Tuesday, August 8, 2017

Short Sightedness Prevails In Ford Motor Co. Product Development

Alexander Carabitses 

Planning for the future has never been the Detroit automakers' strong suit, but in recent years it seemed as if we were seeing a changing of the guard, as Ford ramped up its presence and developments with future mobility solutions, while also aiming to be one of the first automakers to sell autonomous cars.  However, things have changed, yet again.  Similarly to how planning for the future took a wrong turn with FCA, which canned their two bread and butter passenger sedans (.i.e. the two that they should have kept in order to remain relevant in the future) last year, rumors just recently started to swirl surrounding the fate of Ford and GM's passenger car lineups.

In the case of GM, the company has potentially (and figuratively) rigged the majority of its sedans with dynamite.  After killing the Verano last year, Reuter's reports that many of GM's passenger cars will croak in the not too distant future.  The list includes the Chevrolet Sonic sedan, Chevrolet Impala, Chevrolet Volt, Buick Lacrosse, and various Cadillac models including the CT6. While the CT6 rumor thankfully proved to be a false dawn, Cadillac president, Johan De Nysschen, confirmed that while Cadillac is working on a few more crossovers, the ATS, CTS, and XTS will, in fact, die at the end of their life-cycles and be replaced by only one model. This is a drastic change from last years plans that I believe could lead to major consequences for the brand in the future (more on that in a future post).  The plans for the other four cars I listed have yet to be confirmed, but after all is said and done, I think that both the Sonic sedan and Impala run a higher risk of being discontinued, while the Volt and Lacrosse live happily ever after, but I digress.

My real reason for writing this article in the first place stems from the announcement that Ford is preparing to ax three models from its US lineup. With regards to two of those vehicles, the Taurus and the C-Max, even those who live under a rock have seen this coming, as Ford confirmed the C-Max's death a few years back (it is being replaced by Ford's new EV), while the US market has yet to see the redesigned Taurus hit our shores, since it was revealed in China two years ago.  However, it is the third (yet to be confirmed but extremely likely) casualty that has me shaking my head in disgust.  The gut-wrenching reality is that Ford will most likely not bring the all-new Fiesta to the US market, with the chief engineer of the vehicle saying that it was not designed with China and the US in mind due to waning demand for said vehicles in those markets.
(Image credited to Ford)

So after bringing the model back to the US in 2010 under Alan Mullally's leadership and saying that the company will never, ever repeat previous mistakes, Ford is backtracking and its most economical car is presumed dead, most likely because of the rampant demand for crossovers and SUVs.  If we're honest, this would not be the first time that SUV demand has lead to the deaths of many different American small cars.  Or, I could rephrase that by saying that this would not be the first time that an American automaker has made a product planning decision that is short sighted, defies common sense, and leaves the automaker completely unprepared if factors that are out of its control (such as gas prices) change for the worse. Granted, small cars do indeed procure slim profit margins and yes, gas prices are quite low at the moment with the likelihood of potential future increases not being nearly as drastic as the spike that we saw in the summer of 2008.  However, there are no guarantees that market conditions will stay this way forever.  If gas prices suddenly go up and SUV/crossover sales slow, it is almost a certainty that people will start buying hybrids, plug-ins, electrics, and yes, small cars. I honestly think that it doesn't matter how fuel efficient one makes their crossover because unless it has a battery in it, the image of poor fuel economy looms ever present in the mind of the uninformed consumer, given the SUV-like appearance.  Will existing crossover buyers switch to small cars if gas goes to $3.50/gallon? No, but potential crossover and SUV buyers will have second thoughts.
(Image credited to Ford Motor Company) 

Every good coach knows that it is important to have depth in one's lineup and not be dependent on a single player (body style) regardless of how good it is, because if something does go wrong, such as a concussion (high gas prices), there have to be solid teammates (other models and body styles) to back up the star.  Now, it seems as if Ford is putting all of its eggs in one basket and getting rid of their depth, something that would be a terrible mistake.  Perhaps, Ford should learn from Kia which will soon be launching an all-new b-segment crossover globally: the 2018 Stonic.  However, the brand is also launching the new generation Rio sedan and hatchback in the US to compliment it. Now, regardless of what external factors change, Kia will be well prepared for whatever comes its way.  It may also be best to not discount the point that I made a few posts ago with regards to history showing that these "family favorite" body styles only procure temporary popularity, with their logical conclusion being tired, stale, redundancy in the marketplace.  We've seen it with the station wagon, the minivan, and the midsize body-on-frame SUVs; I'm almost certain that we'll see it again with the crossover.
(Image credited to Kia)
(Image credited to Kia)

Most people say that it is impossible to predict the future, and I would agree with that for the majority of things.  However, history often has a way of repeating itself and it is important to see common trends in order to avoid repeating previous mistakes.  Unfortunately, Ford is not looking to the past for clues, while also not preparing itself for the real unpredictability of external factors that are omnipresent in this business. With this in mind Ford is acting exactly like a 40-year-old married man who cancels his homeowner's insurance because he's approaching midlife, has never experienced an event that leads to home damage in his lifetime, and believes that his string of good fortune will carry on forever.  Much like that married man who is putting himself and his family at risk, Ford (and FCA) are putting themselves and their shareholders at risk for reasons I shouldn't have to explain at this point. In the meantime, I'm sitting on the sidelines and saying a prayer to myself that Ford reverses its decision and brings the all-new Fiesta to the US.

Thank you for reading and have a good week.

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