Ford executives working through shift to smaller vehicles

Ford Motor Co.’s plan to morph itself from a truck to a car company in North America is backed by market research showing that a new line of global small cars will be well received in the U.S. when they go on sale in 2010, company executives said.

But getting from now until then will take more cash incentives in a shrinking U.S. market with fearful consumers and tight credit, the automaker’s top marketing executive told reporters Monday night.

Ford, trying to allay concerns about how it will be profitable as its primary market shuns high-dollar trucks and sport utility vehicles, put three top executives before reporters inside the factory just north of downtown Detroit that made the first Model T almost a century ago.

Added cash incentives could be good news for consumers. Many of them need the money to increase down payments to qualify for financing, said Jim Farley, vice president of marketing.

Ford’s revamped revival plan will bring the 105-year-old automaker closer to its Model T roots, focusing more on fuel-efficient cars and crossovers and less on the big pickups and SUVs that have made up the bulk of Ford’s sales in recent decades.

The “core DNA” of this new plan is the new Ford Fiesta subcompact car, which Ford is launching around the world through 2010, when it comes to North America, said Jim Farley, Ford’s group vice president for global marketing and communications.

The Fiesta – billed as the first car to be globally designed, engineered, built and launched at Ford — is central to the new vision for the company, which calls for much more sharing and joint development worldwide.

Derrick Kuzak, Ford’s group vice president for global product development, said the automaker expects that its future product mix in North America will be 39% large, 30% medium and 31% small by 2013.

That compares to a 2007 mix that was 50% large, 28% medium and 22% small.

The automaker is forecasting that large vehicles will make up just 27% of the North American market in 2013.

Ford did not give details on exactly which models fit in which categories, but the projections would still leave Ford, maker of the top-selling F-Series pickup line, more dependent than the rest of the industry on large vehicles.

Farley said that’s because Ford has no intention of giving up its leadership in trucks, which have been the financial foundation of Ford for decades.

“We have no interest in walking away from our truck customer,” Farley said.

Ford is about to move into an aggressive launch of its all-new 2009 F-150 pickup next month, he said, and while the conditions are not ideal – with housing and credit markets stifled and gas pump prices lingering at $4 a gallon – he said a small rebound in pickup sales last month was a good sign.

“We worked through a lot of inventory,” Farley said.

Joe Hinrichs, Ford’s group vice president for global manufacturing, said the cost-savings from the joint development and manufacturing of the Fiesta and other future vehicles would be substantial.

Kuzak said the automaker is already recognizing impressive improvements in productivity, which allow Ford to get more bang for its research and development buck.

Still, Hinrichs said Ford must do more to lower costs, by reducing its workforce with buyouts and looking for more opportunities to save money.

“We still have work to do lowering our fixed costs,” he said.

Farley said the most important thing Ford can do between now and 2010, when Ford’s small cars of the future arrive in earnest, is build trust with consumers, especially on the issues of quality and fuel-efficiency.

Share This