs more and handles differently so that necessitates suspension changes, plus brand new crash testing, a new dash (if it's wider), etc. etc.   Might need a larger engine, too depending on weight.  So it's a lot more than just a top hat but not nearly as much as a brand new platform.

 

We know they're making a C2 based Mondeo for Europe and a C2 based Edge for NA.  That got pushed back a couple of years but with Flex and MKT going away they certainly have the factory capacity to do some type of Fusion vehicle.   Cancelling the current Fusion saves them having to do any type of refresh and frees up the factory to be converted to C2.   I think we need to wait a couple of years to see what they really plan to do in the CD segment.

[silvrsvt]

35 minutes ago, Gurgeh said:

 

You make points well worth considering, except for one. Wagons didn't die because of changing fashion or because demand died for a roomy vehicle able to haul a good sized family and a buncha stuff. It died because EPA regulations made it impossible for automakers to keep selling them. They were replaced first by minivans and then by more flexible SUVs/CUVs.

 

See for instance (quotes below):  https://www.futureofcapitalism.com/2019/07/how-regulation-killed-the-station-wagon

 

"Stringent fuel economy regulations imposed on cars in the 1970s had made it practically impossible for automakers to keep selling big station wagons. Yet many Americans still wanted roomy vehicles. The answer, Mr. Sperlich and Mr. Iacocca realized, was to make family vehicles that were regulated as light trucks...

"Four years after the introduction of the minivan, Mr. Iacocca led the acquisition of American Motors. He then oversaw the development of the roomy Jeep Grand Cherokee, a sport utility vehicle that became a runaway best seller in the 1990s...

"Best of all for Detroit, the federal government limited foreign competition: Japanese automakers were initially kept out of the minivan and S.U.V. markets by an obscure 25 percent tariff on imported light trucks that was imposed by President Lyndon B. Johnson."

 

That is complete bullshit...Station Wagons of the era got identical MPG as their sedan counterparts.

[HotRunrGuy]

6 minutes ago, silvrsvt said:

 

WTF is that? Did someone cut the rear roof off a Taurus Wagon??!?! 

 

Yes.   https://www.hemmings.com/blog/2011/02/09/hemmings-find-of-the-day-1997-ford-crown-victoria-station-wagon/

 

HRG

[silvrsvt]

2 minutes ago, akirby said:

We know they're making a C2 based Mondeo for Europe and a C2 based Edge for NA.  That got pushed back a couple of years but with Flex and MKT going away they certainly have the factory capacity to do some type of Fusion vehicle.   Cancelling the current Fusion saves them having to do any type of refresh and frees up the factory to be converted to C2.   I think we need to wait a couple of years to see what they really plan to do in the CD segment.

 

If the rumors playout Hermosillo is going to be a very busy place with at least 4 different C2 products being built there:

Baby Bronco

Transit Connect

C Pickup

Fusion Crossover Wagon

[akirby]

3 minutes ago, silvrsvt said:

 

If the rumors playout Hermosillo is going to be a very busy place with at least 4 different C2 products being built there:

Baby Bronco

Transit Connect

C Pickup

Fusion Crossover Wagon

 

That's why I'm thinking any type of Fusion would go to OAP with the new Edge because they're probably being developed at the same time.

[Gurgeh]

21 minutes ago, silvrsvt said:

 

That is complete bullshit...Station Wagons of the era got identical MPG as their sedan counterparts.

 

That may be true, but a much deeper dive into the Byzantine world of CAFE compliance across an automaker's entire fleet explains the reason why the large wagon died and how CAFE killed it. This (partial quote below), from https://www.thetruthaboutcars.com/2012/10/how-cafe-killed-compact-trucks-and-station-wagons/ is a little dated in its discussion of then current auto trends as there has been some changes since then and the smaller pickup market has obviously recovered and is now booming. But the historical info still holds.

----------------

On the surface, the footprint requirements can be viewed as logical; a compact, fuel-efficient car like the Honda Fit, should be able to hit tougher targets, by virtue of its small size, aerodynamic profile and powertrain choices. Without any advanced technology like direct-injection, lightweight steel or aluminum construction or even low-rolling resistance tires, it manages a respectable 28/35 mpg IRL, while offering a practical, fun-to-drive package. The Ford F-150 has a very different mission; it must be large, durable, powerful and able to meet the needs of a full-size pickup, and will naturally be less conducive to achieving the kind of fuel economy that a Fit can.

Unfortunately, the footprint method has the opposite effect; rather than encouraging auto makers to strive for unprecedented fuel economy in their passenger car offerings, it has incentivized auto makers to build larger cars, in particular, more car-based crossovers that can be classified as “trucks” as used to skew fleet average figures, much the same way the PT Cruiser did. Full-size trucks have become a “protected class”, safe from the most aggressive targets, while compact trucks have become nearly extinct as a result.

Real world examples

Before we can delve into the demise of compact trucks, we need to examine how the footprint formula works, and how it allowed the car-based crossover to usurp the station wagon as America’s family hauler of choice.

The footprint is expressed graphically via the “curve”, which plots a vehicle’s footprint on the X axis and CAFE mpg on the Y axis. There are different graphs for cars and light trucks, and as we’ll see below, a car and a light truck with identical footprints are subject to very different standards. (N.B. the full document is available here, with the full-size curve graphs on page 29 and 30)

A concrete example of this phenomenon is Volvo’s decision to do away with the traditional wagon at the start of this decade. Wagons are what put Volvo on the map in North America. The rear-drive 200, 700 and 900 wagons held universal appeal for their durability and sportiness, while the 850 and V70 cemented their place in the mainstream, as a car for those who were upper-middle class, or aspiring to be.

Volvo’s current lineup offers two SUVs, the XC60 and XC90 and one pseudo-wagon, the XC70. The XC70 is virtually identical to the V70, Volvo’s stalwart station wagon, save for some extra ground clearance and lower body cladding. But while the V70 was classified as a passenger car, the XC70 joins its siblings as a “sports utility vehicle” according to the EPA. The fuel economy of the entire XC lineup is far from stellar. The best XC models, the front drive variants of the XC60 and XC70 with the naturally aspirated 3.2L inline-six engine, return 19/25 mpg IRL. The V70, in 2010 (its final year of sale for North America) returned 18/27 mpg IRL. All three vehicles have footprints of 48 square feet. The key difference is that while the V70 is a passenger car, the XC models are light trucks, and of course, given an easier time regarding CAFE compliance.

Mazda is another company that must also play against the stacked deck of CAFE. The Mazda6 wagon was offered here for a few years, and axed after it sold poorly. For 2014, Mazda is launching a third-generation Mazda6, including a gorgeous station wagon (and yes, a diesel engine), but it won’t be coming here. Enthusiast blogs have been harping on Mazda’s decision to withhold the car from the U.S. market, but a simple analysis using CAFE methodology reveals why. The wagon, with its footprint of 48 square feet, is subject to the same standards as the Volvo V70. On the other hand, the Mazda CX-5, with a footprint of 45.6 square feet, is smaller, and again, subject to light truck fuel economy standards. For a model that must be sold over 5-6 years (as previous generations were), the Mazda6 wagon starts out having to achieve a CAFE mpg figure in the high 30s.

Assuming the model lasts until 2020, the Mazda6 would have to achieve fuel economy figures in the high 40 mpg CAFE range. Engineering a low volume, niche market wagon for sale in America that would be subject to increasingly tough targets is arguably beyond their means, especially given the small volumes the car would sell in. Instead, Mazda offers the CX-5 crossover. Aside from being classified as a crossover, with all the CAFE advantages built in, the CX-5 is able to sell in economically viable volumes not just in the United States, but across the globe. The realities of CAFE have likely made sales of the third generation Mazda6 wagon impossible in the United States.

[rperez817]

Thank you Gurgeh sir for explaining the U.S. specific regulatory aspect. Very informative.

 

Just goes to show the power of lobbyists to add loopholes in regulations like CAFE. The way those loopholes decimated the market for station wagons (superior in every way to crossovers) in the U.S. is very unfortunate. But it is what it is.

[akirby]

The CAFE loophole did incent mfrs to move to minivans and SUVs, but ultimately it was the market that decided what to buy.   Minivans offered a higher seating position, easier ingress and egress and FAR more flexibility and passenger/cargo capacity.   Crossovers offer similar benefits at the expense of handling and in some cases, fuel economy.   But the fuel economy gap is so small now as to be almost a non-issue especially on small to medium sized crossovers.

 

If CAFE is the culprit then how do you explain Europe moving from cars to crossovers?

 

Everybody under the age of 40 grew up with suvs and crossovers and people tend to favor what they grow up with. 

[akirby]

14 minutes ago, rperez817 said:

 station wagons (superior in every way to crossovers)

 

Completely inaccurate and wildly exaggerated statement (as usual).

[snooter]

What gurgeh posted is correct and reason ford and the others do not want cars.(they just gave up)..the idea of a go around with truck or suv (they are all thirsty) classification has been ongoing at least since the middle 70's....if mazda can truly pull off its sky active compression dillio engine and get near 50mpg in its cx5 i will dump our 18 mazda 3 and join the suv club....i cant really blame detroit for this current truck based push but at least 1 high mpg commuter type car should have been left in the mix that those on fixed income could actually afford to purchase new..the mach msrp is too much for many...