Ford Nearly Completes Car Purge

[Roland]

26 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.

 

Actually, early indications are that Gen Z are more frugal and practical than Millennials and are preferring cars in the used market.  

 

Quote

Current trends reveal that Gen Z buyers like Nevels lean toward used sedans — a vehicle segment that favors Japanese makes like Nissan, Honda, and Toyota. This is in contrast to Gen X and baby boomers, who prefer trucks and SUVs and tend to keep their mobile devices in their pockets. Gen Z buyers keep their smartphones at the ready, constantly  confirming pricing, features, and even the dealer.

https://www.autonews.com/sponsored/decoding-gen-z-car-buyer

 

Ford wants to serve up CUVs to these buyers and market them as more practical than cars, but these buyers don't want to pay a premium for "practicality" that they don't need 99% of the time just so Ford can pad their margins.  Does it have enough room for their friends and their stuff?  Does it have the technology that they want?  Is it cheap to run?  Check, check, check, and check.  Fusion owner ends up in a Corolla.  This is Ford's future history happening now.

 

Other reports bear this out.  Focus buyers are largely moving to the competition, many of them to remain with cars.  Results for the Fusion may be a bit better since buyers are already at a higher price point.  But it's still not going to be good.   Not saying that the CUV trend won't continue for a while.  But there is a bottom and Honda, Toyota, et al are taking advantage to consolidate their strength with young buyers.

 

My generation grew up in station wagons and we liked them.  But they fell out of fashion.   The next generation grew up in mini vans and liked them.  But they fell out of fashion.  Young people may embrace the things that made their parents cool but they want to differentiate themselves from the things that made them staid and boring.  You and @Assimilator are arguing that the CUV is the ultimate and final form of automotive evolution which will never fall out of fashion.   That's silly.  Fashion will continue to change just as people's perceived needs and preferences continue to change.

 

23 minutes ago, akirby said:

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.

 

I'm not arguing that Ford needs to keep making unprofitable vehicles.   I'm arguing that if Ford can't be profitable in the same segments as their competition then those same economics will eventually catch up with them in the segments that they're retreating to.  Honda and Toyota are already sell more Civics, Corollas, Camrys, and Accords than Ford does Escapes - nevermind Rav4s and HRVs.  And this is while Ford is still dumping Fiestas and Fusions.

 

[HotRunrGuy]

3 minutes ago, snooter said:

.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...

 

Snooter,

    Why do you think Ford (or any manufacturer for that matter) needs to have such a broad product line?  I don't see your beloved Mazda offering full-size pickups and commercial vehicles, so if another company offers a product for YOU, go buy it.  How much do you post on Mazda forums and complain that they don't offer an entry-level HD pickup like the F350 you keep mentioning?

 

HRG

[akirby]

My daughter is gen Z and she and most of her friends prefer small crossovers.   The preference for used sedans is driven specifically by price - used sedans are much cheaper than used crossovers.   And used vehicle buyers are somewhat irrelevant to new vehicle mfrs.

 

And for the ten thousandth time - it's not that Ford CAN'T make a profit on Focus or Fusion or even Taurus.   They just have the opportunity to make a lot more profit on other vehicles.   If they had dropped the C2 platform then the concern would be justified.  But C2 is a core platform.  We already have a C2 Focus and they're creating a C2 Fusion/Mondeo along with a C2 based Edge.   They'll have at least 4 C2 factories (Cuatitlan, Hermosillo, Lousiville, Oakville) plus whatever they decide to do with FRAP so bringing back C2 cars would be extremely easy should the new stuff not work out or there is a market shift.   They really are keeping all their options open.

[silvrsvt]

15 minutes ago, Roland said:

 

I'm not arguing that Ford needs to keep making unprofitable vehicles.   I'm arguing that if Ford can't be profitable in the same segments as their competition then those same economics will eventually catch up with them in the segments that they're retreating to.  Honda and Toyota are already sell more Civics, Corollas, Camrys, and Accords than Ford does Escapes - nevermind Rav4s and HRVs.  And this is while Ford is still dumping Fiestas and Fusions.

 

 

But yet neither Honda or Toyota can't compete with the F-series or Transit and Transit Connect when it comes to sales...

 

Ford is strong in trucks/vans, not as much so with cars.

 

 

[rperez817]

15 minutes ago, akirby said:

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

 

The fashion & trendiness aspect of the industry plus economies of scale for automakers who benefit from selling the same products globally.

 

Main difference in the EU market is that the proliferation of crossovers hasn't negatively impacted the availability of wagons (estates) there. That's why EU consumers can buy these beautiful yet practical machines but U.S. consumers cannot.

 

 

 

  

 

 

 

[silvrsvt]

8 minutes ago, rperez817 said:

Main difference in the EU market is that the proliferation of crossovers hasn't negatively impacted the availability of wagons (estates) there. That's why EU consumers can buy these beautiful yet practical machines but U.S. consumers cannot.

 

I wouldn't say that

 

Wagons forecast to struggle but still survive on strong German, Swedish, Czech demand

 

 

 

 

I'm not sure of what the SAAR is for the EU, but Wagons are roughly selling in numbers roughly what a Luxury car does in the US.

 

 

[akirby]

17 minutes ago, Roland said:

Honda and Toyota are already sell more Civics, Corollas, Camrys, and Accords than Ford does Escapes - nevermind Rav4s and HRVs.

 

Does Honda sell body on frame pickups or commercial vans?   Do they sell a Mustang competitor?  Are they developing an entire range of hybrids, phevs and BEVs?  Do they have a Bronco or Baby Bronco competitor?    

 

Accord/Camry/Corolla/Civic have been the cash cows for those companies globally and they've built up a huge loyal customer base over the last 30-40 years.  So that's where they focus their resources.  

 

Ford has different cash cows and Ford has different market opportunities that they're pursuing like Bronco, Baby Bronco, BEV F150, etc. that other companies either can't or have chosen not to pursue.   Which strategy is better won't be clear for several years but with the move to electrification and the increasing popularity of crossovers I think Ford's strategy here is sound.   And the key is that they don't throw out the capability to make cars so if the market does shift back they can respond.

[akirby]

See - I find those station wagons ugly and so does my wife whereas we think crossovers like Aviator, Explorer, Nautilus, Corsair etc. look great.

 

It's just a subjective styling preference.  Not brainwashing.

[Gurgeh]

Here's the thing. I think here is truth on both sides. It is true that people initially left big station wagon sedans for minivans and SUVs/CUVs not because they wanted to but because automakers needed to move their bigger vehicles to different footprints/silhouettes for the U.S. market or stop making them altogether thanks to the way CAFE regulations were constructed at the time. I mean, how could people want to move away from something they knew to something that hadn't really been invented yet? But nevertheless, if CAFE just went away entirely the day after tomorrow I doubt  the big wagon sedans would return because people have gotten used to the greater utility of crossovers and SUVs now that they have been around a while. Honestly, which is better and more versatile? An Explorer or an updated version of the old LTD station wagon? It's not like you were ever going to get great handling in the twisties out of the LTD wagon anyway. It had a lower center of gravity for those who like that, but that's about it.

[Harley Lover]

30 minutes ago, Gurgeh said:

Here's the thing. I think here is truth on both sides. It is true that people initially left big station wagon sedans for minivans and SUVs/CUVs not because they wanted to 

 

If you were around for the history, you remember what happened... the Chrysler minivan was a revelation in the marketplace at the time it was introduced. Ford and GM were offering BOF "minivans" built on their small truck chassis, and Chrysler came in with their product built on the K car chassis. And the market went nuts for the Chrysler offering. All the other manufacturers scrambled to emulate the Chrysler approach (which actually originated at Ford with Hal Sperlich and Iacocca).

 

The SUV craze really started with the Explorer, which succeeded the Bronco II. Ford hit the product characteristics perfectly, and the market stormed to the Explorer in incredible droves. Again, a revelation in the market, despite the fact that Jeep was there first.

 

Bottom line, in both cases, people indeed wanted to move into these products. The market literally rushed to them.

[silvrsvt]

28 minutes ago, Harley Lover said:

If you were around for the history, you remember what happened... the Chrysler minivan was a revelation in the marketplace at the time it was introduced. Ford and GM were offering BOF "minivans" built on their small truck chassis, and Chrysler came in with their product built on the K car chassis. And the market went nuts for the Chrysler offering. All the other manufacturers scrambled to emulate the Chrysler approach (which actually originated at Ford with Hal Sperlich and Iacocca).

 

The SUV craze really started with the Explorer, which succeeded the Bronco II. Ford hit the product characteristics perfectly, and the market stormed to the Explorer in incredible droves. Again, a revelation in the market, despite the fact that Jeep was there first.

 

Bottom line, in both cases, people indeed wanted to move into these products. The market literally rushed to them.

 

The RWD Aerostar was a reaction to the Chrysler Minivans and didn't hit the market til 1986. 

 

The Jeep Cherokee and Jeep Grand Wagoneer both came out in the early to mid 1980 and lacked the refinement needed to be successful in the general market. I know the Cherokee had a horrible back seat room-a buddy of mine had one and my knees where pressed up against the front seats the whole time if I sat back there. My parents had a second gen Explorer and I had no problems with that. 

[Assimilator]

The only counter arguments I keep seeing here to explain the popularity of SUVs and Crossovers comes down to government and corporate conspiracies forcing consumers into vehicles they don't actually want.  Consumers and competition have no real influence on the market and the facts are actually lies.  It's at this point where the conversation is pointless.  

Edited December 3, 2019 by Assimilator

[HotRunrGuy]

14 minutes ago, silvrsvt said:

 

The RWD Aerostar was a reaction to the Chrysler Minivans and didn't hit the market til 1986. 

 

 

Correct. The Chrysler/Dodge minivan appeared as a 1984 , the Chevy/GM Astro/Safari came out in 1985, the Aerostar in 1986.

 

Harley Lover, how do you figure the Chrysler was the "reactionary" product?

 

HRG

[RichardJensen]

Something I haven't checked out---and am thinking I should:

 

What's CAFE compliance look like for sedans over the next few years?

 

Here's the thing: Federalizing the Mondeo should be dirt cheap. It'll use powertrains already sold in the US, and the underlying architecture has to meet US crash test criteria. I mean, it seems that it would be incredibly easy for Ford to turn a profit on even 120k Fusion sales per year, or maybe even less, provided it's coming from a shared plant. Amortization/first unit costs would be tooling and minimal compliance re-engineering, I would think. Everything over that would be gravy.

 

However, if the CAFE requirements for sedans essentially require selling nothing but hybrids & low power options, then we're looking at another instance where CAFE is shaping the market.

 

 

[RichardJensen]

Understanding that hybrids (and EVs) are basically volume constrained, if Ford has to do a, say, 33% volume mix of Fusion hybrids to stay CAFE compliant, they're not going to like allocating that much of their hybrid volume to a less profitable product.

Edited December 3, 2019 by RichardJensen

[RichardJensen]

And, I'd add, don't underestimate the impact that regulations have on the marketplace:

 

Government regulations on automobiles are almost entirely targeted at manufacturers. Consumers do very little heavy lifting when it comes to compliance.

 

Make no mistake, safety regs, emissions regs and fuel economy regs have overwhelmingly altered (and largely for the better) the products available for purchase, and that, in turn, has driven changes in buying habits.

[akirby]

58 minutes ago, Assimilator said:

The only counter arguments I keep seeing here to explain the popularity of SUVs and Crossovers comes down to government and corporate conspiracies forcing consumers into vehicles they don't actually want.  Consumers and competition have no real influence on the market and the facts are actually lies.  It's at this point where the conversation is pointless.  

 

You forgot the part where people who prefer utilities are stupid and brainwashed by marketing and only buy them to impress other people.

[twintornados]

Well @RichardJensen, seeing as at one point, Ford was going to import Focus in from off-shore, it should be a no brainer to instead, bring Fusion/Mondeo in. 

[akirby]

1 minute ago, twintornados said:

Well @RichardJensen, seeing as at one point, Ford was going to import Focus in from off-shore, it should be a no brainer to instead, bring Fusion/Mondeo in. 

 

Factory constraints in Europe might not make that feasible.   But they should have enough factory capacity in either OAP or FRAP to build them here if necessary.

[silvrsvt]

29 minutes ago, RichardJensen said:

Something I haven't checked out---and am thinking I should:

 

What's CAFE compliance look like for sedans over the next few years?

 

Here's the thing: Federalizing the Mondeo should be dirt cheap. It'll use powertrains already sold in the US, and the underlying architecture has to meet US crash test criteria. I mean, it seems that it would be incredibly easy for Ford to turn a profit on even 120k Fusion sales per year, or maybe even less, provided it's coming from a shared plant. Amortization/first unit costs would be tooling and minimal compliance re-engineering, I would think. Everything over that would be gravy.

 

However, if the CAFE requirements for sedans essentially require selling nothing but hybrids & low power options, then we're looking at another instance where CAFE is shaping the market.

 

 

 

24 minutes ago, RichardJensen said:

Make no mistake, safety regs, emissions regs and fuel economy regs have overwhelmingly altered (and largely for the better) the products available for purchase, and that, in turn, has driven changes in buying habits.

 

I found this in an EPA document:

 

Also the new regulations are based on Sq ft "foot print" of the vehicle

 

Autonews has an article here:

https://www.autonews.com/article/20160814/OEM11/308159946/is-cafe-making-cars-bigger

 

This chart also

 

 

 

Edited December 3, 2019 by silvrsvt

[akirby]

23 minutes ago, RichardJensen said:

And, I'd add, don't underestimate the impact that regulations have on the marketplace:

 

Government regulations on automobiles are almost entirely targeted at manufacturers. Consumers do very little heavy lifting when it comes to compliance.

 

Make no mistake, safety regs, emissions regs and fuel economy regs have overwhelmingly altered (and largely for the better) the products available for purchase, and that, in turn, has driven changes in buying habits.

 

That's true to a certain extent but we've had station wagons and manual transmissions for sale continuously in some form or fashion by multiple mfrs and they still don't sell even when they're available.

 

Look at pickup trucks.  In the 80s and 90s you hardly ever saw a supercab and crew cabs were limited to F350 work trucks.   Now all you see are 4 door crew cabs from all mfrs with a few supercabs here and there and one regular cab short bed bought by some guy in Oklahoma.   Consumer preferences evolve.

[RichardJensen]

1 minute ago, twintornados said:

Well @RichardJensen, seeing as at one point, Ford was going to import Focus in from off-shore, it should be a no brainer to instead, bring Fusion/Mondeo in. 

 

I really need to dig into the upcoming CAFE regs.

 

It's a complicated cycle: Manufacturers have some influence over the shape of CAFE regs (nothing like the influence that German manufacturers have over the structure of EU regs, but they still have influence).

 

Trucks & Utes are more profitable than sedans---have been for years---so manufacturers are going to prefer CAFE regs that go easier on utes & trucks because that benefits their bottom line.

 

Simultaneously, trucks and utes are more profitable for a variety of reasons---not least of which is that many truck purchases can be written off as business expenses, while utes have a higher perceived usefulness (even if that usefulness is rarely put to use), thus meaning higher revenue per unit.

 

The combination seems likely to accelerate a shift in market more than would occur without both factors.

[RichardJensen]

6 minutes ago, silvrsvt said:

I found this in an EPA document:

 

 

 

See, that's fascinating: The MPG targets for the Escape & Chrysler 300 are nearly identical.

 

CAFE MPG is calculated using the old-school mid 70s EPA tests, without the subsequent adjustments made in the mid 80s, or the additional tests added a little over a decade ago.

 

Window sticker combined mileage is, I think, like 75-80% of the CAFE MPG, which suggests 37MPG combined for the entire Escape fleet, volume weighted.

[RichardJensen]

14 minutes ago, akirby said:

Look at pickup trucks.  In the 80s and 90s you hardly ever saw a supercab and crew cabs were limited to F350 work trucks.   Now all you see are 4 door crew cabs from all mfrs with a few supercabs here and there and one regular cab short bed bought by some guy in Oklahoma.   Consumer preferences evolve.

 

I would posit this:

 

Safety/emissions/economy improvements have caused the price of a new car to increase faster than overall inflation, thus reducing the number of new cars purchased per person.

 

With fewer new cars purchased, the Swiss Army knife vehicles, like crew cab trucks and utes, are going to be preferred over, say, personal coupes. Thus government regs are indirectly impacting consumer demand.

Edited December 3, 2019 by RichardJensen

[twintornados]

25 minutes ago, akirby said:

...and one regular cab short bed bought by some guy in Oklahoma.   Consumer preferences evolve.

 

Does buying one used count??

 

 

Edited December 3, 2019 by twintornados