Ford Motor Company executive vice president Mark Fields has predicted that “somewhat slower growth, higher interest rates and volatile [petrol] prices” will result in US car sales “that probably won’t outshine last year’s selling rate in this new year”. He also predicted that the small car sector would become a key battleground for automakers.
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Speaking to the Motor Press Guild during the opening of the Greater Los Angeles Auto Show on Wednesday, Field, who is also the carmaker’s president of the Americas, said Ford’s market share “will stabilise in the near term and ultimately grow our market share by making customer values and attitudes central to our business model.”
He noted that crossover utility vehicles, or CUVs, is the fastest-growing vehicle segment in the United States and are on pace this year to exceed traditional SUV sales for the first time ever.
He added: “Another key battleground is small cars. Small is big in America – particularly among the ‘under 30 set.’ And, like crossovers, small cars are ripe for bold design and innovation.”
Fields also claimed that Americans want to buy American brands.
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By GlobalData“There remains a huge – and not yet fully realised – market for American cars in this country. It is waiting to be seized, consistently.”
And he said that the world’s number two automaker, likely to be beaten in global output terms by Toyota this year, is changing the way it does business.
“We will compete vigorously to be America ’s Car Company, winning the hearts and minds of even more customers. Our way forward is not a retreat into smaller markets, but a retaking of the American marketplace,” he said.
Responding to views amongst US industry observers that one or possibly both of the American automakers might end up “out”, Fields said: “I believe in the future of Ford Motor Company and the American automakers… it will take fundamental changes in the way we do business to secure our future.
“The auto industry here in the US always has had its ups and downs. It’s a cyclical business… What is different today from previous downturns is the confluence of powerful economic and global competitive forces, and the cumulative impact of business decisions made – or not made – in Detroit over the past several years, or in some cases, decades.”
He cited steadily rising interest rates after a period of historically low rates, a significant increase in oil and petrol prices, high material costs, especially steel, andbankruptcies among major suppliers.
Fields said the American auto industry’s problems go beyond economics.
“In short, we lost our way. We lost touch with our customers – particularly our car customers.
“I’m amused, in fact, about the debate in Detroit as to who’s in or out of the Big Three. It makes for great headlines and PR stunts, but it’s the wrong debate. It’s old thinking, and it’s irrelevant.
“The real focus should be the up-for-grabs Big Six – the battle among six huge North American, European and Asian companies for growth and profits in the North American market.”
Fields reiterated Ford’s recent commitment to innovation and said the “Way Forward” business plan, to be announced on 23 January, was “the roadmap for transforming our business in North America”.
“It includes a huge investment in clarifying and leveraging the brand identities of Ford, Lincoln and Mercury – and better connecting with more customers than we do today. Equally important, it includes an investment in innovation – and in bold American design – to provide that emotional connection with more customers.”
Fields said the US economy is projected to grow at 3% or better this year and petrol prices have come down from the highs following the hurricanes last autumn but oil futures suggest a price between US$60 and $65 a barrel this year, which means there won’t be much relief at the pumps.
“So, fuel economy will continue to be a factor for buyers,” he said.
He noted that somewhat slower growth, higher interest rates and volatile gas prices all add up to auto sales that probably won’t outshine last year’s selling rate in this new year.
But one thing I can tell you with a high degree of confidence is that 2006 will not be the ‘year of the truck’ as I saw in one of my competitor’s press releases recently,” he added.
“That ‘build it and they will come’ attitude is not only business as usual, it’s the old thinking that we need to shed as American automakers.
“Instead, the consumer will be in the driver’s seat more than ever before, and that will cause the shift in buying patterns to accelerate dramatically.
“Either the American automakers, including Ford, will begin to change, play far better offence and truly connect with customers. Or it will be the beginning of the end for some companies.”
Fields stressed that small cars – often called B-cars in the US – would be a key battleground.
He added that buyers are looking for more than just the small, fuel-efficient vehicles patterned after the ubiquitous econo-boxes of the 1970s and ‘80s.
“But no company today is putting an American stamp on the small car segment. That means there’s a huge growth opportunity if only someone is willing to seize it. Ford plans to seize it. Work on some bold American small cars is already under way at our California Advanced Product studio.”
He said a new concept would debut at the Detroit motor show next week “that proves small cars can be bold, American and innovative.
“And this concept will underscore just how serious Ford is about being a major player in this segment going forward.”
Commenting on the success of the recently launched Ford Fusion sedan, which has attracted favourable reviews in the US enthusiast press, Fields said: “I’m not telling you anything you don’t already know when I say we took our eye off the ball for years when it came to sedans.
“They just weren’t attractive enough when we were feasting on the addictive profitability of trucks and SUVs.
“It’s still early days, but the Fusion is proving itself a winner. Sales are growing, and we’re leasing more than one in four Fusions because the residual values are so strong. Fusion customers say “bold design” is the number one reason they embrace the car.”
He also said that the company would start a third production shift for the car starting next month.
