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Bob Rosadini

Retained Customers When Ford Cars Are Gone.

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Lately I've been noticing a lot of Focus/Fusions in traffic.  Nothing scientific, I just seem to see a good number.  Now looking at 2019, I  note in round numbers 6 mos YTD Fusion sales were a bit under 100,000 units.  The apparent Hackett logic is cars are dead, the age of the suv/crossover is here.  Now I'm sure that most of the regulars on BON will for sure not jump ship.  But of those 200,000 annualized Fusion sales, any guess as to what the retention percentage will be?

 

The sad fact is, there are plenty of nice alternatives out there.  And yes I understand (as we have been told) that Kia, Hyundai, Subaru  etc are ALL losing their ass on car sales.  So anyone think that the departure of Ford-as well as GM and FCA from the business of making cars may give these others second thoughts?

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17 hours ago, Bob Rosadini said:

Lately I've been noticing a lot of Focus/Fusions in traffic.  Nothing scientific, I just seem to see a good number.  Now looking at 2019, I  note in round numbers 6 mos YTD Fusion sales were a bit under 100,000 units.  The apparent Hackett logic is cars are dead, the age of the suv/crossover is here.  Now I'm sure that most of the regulars on BON will for sure not jump ship.  But of those 200,000 annualized Fusion sales, any guess as to what the retention percentage will be?

 

The sad fact is, there are plenty of nice alternatives out there.  And yes I understand (as we have been told) that Kia, Hyundai, Subaru  etc are ALL losing their ass on car sales.  So anyone think that the departure of Ford-as well as GM and FCA from the business of making cars may give these others second thoughts?


Why does everyone mention losing cars without also mentioning what’s replacing them?

 

Would you rather have (from a business standpoint):

 

A.  Fiesta, Focus, Fusion, Taurus

 

B.  Mach-E, Ranger, Bronco, Bronco Sport, Maverick, BEV F150/Transit/mid sized utilities


That’s the choice.  

Edited by akirby

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Another question:  Will these former Ford passenger car owners opt into a CUV/SUV (Ford or other), or continue purchasing passenger cars?

 

Other manufacturers (Asians and Germans) are adding new passenger cars and updating current ones, so they are for the moment choosing to remain in that market.

 

Ford has to bank on the CUV/SUV demand not dipping - ever. 

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Did car production have to be an either // or choice when Ford still has production space?

 After MKZ and Continental end, I see lots of spare production capacity at Flat Rock, 

there's also a lot more space now at Oakville and then there's  Louisville on two shifts.

 

 

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2 hours ago, akirby said:


Why does everyone mention losing cars without also mentioning what’s replacing them?

 

Would you rather have (from a business standpoint):

 

A.  Fiesta, Focus, Fusion

 

B.  Mach-E, Ranger, Bronco, Bronco Sport, Maverick, BEV F150/Transit/mid sized utilities


That’s the choice.  

1.Maybe because they don't consider replacing their apple with an onion. If one likes apples and not onions, why would as you said (everyone)  mention  the onion choices?

 

2.Why do you think those everyone's upset with losing their (Ford) car choices  need to consider your "from a business standpoint" point of thinking? Or is that a prerequisite to be able to post ones personal vehicle choices on these forums?

 

IMO, Ford just needs to be a little more heavy handed with their push marketing schemes (All our customers want CUV/SUV PR spiels)  directed at those half a million customers who used to purchase their cars.  Sales numbers are not looking  like those car buyers are buying into the "we all want Ford CUV/SUV" PR spiels" .

 

But as the hard liners here keep repeating,  these half a million ex Fiesta,Focus,C-Max, Taurus, and soon to be Fusion customers are all waiting for these new onion vehicles to replace their preferred apples.   Ford hopes you are right.

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https://www.nytimes.com/2020/05/21/business/suv-sales-best-sellers.html

 



For nearly two decades, the Toyota Camry was the best-selling passenger vehicle in the United States. (Pickup trucks are a different category and sales stratosphere, with the top three slots going to Ford’s F-Series, Fiat Chrysler’s Ram and Chevrolet’s Silverado.) In 2019, Toyota’s RAV4 sport utility took the passenger crown with nearly 450,000 sold, putting it in fourth place over all behind the pickups, according to Car Sales Base. Next were the Honda CR-V at over 384,000 sales; Nissan’s Rogue and Rogue Sport, combining for 350,500; and the Chevy Equinox at 346,000. The first sedan on the sales list, the Camry, showed up at No. 8, just shy of 337,000.

 

“S.U.V.s made up 47.4 percent of U.S. sales in 2019 with sedans at 22.1 percent,” said Tom Libby, automotive analyst at IHS Markit. “By 2025, we see the light-truck segment that includes S.U.V.s, vans and pickups to make up 78 percent of sales compared to 72 percent now.”

The tipping point was not so long ago. S.U.V.s outsold sedans for the first time in 2015, Mr. Libby said, and the market has rushed to sport utilities. Why the seismic shift? It comes down to practicality, ride height, baby boomers and, well, vanity.

 

“It was time for a change,” said Tom Kearns, chief designer for Kia’s Design Center America. “People appreciate the function, utility and visibility compared to sedans. It’s driven by changing lifestyles, usefulness and technology.”

 

Its simple-People are willing to pay a premium for a CUV vs a sedan (which are often bought as cheap as possible because they are considered a commodity) and CUV offer a bit more room and utility then a sedan can. Since people are keeping vehicles longer, a vehicle that offers more flexibility is going to be valued more then a sedan. 

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My parents have had ford SUVs and trucks for a while now. Now that they are older, they want a sedan. They are having a hell of a time finding a Continental with the options they want. They have already asked me what other car brands I’d recommend.

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8 minutes ago, T-dubz said:

My parents have had ford SUVs and trucks for a while now. Now that they are older, they want a sedan. They are having a hell of a time finding a Continental with the options they want. They have already asked me what other car brands I’d recommend.

 

As much as this might pain some people, the Escape is the replacement for the CV for that demographic. 

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10 minutes ago, T-dubz said:

My parents have had ford SUVs and trucks for a while now. Now that they are older, they want a sedan. They are having a hell of a time finding a Continental with the options they want. They have already asked me what other car brands I’d recommend.

 

What brands have you recommended to your parents T-dubz sir? I think Genesis and Lexus would be good alternatives.

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1 minute ago, rperez817 said:

 

What brands have you recommended to your parents T-dubz sir? I think Genesis and Lexus would be good alternatives.


I told them to try out the Volvo S90. They aren’t fans of Lexus (nothing against the brand, they’ve just had ford’s for their entire life and Toyota is the enemy lol). I was going to suggest genesis, I’d actually consider the g80 for myself but I’m not sure that styling is for them.

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12 minutes ago, silvrsvt said:

 

As much as this might pain some people, the Escape is the replacement for the CV for that demographic. 

 

If you are looking for a Continental would you settle for a Escape?  

 

To Bob's point-there are hundreds of thousands of Ford sedans in the market and not everyone is going to be replaced with a SUV. Other manufacturer's have decided to stay in that market and while it is certainly decreasing, it is far from dead. Given Ford's cost structure, it might of been their only option-but I think they left that market a little early and could of dumped some cash into keeping those sedans fresh for another 4 years or so. 

 

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5 minutes ago, kyle said:

To Bob's point-there are hundreds of thousands of Ford sedans in the market and not everyone is going to be replaced with a SUV. Other manufacturer's have decided to stay in that market and while it is certainly decreasing, it is far from dead. Given Ford's cost structure, it might of been their only option-but I think they left that market a little early and could of dumped some cash into keeping those sedans fresh for another 4 years or so. 

 

 

If Sedans are going to make up only make 12% of the market in 5 years and you have a half dozen to dozen companies competing for that piece of the pie...why put money into something that isn't as profitable as a truck or SUV?

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48 minutes ago, kyle said:

To Bob's point-there are hundreds of thousands of Ford sedans in the market and not everyone is going to be replaced with a SUV. Other manufacturer's have decided to stay in that market and while it is certainly decreasing, it is far from dead. Given Ford's cost structure, it might of been their only option-but I think they left that market a little early and could of dumped some cash into keeping those sedans fresh for another 4 years or so. 

 

 

Good point kyle sir about Ford's cost structure. The company has long struggled with putting too much money in to product development and manufacturing and not getting enough out. With their sedans in the U.S. market, it has been a vicious circle of unremarkable products with massive sales incentives and relatively high fleet sales. That damaged Ford's reputation in the sedan market, which meant the profit eroding practices became further and further entrenched.

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7 hours ago, jpd80 said:

Did car production have to be an either // or choice when Ford still has production space?

 After MKZ and Continental end, I see lots of spare production capacity at Flat Rock, 

there's also a lot more space now at Oakville and then there's  Louisville on two shifts.


It’s not just production capacity, it’s also engineering and design and marketing and testing.  It’s also people resources.  
 

You put all the projects on a spreadsheet in priority order, then you add up the running costs and resource commitments and when you run out of money or resources for that year you draw the line.  Above the line is fu died and below the line has to wait.  That’s just how it works.

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I think this was mentioned in a previous discussion, but doesn’t Toyota basically use the same frame/platform over and over again for the Camry but just make exterior and interior changes to make it look new? If ford took a similar approach, it would seem ford would be able to make a sedan that was actually profitable for them. 

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5 hours ago, MKII said:

1.Maybe because they don't consider replacing their apple with an onion. If one likes apples and not onions, why would as you said (everyone)  mention  the onion choices?

 

2.Why do you think those everyone's upset with losing their (Ford) car choices  need to consider your "from a business standpoint" point of thinking? Or is that a prerequisite to be able to post ones personal vehicle choices on these forums?

 

IMO, Ford just needs to be a little more heavy handed with their push marketing schemes (All our customers want CUV/SUV PR spiels)  directed at those half a million customers who used to purchase their cars.  Sales numbers are not looking  like those car buyers are buying into the "we all want Ford CUV/SUV" PR spiels" .

 

But as the hard liners here keep repeating,  these half a million ex Fiesta,Focus,C-Max, Taurus, and soon to be Fusion customers are all waiting for these new onion vehicles to replace their preferred apples.   Ford hopes you are right.


 

You’re still not getting it.  You can’t make business decisions based on what some buyers want.  You have to make the business decision based on what’s best for the company.  If you lose 2 Fusion customers paying $25K with a 2% profit margin but gain a Bronco customer paying $40k with a 10% profit margin, who wins?  And I guarantee the Bronco customer will be more loyal just like f150 and Ranger and mustang buyers.  A lot of those car sales were based on lowest price which accounts for all the SE sales with $4k - $5K Rebates.  When they replace the vehicle they’ll get whatever is on sale at the moment.  Given all the competition from Hyundai and Kia and the Japanese brands in that space it’s very low profit potential and lots of churn even with the best products.  
 

Think of it this way.  If you owned a business and had the capacity to sell 1k widgets a year would you sell widgets with a 3% profit margin or ones with a 10% profit margin - given an equal choice?

 

What if Ranger, Bronco, Bronco Sport, Maverick and all the BEVs end up increasing market share and prodding more revenue and more profits?  I think that’s highly likely.

 

And don’t forget that once the factories are converted to C2 Ford will be able to add some cars back to the mix if it makes sense and they have the capacity.

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1 hour ago, T-dubz said:

My parents have had ford SUVs and trucks for a while now. Now that they are older, they want a sedan. They are having a hell of a time finding a Continental with the options they want. They have already asked me what other car brands I’d recommend.


That’s strange.  As most folks get older they find it harder to get in and out of a sedan and prefer the higher seats of a utility.

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1 hour ago, silvrsvt said:

 

If Sedans are going to make up only make 12% of the market in 5 years and you have a half dozen to dozen companies competing for that piece of the pie...why put money into something that isn't as profitable as a truck or SUV?

 

Valid points but a lot of those costs are shared costs. Most SUV's share the platform with a car counterpart so it is not completely raw cost. I just think the market is still relevant, especially since Ford had a pretty good presence-it was not like they are Mazda. 

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1 hour ago, kyle said:

 

If you are looking for a Continental would you settle for a Escape?

 

To Bob's point-there are hundreds of thousands of Ford sedans in the market and not everyone is going to be replaced with a SUV. Other manufacturer's have decided to stay in that market and while it is certainly decreasing, it is far from dead. Given Ford's cost structure, it might of been their only option-but I think they left that market a little early and could of dumped some cash into keeping those sedans fresh for another 4 Years

 


I think this point is being lost on some of you.  Ford has options that others don’t.  The Asian brands outside Toyota don’t have pickups, vans and off road vehicles to speak of and certainly nothing like Bronco.  They also have to compete in their home markets which are different than North America.

 

This plan wouldn’t work for Hyundai or Korea or Honda and their plan wouldn’t work for Ford.  Different markets and different strengths and options.

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1 hour ago, silvrsvt said:

 

If Sedans are going to make up only make 12% of the market in 5 years and you have a half dozen to dozen companies competing for that piece of the pie...why put money into something that isn't as profitable as a truck or SUV?


Because people don’t understand profit margins and commodity pricing and price wars.  They think a $25k Fusion is the same as a $40k Bronco.

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8 minutes ago, akirby said:


That’s strange.  As most folks get older they find it harder to get in and out of a sedan and prefer the higher seats of a utility.


They have an explorer platinum and f150 platinum right now. They want to get rid of the truck since it’s so big and they don’t see the need of having two SUVs. Plus I think they want something a bit more luxurious too. 

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15 minutes ago, T-dubz said:

I think this was mentioned in a previous discussion, but doesn’t Toyota basically use the same frame/platform over and over again for the Camry but just make exterior and interior changes to make it look new? If ford took a similar approach, it would seem ford would be able to make a sedan that was actually profitable for them. 


That would help the profit margins over time but it doesn’t change the fact that the sedan market is severely overcrowded with relatively similar vehicles which still results in low prices, price wars.  I think they need to do that anyway ( they already do it with F series and Mustang ) but it might only raise the margin from 2% to 4% while other trucks and utilities are double or triple that.

 

Fusion has Accord, Camry, Altima, Optima, Sonata, Malibu, Legacy, Passat, Mazda6, Charger, 300 not to mention entry level luxury sedans.

 

What competition exists for Bronco, Bronco Sport and Maverick?   Not much outside of wrangler and renegade and maybe Cherokee.

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11 minutes ago, akirby said:

Given all the competition from Hyundai and Kia and the Japanese brands in that space it’s very low profit potential and lots of churn even with the best products. 

 

Yes sir. In the U.S. midsize sedan market in particular, it's now about survival of the fittest to the extreme. Gotta be absolutely top notch to stay in the game. The weakest products in the segment are dead or are dying soon. Chrysler 200 in 2017, Ford Fusion this year, Chevy Malibu in 2022.

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16 minutes ago, kyle said:

 

Valid points but a lot of those costs are shared costs. Most SUV's share the platform with a car counterpart so it is not completely raw cost. I just think the market is still relevant, especially since Ford had a pretty good presence-it was not like they are Mazda. 


See my previous post about all the competitors in the sedan space.  

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6 minutes ago, T-dubz said:


They have an explorer platinum and f150 platinum right now. They want to get rid of the truck since it’s so big and they don’t see the need of having two SUVs. Plus I think they want something a bit more luxurious too. 


That makes sense as long as they don’t mind the low seats.  Sounds like they should be looking at used luxury sedans in general.  Lots of great choices in 3-4 yr old models for less than half of the new price.

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