FEBRUARY SLUMP DEMONSTRATES FORD’S WEAKNESS IN CARS

It could have been worse.

General Motors (GM) took a 12.9% dive in February 2008, down to 268,737 units sold in the United States of America market(But GM is only down 6% for calendar 2008 to date in the U.S.A.).

Cerberus’ Chrysler L.L.C. plummeted 14%, to 150,093 and the MoPar brands have fallen 13.1% in calendar 2008 in the U.S. market.

According to Business Week:

“Ford Motor [Company](F) sales, including Jaguar, Land Rover, and Volvo, dropped 6.6% from the year-ago month, to 196,060 [in the U.S. market]. Year to date, Ford dropped 5.4%, to 355,336. Ford, like GM, has been intentionally cutting back on low-margin sales to daily rental fleets; that business was down 20% in February, accounting for about 60% of the company's decline. But the result wasn't much different for retail sales: Not counting fleets, sales were down 6%, the company said.

"What we're seeing today is definitely the downside of a business cycle, whether or not it's ultimately designated a recession," says Emily Kolinski Morris, Ford senior economist for North America.

However, Toyota, which has a better mix of small cars than FoMoCo, only fell 2.8% in the U.S. market.

All of the blame cannot be laid on the faltering U.S. economy.

Nor can all of the blame be placed on the assumed nexus between the liberal environmental/consumer movement (e.g. Consumer Reports obvious anti-Detroit bias) and the Asian auto makers.

A large chunk of blame rests in FoMoCo’s failure to update and diversify its automobile line-up.

Based on strong sales of the Civic and Fit (both of which are arguably fresher designs than Ford’s Focus), Honda actually increased sales in February by 4.9% and is up 1.5% for calendar 2008.

FoMoCo’s gross neglect is demonstrated in Four critical market segments:

1. The Youth Market: While the Mustang certainly is an iconic car that millions of young drivers lust after, the vast majority of youths will never be able to swing the huge insurance/fuel/monthly payment burden of purchasing a new one.

And even if they could, a whole generation of parents brought up on the “Consumer Reports” mythology (which constantly and consistently dogs rear-wheel-drive sports models) would never sign off on one.

Instead, car buying youth end up in Civics or a variety of more “sensible” Asian cars.

Ford’s problem is that it hasn’t developed a sporty, affordable Sub-Mustang model which mixes practicality with style and panache. Recent small Fords (excluding the underpowered SVT Focus) have had all the youth market appeal of a hair shirt.

Some would say this die was cast back in the 1970s when virtually all of the Detroit automakers conceded the majority of the entry-level car market to the more diversified imports.

But with 35 m.p.g. Corporate Average Fuel Economy standards looming (even if the NHTSA “attribute” regulations eventually soften the blow a bit for FoMoCo), and the graying of FoMoCo’s loyal customer base, Ford must figure out how to build a desirable and affordable youth market model so as to offset enough high-performance V8 Mustangs to satisfy the adult market.

Of course, the Mustang should not be compromised as it was during the infamous Mustang II era (1974-1978) or during the pre-Fox body Mustang GT “daze” (1979-1981) just to chase a few more youth market sales.

Instead, FoMoCo needs to develop a “Sub-Mustang” that is more affordable, practical, fuel efficient, sporting and grassroots “tunable” than the late Mercury Cougar or Ford Probe. Obviously, the halo version of such a youth model should master Mitsubishi’s EVO and Subaru’s WRX STI. But the grassroots “mainstream” model should offer a high level of insurable performance potential at a value price.

Ford also needs to be the first to bridge the import tuner and hybrid worlds with a VW-style twin-charged gas-electric hybrid version of the “Sub-Mustang.” Such an out-of-the-box model would surely generate a wave of youth market enthusiasm.

The “Sub-Mustang” is not a replacement for more “mainstream” models such as the Focus. But as Toyota demonstrated long ago (while Ford was wasting time and money on the Pinto), the small car market is highly segmented and diverse. As fuel prices and environmental pressures increase, more diversity in small cars and more sporting models are essential.

2. Large Sedans: It’s clear that renaming the prosaic Five Hundred as the Taurus didn’t fool anyone. GM’s Chevrolet Impala and Toyota’s Camry still handily outsell Ford’s oversized FWD lump. FoMoCo is reportedly cutting back to only one shift at the Chicago Assembly Plant to cut supplies of the slow selling Tauri/Sable models.

Ford must find a way to build a sedan that generates some sort of mass-market excitement. Impala has achieved a modicum of success in spite of its lackluster FWD specifications because it doesn’t appear be an automotive equivalent to a corrective shoe. Instead, Impala offers an “SS” model with a somewhat fuel-efficient V8, as well as a number of lesser models.

Curiously, Carl Edward’s second 2008 NASCAR Sprint Cup win (at Las Vegas on March 2, 2008) in his Roush-Fenway “common template” Ford Fusion funnycar was paced by a Dodge Charger in police livery. This reminded FoMoCo viewers that Dodge is making serious inroads into FoMoCo’s Police Interceptor market share and of FoMoCo’s general neglect of the Panther lines.

Of course, no Police Interceptor can run with a Hemi-Cop Dodge because FoMoCo has withheld Hemi-killing 4-Valve/DOHC Modular V8s from the Panther line (save the nearly forgotten and underdeveloped Mercury Marauder). And FoMoCo hasn’t significantly updated the specs of the Panthers for five years (and has held onto the styling for ten model years).

To be sure, FoMoCo needs two large sedans.

It needs both an anvil-tough body-on-frame Panther-based RWD model for fleet and traditional sedan buyers and a smaller Impala/Camry fighter. And it needs to leverage its V8 heritage with superior DOHC 4-valve direct injected eights as halo models in both lines. (The V8s don’t have to be huge, but optional eight cylinder power (combined with cylinder deactivation and other fuel saving technologies) offer an important psychological link with Ford’s glorious past.

Moreover, both large sedans need a lot more “American swagger” and sportiness than either the Crown Victoria/PI/Grand Marquis/Town Car or the lackluster Taurus/Sable. The old Ford Interceptor concept car showed that some at FoMoCo may have understood this. But typical FoMoCo inaction has caused Ford to continue to miss this market.

Additionally, FoMoCo must take a page from the Europeans and offer torquey turbo diesel options in both of its large sedans.

3. Sports Sedans: Pontiac’s exciting new G8 and Cadillac’s CTS (along with a whole host of RWD BMW, Audi, Mercedes and Lexus models) point to a serious deficiency in FoMoCo’s line: A lack of serious sports sedans. Sports sedans are not high volume models, but are high profit and high profile ones. Sports sedans make a serious statement about the engineering acumen of an automaker.

Ford, of course, has produced serious sports sedans in Australia based on its RWD Falcon. Ford Performance Vehicles (FPV) offers more than one exciting Falcon-based grand touring sedan in the Land Down Under. But Ford’s hapless North American operation has been content for decades to bleed sales to BMW, Audi, Lexus, Cadillac and now Pontiac.

Ford has also occasionally built a flabby, overpriced sport sedan at Jaguar. But Jaguar’s impending release from the FoMoCo fold (as well as its historically poor sales performance) suggests that Ford needs something a bit more disciplined and serious in this segment to be competitive.

A serious RWD sport sedan (with optional turbo diesel and “Eco Force” twin turbo V8 and six) is an essential statement that Ford must make to be taken seriously as international automaker. Without one, Ford will continue to lose owner loyalty to GM and the luxury imports.

4. Small trucks: How old is the Ranger? Who can even remember?

Yet with huge gas prices weighing down the entire American economy, FoMoCo is not very well positioned to sell smaller, more fuel efficient trucks. An updated Ranger with more powerplant and cab/bed options is critical to leading the shift to smaller, more fuel efficient trucks and vans.

A street-going, all-wheel-drive high-performance model inspired (loosely) by Baja 1000 trophy trucks would also be a segment breakthrough.

Ford will continue to suffer -- boycott or none and regardless of the state of the American economy -- as long as it fails to provide a diverse line-up of affordable, exciting and desirable vehicles.