Monday, April 4, 2011
The present economic climate has not improved significantly since this project started last year. In fact there are significant changes in the former domestic auto industry. Chrysler LLC has emerged from bankruptcy as a subsidiary of Fiat SPA. The plan is import Fiat vehicles under the Dodge and Chrysler brands. These cars will consume less fuel than the one they will replace. What is unclear is whether or not the North American public, particularly the United States and Canada, will accept re-badged Fiat products. The last vehicle imported by Fiat to North American shores, the Ritmo or Strada, was lackluster in durability, reliability and desirability until Fiat finally stopped importing vehicles into the United States in the mid 1980’s.
General Motors, one of Ford Motor Company’s chief competitors, is still in bankruptcy proceedings as of this writing. However, the United States government is now a 60 percent owner, the United Auto Workers health fund a 17.5 percent owner and the Canadian government owning the remainder. Basically, the beleaguered firm is going to be nationalized. There is deepening resentment toward government involvement in the private sector, at least at the grassroots level concerning General Motors. Add to this the negative publicity concerning Chrysler and their absolution from liability from past claims and the situation can only become more favorable for Ford.
These circumstances are not of Ford’s making and to date; little has been done to increase the availability of smaller cars and trucks to their present sales lineup. There are still only two compact car models in Ford’s offerings and both are Focuses. There are no subcompacts available at this time and their compact pickup truck, the Ranger, is nearly two decades old in design. Ford has five SUV models, four trucks and three crossover models.
As far as Ford’s website is concerned, they have backpedaled on introducing the European version of the Focus to the United States and Canada, instead opting to introduce the much-touted and well-received Fiesta in 2010 as a 2011 model. This is an eternity as far as vehicle models are concerned. While Toyota can restyle, for better or worse, a new model every three to four years, Ford and its “domestic” counterparts struggle to update their wares every five to ten years. What is more is while that even a recently-bankrupted General Motors can pay lips service to introducing credible compacts and subcompacts; Ford cannot even update the two models they presently have. Their solution is to add features that add cost, rather than value to a new vehicle.
Force Field Analysis
In times of tight credit, customers are opting to hold on to their present vehicle over trading it in. Any product offered needs to have visual impact if it going to sell. Positive visual impact is preferred in this day and age, but even negative impact is better than none at all. Producing bland, unassuming products did nothing for their competitors. This kind of strategic err ended Oldsmobile; Saturn and Pontiac are in the process of sharing a similar fate. While it has worked thus far for Toyota and Honda, it will not work for Ford. The former two have a reputation for reliability and quality, Ford is still trying squelch bad press, or worse, none at all.
The people that have money to spend on a new car want something inspiring. They want something to show their friends, family and acquaintances. Even if it is a practical purchase, it need not be a bland one. While this is arguably subjective in nature, it is a matter of subjectivity that got the “Big Three” where they are today; bankrupted and losing market share in a growing pool of competent and no so competent competitors. Ford has done the predictable that has “helped” it in the past.
These have involved addressing the hurdles of financing, restyling the higher-profit, lower-cost vehicles and ignoring the lower-profit ones, or not building them altogether. Time will tell if this strategy works for Ford yet again. The economic picture painted during a recession has always been fatalistic, even in ones past. If this was the only argument to increase sales of smaller, lower-cost vehicles, it would be a financial dead end. However, the current political situation in the United States is such that not addressing this issue will be a fatal flaw. The domestics of yesteryear were completely unprepared for the 1973 oil embargo, (OPEC’s punishment for the United States’ support for Israel during the Yom Kippur War), as well as the four-fold increases in oil prices, the chaos and the resultant government regulation that followed.
What followed was that the domestics, Ford included, had to implement short-term solutions to long-term problems. Engineers had the daunting task of making a vehicle safer in a crash, more durable, more fuel-efficient and with less harmful emissions. All of these will conflict with each other to some degree. To use less fuel, for example, a vehicle must be light and will be more harmful to air quality. Ford found it much easier to shift consumer focus to light trucks, which has less regulations involved, were less expensive to build and they were able to realize higher profits.
Since 1973, Ford has known that oil supplies were a scarce resource controlled by despots and tyrants. They have also known about air quality and since 2000, carbon emissions. In addition, Toyota and Honda have outstripped Ford in quality and reliability in vehicle class once deemed as safe territory for the beleaguered automaker. It has been 36 years as of this writing for them to resolve issues such as unions, vehicle quality and fuel economy. To date, they have not addressed this adequately. Customers and the government will not idly stand by while fuel prices climb and air quality deteriorates.
The only proven, tried and true method to increase fuel economy is to build and sell smaller vehicles. The technology is simply not available to the masses that can allow everyone to drive a three ton truck and expect it to get thirty miles to the gallon. A three-hundred horsepower engine will consume more fuel than one at one-hundred horsepower. No amount of hybridization is going to accomplish real savings to the consumer. It will only shift it from operating costs to the purchase price.
Recommended Alternative Solution
Ford needs to offer more and competent choices to its small vehicle offerings if it is to stay credible as an automaker. Although there is still a market for larger vehicles, Ford at present is putting too much emphasis on these. In addition, the market is not the only determinant anymore. Government regulation, after a nearly 30 year of a laze faire policy, has redoubled their efforts to curtail emissions and increase fuel mileage. The present lineup heavy of fuel-hungry cars and light trucks will make Ford a soft target for regulators. Having more economical alternatives to SUV s and crossovers will at least secure sales that Ford would lose to competitors and help boost corporate average fuel economy. The Fiesta should be introduced as soon as possible and the international version of the Focus brought to market in the United States and Canada. Several years ago, Ford offered the wagon variant of the Focus, but discontinued it as a way to save money. It would be the economical alternative made mention of earlier in this paper.
Ford should also consider cutting the Taurus X from their lineup, as it was never a strong seller to begin with, even as the Freestyle. Eliminating this slow selling vehicle with poor gas mileage would have the effect of boosting average fuel economy without the expense of introducing a new model.
Recommendations for Further Research
There are numerous problems in which Ford, as with any firm of this size, must address. Ford should conduct more research in what customers desire in a vehicle, as well as what they would in a small car. Admittedly, if most buyers, especially in the United States and Canada, had a choice, a larger vehicle would be the preferred means of conveyance. However, there is still a valid argument to make smaller vehicles more credible for Ford. They should be safer, be cost-effective to own and operate, as well as something desirable to the average consumer. Economics, as well as government action, mandates this. Overseas manufacturers will capitalize on these mandates because they already build vehicles which are not only desirable, but are reliable and therefore credible to the consumer. Research is not needed as much as action. There has been more than enough, through focus groups, blog posts and the lack of sales to show the need to effect change.
Ford’s financial situation does not allow it to make significant changes to its small car lineup. Nevertheless, it has the means at its disposal to increase car sales with minimal effort and expense through the items specified in this writing.
Summary of Results
Ford Motor Company has elected to implement their own version of their solution to increase sales with timetables and technical aspects which differ from this project. These will have to be evaluated their merits. The steps that Ford took in the past few months have been to increase sales, customer satisfaction and attract new customers from other automakers. The methodology has been predictable, and some actions have not happened yet, and some others they have done outside of recommendations. Time will tell if the latter were the right decisions. However, they did follow an important aspect and this was to eliminate redundant and slow-selling lines. Even though Ford is still not on firm financial ground, its quality and sales figures put the company in an enviable position among domestic and even some foreign automakers.
With all of their efforts, Ford has refused government loans and assistance. This has given credibility to the automaker in a time when their domestic competitors have or are going to file for bankruptcy. Chrysler has shut down all of their North American operations while in bankruptcy protection and shares of General Motors have hit a near seventy-five year low. Ford could have outperformed by public opinion alone, considering the present attitude toward “government bailouts.” However, making a conscious effort to improve their product is an added benefit to the automaker and gives them credibility. Ford has improved their product to par with Japanese automakers and their service is going above and beyond what the intervention would call for. The real question is whether or not these levels are sustainable without further eroding their financial standing.
The effort to overcome biases is to be taken into consideration and is not “over the top” considering what competitors are doing at the present time. Problems with the auto industry in the United States are deep seated and the economy was merely a test of what was already primed for failure. Since the 1970’s, the quality, credibility and market share of domestic automakers has steadily eroded. Though Ford has taken great strides to improve their quality through marketing and honest effort, the biases against the industry as a whole are staggering. Only the issues germane to Ford will be made mention of here and only those which are noteworthy.
The Ford Pinto was the most notorious example that one can give (Ford Pinto.com, n.d.), but the Pinto’s replacement, the Escort, was also not without problems. The engines were notorious for being ruined when the timing belts broke. The Tempo, Ford’s midsized offering in the 1980’s and 1990’s was poor in quality and reliability to the point that few lasted beyond the payment book. The Focus was also plagued with problems and was for a time, the most recalled vehicle in automotive history, a title it still holds for the 2000 model year. Ford’s answers to the minivan, the Aerostar and Windstar, were subpar in quality and reliability . The 3.8 liter engines frequently failed and the second generation Windstar was cause for Ford to get out of the minivan business. Body integrity was poor and resulted in fires while nothing was done for customers. The incidents of cruise control fires still linger to this day and have cost Ford millions in repairs and customers tens of thousands of dollars in destroyed vehicles and in some instances, homes and lives . Rumors are circulating that Ford has improved their service to the point of even repairing products out of warranty to counter bad publicity. However, these are rumors that cannot be substantiated.
What can be substantiated is that Ford has turned to aggressive marketing, promotions, and styling to sell their products. They have restyled the Fusion for 2010, changing the front fascia, taillights and the interior trim along with adding a hybrid option. At this writing, there are at least twenty 2009 Fusions on Grand Ledge Ford’s lot. The result would seem to be self defeating to try and sell the 2009’s as it was to introduce the 2009 F Series a year ago. They have also introduced the MKS as a replacement to the aging Town Car, even while there are many of the latter still sitting unsold on dealers’ lots. The Taurus is also new for 2010 and there are still more than a few 2009s unsold. Restyling costs money and with only one exception, all of the vehicles changed have not had any problems with desirability or reliability. The Fusion is one of the best-rated passenger cars that Ford has introduced since 1986 and has had rave reviews from the press and owners alike. The Focus will not get a replacement until the 2010 calendar year and Ford will not introduce the Fiesta in the United States until early 2010 as a 2011 model. All the while, even GM has at least a credible subcompact. While the styling is controversial, the fact is that consumers seem to like it (Car Connection Website, 2009).
Aggressive marketing, as mentioned earlier, is Ford’s chosen method to increase sales. They have relied heavily on the Ford Advantage Plan in recent weeks as a response to similar plans from competitors, namely Hyundai and General Motors. There is the premise that Ford Credit has plenty of money to loan and for customers who are worried about losing their income, a payment protection plan that covers vehicle payments for up to a year if these unfortunate events befall the buyer (Blue Oval News, 2009). The real question is if this marketing campaign has worked. As of March, 3rd of 2009, Ford’s sales were down 48.4% (Jalopnik, 2009). Sales in April are still down 31% from where they were in 2008. Nevertheless, they have made substantial gains in sales with their marketing .
They have improved durability over competitors’ cars by making bumpers stronger and vehicles more reparable after a crash. In addition, Ford has reduced the price on many of its collision parts, reducing insurance premiums . This lends further credibility to the company’s renewed commitment to quality and owner satisfaction, something that would have been out of the question only a year ago. On the other hand, these efforts have cost the company money to increase their market share. While it may be money well-spent and even ethical to address issues of vehicle durability. Payment protection, interest free-financing, rebates and all other present efforts should only be for the short-term.
Once the promotions end in June, is Ford going to have to extend them to keep their sales up? Or are they going to have to turn to more marketing to keep a dwindling customer base interested. This involves a substantial amount of money spent on a service that will not provide lasting value to either the company or its customers. Advertizing is expensive and unfortunately, will not hold customer impact more than the thirty seconds it takes to air a television commercial. They will have to invest more into it have the same effect and while it is tax deductable, it will only get customers into the lot, not increase sales. Another issue with this is if the value for the customer is not there, or Ford does not have the product that people want, they will not buy anyway.
Recaps of the Objectives from Chapter Five are included for review in this chapter.
Objective One. This is to increase car sales by ten percent and overall vehicle sales by fifteen percent or more. This is important in several ways. The added revenue is one aspect that will undoubtedly help Ford’s financial standing. However, it will also show that the company is a better investment than competitors.
Hypothesis 1. Motor Company can sell more cars and trucks by scaling back on equipment that adds cost to the vehicle as opposed to value. This means not including options that customers do not want from dealer stock models, yet still allowing of dealer-installed equipment on all new cars. This gives the customer choices on which options he or she really wants .
Hypothesis 2. Ford can sell at least ten percent more units of the Focus model by introducing the international version of the car to the United States and Canada. The U.S. and Canadian model is outdated and pedestrian when compared to the international version. In addition, the company can save money on tooling costs with a world car.
Hypothesis 3. Car sales can also be increased if Ford reintroduces the Fiesta, one of the most successful models to date, to the United States and Canada. At the present time, Ford does not have a subcompact model for sale in the United States and Canadian market. Even Ford’s competitor, General Motors, has the Daewoo-based Aveo. The Fiesta is far less offensive looking and will have a much broader market appeal than the Aveo, if Ford can introduce it in time.
Objective Two. The second is to improve customer satisfaction and retention.
Hypothesis 1. Customer retention would improve if Ford responded objectively to warranty claims; hiring an outside firm to evaluate such claims. This would help render Ford harmless, legally and morally when a claim is rejected. Hiring an outside firm will insulate the automaker from frivolous claims and bad publicity.
Hypothesis 2. Ford’s customers would be more willing to buy their products again if they would evaluate designs of vehicle parts that fail at a higher rate than what is industry standard, even if the part is not under warranty, or the customers’ fault.
Objective Three. It is not enough to retain customers for Ford; they need to add new ones. Although there are new drivers, few can afford a brand-new car. This means that the present market in the United States and Canada is saturated. They will have to woo former GM, Chrysler, Toyota, Honda and even customers who buy European imports to buy Fords.
Hypothesis 1. Ford can attract more new customers by improving warranty service to present customers. Word of mouth including via the internet travels fast. When someone has a good experience, they will tell people about. However, if they have a bad experience, they will tell at least eleven others the experience.
Hypothesis 2. Providing more choices, by selling lower end vehicles on dealers’ lots, and making more options dealer installed and making the higher end vehicles special order, time and space on the lot permitting, will attract new customers because they have more vehicles to choose from, rather than just what is on the lot.
Hypothesis 3. Providing more choices in car lines and less in the line of trucks will attract more value-conscious and environment-conscious consumers back to Ford.
The larger, more expensive vehicles that Ford sells are getting restyled first, while the Focus, the only small car they have for sale in the United States and Canada, with its spotty reliability record; still has a platform that is nearly a decade old. They have a hybrid, which may or may not be a good investment for the practical consumer. What is worse is that Ford does not have a high-mileage conventional power train vehicle for sale in the United States or Canada, yet sells it all over Europe. This is something that will be covered in Chapter Seven.
Data Collection Plan
Objective One. This is to increase car sales by ten percent and overall vehicle sales by fifteen percent or more.
Hypothesis 1. Motor Company can sell more cars and trucks by scaling back on equipment that adds cost to the vehicle as opposed to value.
Hypothesis 2. Ford can sell at ten percent more units of the Focus model by introducing the international version of the car to the United States and Canada.
Hypothesis 3. Car sales can also be increased if Ford reintroduces the Fiesta, one of the most successful models to date, to the United States and Canada.
Objective Two. The second is to improve customer satisfaction and retention.
Hypothesis 1. Customer retention would improve if Ford responded objectively to warranty claims; hiring an outside firm to evaluate such claims.
Hypothesis 2. Ford’s customers would be more willing to buy their products again if they would evaluate designs of vehicle parts that fail at a higher rate than what is industry standard, even if the part is not under warranty, or the customers’ fault.
Objective Three. It is not enough to retain customers for Ford; they need to add new ones.
Hypothesis 1. Ford can attract more new customers by improving warranty service to present customers.
Hypothesis 2. By adding options which add value and not just cost to the vehicle, Ford can attract new customers to their products.
Hypothesis 3. Providing more choices, by selling lower end vehicles on dealers’ lots, and making more options dealer installed and making the higher end vehicles special order, time and space on the lot permitting, will attract new customers because they have more vehicles to choose from, rather than just what is on the lot.
Hypothesis 4. Providing more choices in car lines and less in the line of trucks will attract more value-conscious and environment-conscious consumers back to Ford.
Data Collection Plan
Much of what is going to be done is not going to be easy, or possible to translate into objective data that Ford can utilize. The only objective data which Ford is going to be able to rely on is whether or not sales have increased the ten or fifteen percent and customer perception, retention and attraction have improved for the firm. Many websites have many negative attributes to be said about any automaker, a trait not unique to Ford. Even such touted firms as Toyota and Honda have had their share of reliability and service problems. It is the nature of any electromechanical device to fail and the only difference can be how the manufacturer or dealer chooses to rectify, or ignore the problems customers perceive.
Ford Motor Company uses much time and resources to predict what customers want and will spend money on. For reasons known to them, much of their product line consists of trucks, even to this day. They are planning on adding one car model in 2011, but this does not solve the problems they face now.
Rather than concentrating on a data collection plan during and after the interventions, it would be better to evaluate customer attitudes toward what they are willing to buy at present and work toward implementing the interventions then. There are methods to do this already in place. One is through Ford’s website when customers choose the options they want. However, they still need to negotiate their way through the packages and either pay for the options they do not want, or settle for less than they want. Ford can collect data on desired options through their website, as this would be the most cost-effective way. To prevent tampering by automated sources, the usual codes that only human beings can read can be utilized. Due to poverty of time, there should be a small incentive that will not affect or sway the customer to buy from Ford by the survey alone, albeit this will be difficult to perform.
Such a process is not possible to describe in great detail in such a medium as this paper, but the focus of such a plan must involve seeing what the customer wants. After all, regardless of the economy, or credit availability, customers will not spend large sums of money on what they believe to an inferior product, or poor customer service on any product.
The following questionnaire can be used in some form either through mailers, Ford’s website and even in showrooms. It is not going to be inclusive of every reason, or solution to ford reduced sales, but it will give an idea of customer attitudes so Ford can best use their resources.
Ford Vehicle Response Survey
Please circle the answers that apply, this survey will help to better address the needs of our customers.
1 Are you considering replacing your current vehicle?
Now 3 months 6 months 1 year > 1 year
2 Are you considering a new vehicle purchase? If no, please skip to question 14
3 What make of vehicle are you considering?
Ford Toyota GM Honda Chrysler
Smart Hyundai Subaru Volkswagen Other
4 What factors will influence your decision?
Reliability Service Style Value Other
5 Have you owned a Ford, Lincoln or Mercury product in the last ?
1-3 Years 4-6 Years >6 years
6 What is the make of vehicle you currently own?
Ford Toyota GM Honda Chrysler
Hyundai Kia Volkswagen Subaru Other
7 Why are you considering replacing your vehicle?
Age Reliability Life changes Want more options
Condition Unhappy with dealer and/or manufacturer
8 If considering a Ford, Lincoln or Mercury, which model?
Focus Fusion MKS F-Series Navigator
Explorer Flex Mustang Mariner Other
9 What options are most important to you? Please check all that apply.
SYNC Navigation THX Sound Ambient lighting
Automatic transmission Leather seating areas
cruise control DVD MP3 Sirius Satellite Radio
10 If you are considering a car, what are the reasons? Please check all that apply.
Safety Value Ease of parking, driving, etc
Do not want a truck Want a truck, cannot afford
Styling Other, please explain,
11 If considering a truck, including a crossover or SUV, what are the reasons, please check all that apply.
Safety Value View of road
Utility Styling Rugged appearance
Other, please explain,
12 What barriers do you believe would prevent you buying a new vehicle?
Higher sticker price Insurance Financing
13 What would you consider good reasons to buy new over used?
Longer life than used vehicle Lower interest rates
Warranty Value Current styling
Up to date features Other
14 If you are not in the market for a new car, what are the reasons? Please check all that apply.
Current finances Credit standing Other expenses
Satisfied with current vehicle Other, please explain.
This list is merely a tool and can and should be modified as the situation warrants.
Data Analysis Plan
The main source of data that will be meaningful is in the sales figures and even that will be make less clear by fluctuations in the economy, the political situation, and other external factors which Ford cannot control. The surveys that were sent out and returned will also have to be evaluated before and after the interventions to measure the results. The best method to measure sales data, and if the intervention has had a positive effect on sales is through percentages. This is because it is the most recognized method through which sales are recognized, whether on the balance sheet or income statement, or even the news media.
Customer retention and attraction is going be more difficult to measure. Even if sales increase, this is still not the most reliable fashion in which to measure whether customers bought the car because they were affordable, or because they genuinely felt Ford products were a viable alternative to other brands. This is going to mean sending the same surveys to the same people after the intervention and measuring the results, making allowances for those who have moved are otherwise not available. The chi-square test is the best way to measure consumer attitudes because of the subjectivity involved. If we expect a certain number of people to favor Ford products after the intervention, we can find out whether the change was significant or not. Other makes can be compared with this test and the significance of these. This will see if Ford has not only maintained, but gained market share.
Limitations of the Data Collection Plan
Any statistical method, as with any intervention method will have limitations. This is because no amount of planning can cover every possible event that can happen. A natural disaster can destroy thousands of cars and cause a surge in vehicle sales for all manufacturers, or a significant rise in interest rates can cause them to plummet. Internal problems that can arise are major recalls, or a strike decimates production. All of these factors can and will affect sales and the data collected. If the course of the data is used on its own merits, the results will be inaccurate without taking other factors into consideration. Other issues can arise from people moving and being unreachable to someone being frustrated with the dealer that day over an errant work order. Ford can choose to not follow through on any of the alternatives and this may or may not affect the results as well, but these will be more or less apparent in said results.
Admittedly, the questionnaire has some flaws in the interest of simplicity. There is not a space of every vehicle that Ford, Lincoln or Mercury manufactures, but only represents the most recognized. The customer can write in the “other” box to counter this, but all that really needed to be done is to ascertain whether customers want to buy a car or truck of varying sizes. This should be more than adequate. The field test showed that the form was not the easiest to use and interpret, with the layout being limited by the creativity of the author.
It also does not elaborate on those wanting to buy a used car, but the intent was not to influence the participants’ views on whether or not to buy one. Similarly, the idea of including “insurance” (costs), “depreciation” and “high sticker price” in the survey may be perceived to detract potential buyers from buying a new car. However, the argument for leaving this intact is that Ford needs the information in regards to keeping, or revising its current price structure.
Like it or not, these are the very reasons that customer opt for a used vehicle in the first place. Ford needs to know the amount so they can counter the threats. As touched on in Chapter 4, the sales of consumer vehicles may increase, but the sales of fleet vehicles, especially police vehicles, may actually decrease because of more agencies switching to the Carbon Motors product.
Description of the Alternatives
Statement of the Objectives
Ford Motor Company has lost over 14 billion dollars in 2008 (New York Times website, 2009). Though there are many reasons for this, the result is that fewer customers are buying their products. While this is not a problem unique to Ford and the responses have been to cut jobs and spend more money on developing new models, including a hybrid version of the Fusion, a midsize car, Ford should also keep other options open. These should be options that do not include cutting more jobs and spending millions of dollars in developing new products and redesigning new ones. A firm cannot merely downsize, nor can it spend itself into prosperity. Though not included in the objectives, these cannot be accomplished be Ford by cutting jobs or merely spending money hoping for the economy to turn.
Objective One. The first objective is to increase car sales by ten percent and overall vehicle sales by fifteen percent or more.
Objective Two. The second objective is to improve customer satisfaction and retention. This is vital as there are allegations of denied warranty claims and the perception of poor products and workmanship.
Objective Three. It is not enough to retain customers for Ford; they need to add new ones. This is because their current customer base is not enough to keep the firm solvent. Ford has lost a significant amount of customers to Toyota, Honda and other firms. More significantly, they are also losing customers due to financing and the used car market. Ford needs to better market their argument that new cars are better and more reliable. It is common knowledge that depreciation is a significant and hidden expense on a new vehicle. This is something Ford must counter with vehicles with options that add value, not just cost, to their product.
Description of the Alternatives
Alternative One. This is to continue with the present business model, concentrating on selling the competent, yet dated design of the current Focus compact. It also means pursuing the current plans with the Fusion, which is still a relatively innovative design until 2010 and introduce the 2010 Taurus, a very innovative and compelling, though probably expensive vehicle that fewer customers will be able to purchase. The current Crown Victoria, or Police Interceptor, at present a fleet sales only vehicle is also competent for its current purposes. However, the design dates back to the late 1970’s and is not purpose-built. The longevity of the vehicle for police work is about sixty to seventy thousand miles and fuel economy is poor. A firm called Carbon Motors, under the direction of the Department of Homeland Security, is building such a purpose-built car codenamed the E7 which is superior in range, handling, operating costs and officer use and protection and durability (Carbon Motors website, 2008). It will most likely erode Ford’s near monopoly on the police car market without extensive and costly modifications. One aspect the firm has in its favor is the reputation of its trucks. They are dependable and tough and with the exception of the E-Series, current models. The E-Series, or the van, has a design that dates back to the 1970’s, has poor fuel economy and handling, (Car Gurus website, 2009). The aforementioned challenges that Ford has, along with the current financial situation make this a choice that Ford will make at its own peril.
Alternative Two. Introduce the International version of the Focus compact in place of the current model that dates back from 1999. The coupe, while more recent, is still reminiscent of 1970’s and 80’s subcompacts made by domestic manufacturers. This was not a period of nostalgia for anyone that knows about vehicles and surely not the manufacturers themselves. The International model is arguably more modern even though the differences between the coupes are more subtle than the sedans, where the differences are profound.
Alternative Three. Introduce the Fiesta, an international subcompact, to the United States and Canada. It is one of the most successful cars Ford has ever sold (Wikepedia, 2009) and was sold briefly in the United States in the 1970’s. It would be Ford’s alternative to General Motor’s Aveo, which suffers from clumsy styling, including, but not limited to, the corporate “big mouth” grille (Autoblog website, 2007) that is gracing Chevrolets and to some extent, other GM vehicles. The reintroduction of the Fiesta should be a money maker for Ford.
Alternative Four. Hire an independent firm to determine warranty claims. This firm, contracted by Ford, would be paid to evaluate problems with Ford’s products without pressure from the manufacturer, dealer, or consumer. More importantly, it would encourage efforts to improve quality and workmanship, along with modifying the design of failure-prone parts. An added benefit would be to insulate Ford from bad publicity caused by frivolous warranty claims and reduce the pressure to deny claims that are in fact valid. This will increase customer retention even if a claim is denied.
Alternative Five. Ford can and should evaluate parts that suffer frequent breakage, even those determined not to be the fault of the manufacturer. A common problem with many of the earlier Triton overhead cam V-8 engines is the propensity to “blow out” a spark plug.
This is a repair that can cost a consumer thousands of dollars to replace a cylinder head to spend hundreds of same to repair at an independent mechanic. Ford frequently denies this claim and many consumers faced with this problem may never buy a product from them again. This is only one example of problems with a product that consumers spend increasing amounts of money to purchase, maintain and insure. Nearly all want a product to be reliable and a firm to honor the warranty when a part is defective. An increasing number of consumers are turning to public forums when things do not go their way and a surprising number of them are even angry at the manufacturer of perceived defects when the causation is merely that the car or truck has reached the end of its service life.
The alternatives are not the only ones that Ford has before them. There are many options that they can pursue and this is not a complete list. These are meant to be the most basic. Because the object of this work is to get the best benefit for the cost involved, the options can be taken inclusively, or exclusive of one another. In the interest maximizing the benefit of increasing small car sales, while the profits are not as large, will be better than having high-end vehicles sitting on dealer’s lots not being driven, or making money for anyone. In addition, the alternatives are ones that Ford, as well as other automakers have already tried to some extent in the past to increase sales. While these worked in the very short term, they have had longer-term consequences the consumer and industry are still reeling from today. For decades, the United States has had a very easy time selling larger vehicles for a larger profit. This is an option not afforded in many other nations, save for nations such as Australia, China, or the Middle East. The majority of nations consider what the United States uses for compacts as full-size. With few exceptions, the United States has also enjoyed far lower fuel prices than the majority of nations, save those that produce a large surplus of oil.
These are factors that no automaker that wants to remain in business should ever count on. It has already sent General Motors and Chrysler to the government for bridge loans, yet Ford has managed to weather this better than the others. This does not mean that Ford can, or should retain the status quo. There is plenty that Ford is doing right with their present situation. Yet there is some room for improvement, considering the need to do more than just maintain in a very competitive marketplace with external threats increasing daily. The firm is in need of a credible small car program in the United States, something it has seen as unnecessary and unprofitable when fuel was inexpensive, credit was available and employment plentiful. At the present time, with these factors reversed, or highly diminished, more consumers will be turning away from “want” vehicles in favor of “need” vehicles. It will be up to Ford Motor Company to use this to their advantage.
As suggested by the title of this chapter, the options that Ford has are many. However, most of them carry consequences and many of these will have a negative impact on the automaker and those of the stakeholders. While the focus has been to implement plant closings and restyle their higher profit trucks, this writer will argue that there are other options that Ford should implement that will cost it nearly nothing.
At present, most new vehicles are sold in trim levels. The Focus, for example, is sold in four package levels from the S starting at $14,000, the SE at $15,000, the SES at $16,000 and the SEL at $16,200 . These are the starting prices for each package and they are approximate. Package pricing allows the manufacturer and the dealer to simplify their inventory, but the options included with these packages are confusing and add additional cost to the vehicle the customer might not want.
An example is ordering the Focus S online with automatic transmission. This adds $1,300 to the cost of the car. This is 9% to the cost of the vehicle price alone, a substantial figure. However, Ford has limited options available for this model and to get more available (and more choices); the customer has to spend even more. On the dealer’s lots, there is a tendency to stock higher end models. While this adds profits, it also adds additional cost to a new car and may actually drive customers to the used car market; essentially defeating the object of increasing new car sales. The point this writer is trying to make is that Ford had a good plan 60 years ago for selling new vehicles, even in times of tight credit. In basic terms, this was offering the base price and a complete options list for every car.
While this would add to the cost of making the car or truck initially, it would also allow the customer the flexibility to choose the options he or she wants and can afford. Lastly, if someone wants ambient lighting in their new Focus for example, they will not have to spend thousands more on options they do not want. Another would be to eliminate this altogether as most customers opt for aftermarket ambient lighting anyway.
Another option would be to limit the amount of equipment available, especially on the smaller cars to save overhead costs. The aforementioned ambient lighting and even leather trim in a Focus might seem superfluous to customers trying to buy a new, entry level vehicle. This is especially true in an economy where disposable incomes have not kept up with inflation, credit is tight and the perception of “hard” times is a part of those where the former two conditions may not apply.
The third option and this is the most costly, would involve introducing the European version of the Focus to the United States as well as a subcompact such as the Fiesta as made mention of in previous chapters. There will be issues that need to be addressed with meeting the standards here (safety and otherwise), but Ford does not at present have a subcompact available in the United States (and the only firms offering them are Smart (For Two), GM (Aveo), Toyota (Yaris) and Honda (Fit). This is a market that Ford is missing out on, much the way they did for many years in the SUV boom before introducing the Expedition and Excursion. As for the European version of the Focus, this is a subjective viewpoint, but the design is more modern in a market that demands vehicles that are current. The Focus sedan’s design is already eight years old with a few modifications while the coupe (which is more expensive) is also dated in style compared to competing manufacturers from GM, Europe and Japan.
There really is not a reason that Ford cannot implement at least one of these changes. They have spent much money and time restyling their F-150 for 2009 and sales of light trucks are down, maybe permanently, because of anticipated higher operating costs. Yet the cars that need to be selling are languishing with older designs and loaded with features which customers may not want and add cost, rather than value, to their potential purchase. What are hurting car sales are also hurting truck sales as well. While adding another $2,000 to the purchase price of a truck to add a bigger engine and few options may seem to make it more desirable, it is putting it out of reach for many buyers. Lower end options have to come special order, while higher end ones are available now. The buyer may opt for a used truck, if he or she needs one quickly, rather than wait for the factory to bring one. The dealer can and should be able to add some “must haves” to a vehicle if the customer so desires, or order a new vehicle to his or her tastes.
This was how automakers made sales in the 1950’s and 1960’s (and this was no small reason why many bought “American”). At present, many buy from dealer stock to get the discounts. However, Ford should make vehicles that customers want without discounting them. They should not compromise style, cost-effectiveness or features. There is no ideal car or truck that any automaker is capable of building without input from the customer. Any firm that forgets the importance of the customer in their business will not be in business long. In addition, a firm should not continue to offer their customers “yesterday’s specials” when there are better alternatives available at little or no initial cost to the manufacturer. Ford listened to customers nearly 20 years ago concerning the direction that their Mustang was taking. In 2007 sales of the Mustang were declining, while sales of the Focus are 28% higher than they were a year ago. Ford should also cater to customer of “need” cars as well as those of “want” cars such as the Mustang. The need for this direction should be obvious.
This chapter will explain the options that Ford Motor Company may have in improving overall sales and to select effective leadership. Both of these are absolutely necessary to get this firm out of the dire situation that incidentally is not unique to Ford. General Motors and Chrysler LLC are in similar circumstances and are considering a merger or buyout of the latter to the former. If this happens, it is very possible that Chrysler, along with Dodge and Jeep will go the way of Willys, Nash, Studebaker and American Motors. It may also further erode consumer confidence in “homegrown” auto industries, including, but limited to, availability of parts and service for “orphaned” models already stigmatized for poor reliability and resale value. Ford will need to make some critical choices if has not already. First and foremost, they will need to strengthen their position globally if part of their domestic competition no longer exists. They may no longer have Chrysler to insulate them from buyers forced to seek the likes of Hyundai, Kia, and Honda for products that Ford no longer offers or offers poorly.
Throughout most of its 105 year history, they have been known for building the right product at the right time. The Model T, Model A, the Falcon and even the panned Mustang Two are examples of the right car at the right time . More often than not, they have also made the wrong product at the wrong time. The ill-fated Edsel, which contrary to popular belief, was never branded as “Ford” but was a brand in itself and consisted of no less than 18 models (Willson, 1997). The 1958 Lincoln Capri, 1959 Fairlane 500 Skyliner, Lincoln Aviator, and the Ford Excursion were all products that were either too technically audacious or not economical for the time. The present products that Ford offers, while of good quality, are not keeping up with the times stylistically or in economy, fuel and otherwise. The Ford Taurus, Mercury Sable (soon to be discontinued as of this writing) and Ford Focus have these traits to some degree.
The Focus is a product that has a checkered history in the United States. When it was first introduced in 1999 as a 2000 model, problems manifested quickly. Ignition locks broke repeatedly and there were issues with brakes, fit and finish, not to mention the appearance of the car was controversial for its time. The current model is loaded with new options, including SYNC from Microsoft that includes a built in mobile phone and music player that costs about $400. However, the styling is pedestrian. While the four door model has not changed much from the 2000 model year, the 2009 three door model (figure 1) is reminiscent of the 1976 to 1987 Chevrolet Chevette (figure 2). In other words, it looks cheap. However, the price of the coupe starts at $17,000 and can swell to over $20,000 fully equipped.
While Chevrolet is planning the Cruze, a modernistic-looking competitor for the Focus, Ford is still mulling over trying to bring the European model (figure 4) to the United States. Chevrolet will have had three models in the same time that Ford has had one in this very important segment. The Cavalier, Cobalt and soon the aforementioned Cruze (figure 3), that will leapfrog even the European version of the Focus in looks and relevancy. The fact that Ford does not share all of its tooling on an otherwise world auto is probably expensive to say the least. The European version has been more reliable and was one of the best selling cars there while the North American version has suffered from a myriad of defects and recalls. For a time the Focus was the most recalled model in automotive history . Ford should introduce the European version and drop the “Focus” nameplate as there are still many owners that may associate it with the lackluster performer of the 2000 model year. The current model still shares many visual traits with earlier versions to make a name change on this one ineffective.
In addition, Ford tried this with the Freestyle, changing it to the Taurus X, and adding a few minor cosmetic changes. The result was that sales were off by over twenty-five percent and the model was considered redundant by the introduction of the Flex this year.
The mid-sized Taurus is due for a restyling in the next two years, but the current offerings suffer pedestrian styling, which is hurting sales. Ford has also spent much money on restyling its F Series truck that they had to delay several months while they sell off the 2008 models. What is worse is that this new product will not get the exposure it needs from the road on dealers’ lots. This is because dealers like Grand Ledge Ford of Grand Ledge, Michigan, Courtesy Ford of Okemos, Michigan and other dealers selling competing products have moved their small cars to the front of the lots.
This means that Ford has their Focus, their worst looking car line, to attract new customers. Only used car dealers with their glut of trucks and SUVs in proportion to passenger cars are still keeping the former to the front of the lot (figure 5).
Restyling their current offerings is a couple of years away. Yet there are many of the current ones still on dealer’s lots that need to be sold. Ford probably cannot reasonably be expected to sell these cars at a loss, but the styling is something that needs to be overcome in creative fashion. The current Focus, Taurus and Fusion are competent models. In fact the Fusion has been rated high by several independent rating firms.
These car lines are more relevant than trucks, SUVs and even the CUVs such as the Edge, Taurus X (which is soon to be discontinued in favor of the Flex) and the Flex because of their perceived economy. It is understood that smaller cars mean smaller profits for the automaker, even when they add options reserved for larger, more luxurious cars. As credit tightens further, trying to justify a “loaded” Focus is going to be a harder sell because of the higher price. Most buyers purchase a small car for its economy and lower price tag. Having too many “loaded” small cars on the lot will defeat the purpose in short order. Most savvy new car buyers also know that larger vehicles are not much more expensive than smaller ones. However, separating them into classes, especially the “economy” models will discourage, rather than encourage up selling. This is something that Ford really needs as they make more money on the options and the larger cars than the stripped down smaller ones. What is more is that even customers with their minds set on buying the “cheapest” and will not want to hear the sales pitch for the more expensive models will be more likely to buy the higher-profit ones if they can see these ones as well. Ford should aggressively market their cars as practical and economical. They should also eliminate options that add cost instead of value to their products. Dealers typically “load” up their inventory with costlier models to increase their profits and they should not be expected by Ford to stop this practice.
Nevertheless, items such as power windows, leather interior, ambient lighting and even SYNC may make the Focus more palatable to younger buyers with more disposable income; this demographic is small and shrinking. These are also taking sales away from Ford’s higher-profit models and negating any real savings to the customer, driving many to the used car market. In short, this practice is performing a terrible disservice to Ford.
Finding and Retaining Effective Leadership.
Another weakness that Ford shares with many other United States firms is the propensity to hire ineffective leadership and pay exorbitant salaries to same. Ford paid Jacques Nasser close to $16 million in 2000, in that same time period the vice chairman received $3.3 million, the group vice president for Global Product Development and Quality $2.3 million (This was the same period Ford introduced the problem-ridden Focus in North America). Other compensation including the vice president for the now-defunct Premier Automotive Group was at $2.8 million and the former vice president for the Global Consumer Services and North America at $2.9 million reflects a disparity between compensation and reality in the same time period. While the purpose of this illustration is not to criticize compensation or defame executives, it points out that underperforming in decision making is more tolerated than it is with other aspects of corporate function.
A common argument for keeping compensation the way it is for such personnel is because such talent is scarce relative to the pool of individuals that can effectively perform such duties. If the firm does not pay the rates, then another one will for same person and the first one will lose out. This argument is dissolved when observing the poor performance of a firm such as Ford under such leadership. While this is not to discuss fairness and executive compensation, it is a point this writer must address if he is going to get the firm to do the same on acquiring effective leadership. There are many problems that Ford has to work around to get effective leadership, but there is not enough room in this writing to address them all. Rather, Ford needs to look for the traits of a good leader, or preferably, good leaders. These should be people that have a genuine interest in saving the firm and not just collecting a paycheck. They will need dedication that is greater than the individual to overcome all of Ford’s challenges.
Above all, this person, or group of persons, will need a strong survival initiative. While this writer is adapting this from the Army Survival Manual, a good leader needs to have these qualities in face of overwhelming challenges.
Being able to make up his or her mind.
Being able to improvise.
Being able to live with your decisions.
Being able to adapt to the situation-to make a good thing out of a bad thing.
Remaining cool, calm and collected.
Hoping for the best, but preparing for the worst.
Being prepared to meet the worst that can happen.
Being able to understand and predict what other people will do.
Understanding where one’s special fears and worries come from and knowing what to do to control them.
However, just being able to survive is not going to be of much use to Ford either. They are going to need an individual with vision to realize success that can bring the various groups together. “Is there anything worse than being blind? Yes! The most pathetic person in the world is someone who has sight but has no vision,” is how Helen Keller brilliantly summed this up. Rather than hire “small people” with no vision, drive, or ambition and who only know how to conform, Ford needs to invest the monies into recruiting and retaining a person who knows how to struggle and succeed in business. They also need to have genuine leadership qualities and more than a little charisma would help as well.
There are many websites, books and ideas concerning what a good leader should be and many subdivide them into different classes of leaders. As far as this writer is concerned, these are important, but not so as having a person that can lead Ford into prosperity. This, in retrospect, is going to take a charismatic leader that can bring unions, suppliers, the government, investors and even customers in his or her vision. Ford has been losing ground in customer satisfaction for nearly thirty years. One saying this writer lives by is when one finds oneself in a hole; the first thing to do is stop digging. A good leader can stop this destructive cycle and reverse. The traits this writer found most relevant are from the Women Today website.
Have a Dream (that will make this world a better place). This person should already have a plan to save Ford and keep it going in his or her plan. This person must be able to “hit the ground running” and be dedicated to it. The site refers to this as something one would die for. While this seems extreme, it illustrates the loyalty and commitment that this leader must have. There is no time for a sunshine patriot or summer soldier in this war.
Know their strengths. Leaders need to know their strengths and surround themselves with people that compliment them appropriately. Leaders get things done through other people. Leaders also lead based on their strengths.
Strive for Excellence. Settling for mediocrity is not going to bring Ford to profitability; it will only prolong its decline as Asian competitors improve their products and pricing structure. In order to be the best, Six Sigma, zero percent financing, or all the options and buyer incentives are not going to be enough. The product needs to be solid and something the public will crowd showrooms to buy. They will also be a product that others will tell their friends and relatives about, in evangelistic fashion. This is excellence; something that Ford needs to be synonymous with right now. The leader Ford chooses needs to exude excellence in his or her behavior, manners and be someone that the rest will want to emulate.
Be Persistent. The site uses Mother Theresa as someone that is determined. More importantly, leaders don’t have exceptional abilities but they learn from their mistakes and go on. They also do not grow in a comfort zone, but are willing to take risks. This writer would also add that taking risks does not mean choosing styling that will offend or otherwise harm the potential buyer. The aforementioned Focus was offensive in styling to many people in the pursuit of being different. Those who bought one lived to regret it. Taking risks is being calculating and minimizing damage to the company. Throwing in the towel is not an option.
Being Willing to Stand Alone. Lee Iacocca was such a leader and Ford fired him. While a CEO has to answer to shareholders for his or her decisions, they need to understand that a true leader is going to do things that might not make sense at the time. They may clash with the board of directors and make some angry. A leader is not striving to be popular, but to do his or her job.
Be Ready for Resistance. There is real push at Ford and other carmakers, and that is to maintain the status quo. It’s the surest thing to do, predictable and the easiest way to be in Chapter 11. Not implementing a warranty plan that retains customers and not honoring the one they already have is driving customers away. This is one thing that has not changed since this writer bought his last Ford product in 2002, a 2000 Windstar with numerous problems that resulted in the destruction of said vehicle. Another is not offering products that consumers can finance on less than perfect credit. A leader needs to be addressing these concerns and there will be resistance from dealers, union members and management alike.
Set an Example for Your Staff. “Work hard and be a leader; be lazy and never succeed.” This is the quote from the site. This reiterates the fact that many people want the position and the paycheck, but will not put forth the effort. We all want to escape responsibility, but being a leader takes work, and a lot of it. There is not enough pay or prestige in the world to properly compensate a true leader, but he or she performs this out of dedication. The true leader is a servant as the site points out, and is always “on duty.”
Be Ethical. This goes along with the last principle, and something that the auto industry needs to be perceived as by the public. There are many instances concerning Ford and other automakers where profits were put before people’s lives. Chrysler has one concerning their GEN 3 seatbelts that unlatch in a crash in the interest of saving twenty-four cents a buckle . Fords worst was with the Pinto that still haunts them to this day, nearly forty years later. There are some principles that Ford’s leadership needs to follow even when the government and the law are on their side. Considering the current political situation in this country, the government is solidly on the side of business. However, the buying public can and will call them on these ethical errors. Even if they never win a court case, they can still choose not to buy products they feel are unsafe. This is deadly to an automaker, no matter what friends they have on Wall Street, or in Washington.
Serve a Higher Purpose: This writer paraphrased this to serve the premise that there are people who do not believe in God, but can still serve a purpose higher than oneself. When a leader does his or her job with spirituality in mind, the result is that they serve the good of all involved, and not just the firm or themselves. This may be a tenet lacking in many so-called leaders today, but there are more than enough out there that do their jobs without complaint in their present capacity .
Without effective marketing, the best products in the world will not save Ford. The pivotal models that can save, or sink the firm also have the lowest profit per vehicle. The only way they can turn a profit is to sell more of them than they already do. Other “world” products, such as the Fiesta and the Transit Connect should be considered to add value to Ford’s “top heavy” lineup as these are already being sold successfully in other countries and the cost to bring them here would be small. The Fiesta would be a good alternative to the Chevrolet Aveo while the Transit Connect would be for the effective, but dated and uneconomical E-series van. Another is to drop the “Focus” nomenclature in North America while bringing (and renaming) the European version to the United States.
Without a good leader, or a group of same, Ford will never realize long term profitably and will probably go the way of many other automotive firms in the last century. Firms such as Hudson, Kaiser, Studebaker, American Motors and Packard made outstanding vehicles, yet made costly blunders in considering what customers wanted. These aforementioned firms did not have the issues of higher fuel costs, tight credit and global competition on the scale that Ford has today. Considering the quality control issues that the firm has and the apparent lack of concern they have in correcting them, an effective leader will have surround themselves with brilliant, capable and visionary individuals to turn Ford around for the better.
History and Background of the Problem:
The present situation at Ford Motor Company is a lack of sales. Although the present economic condition may be responsible for this problem, the fact that fuel prices are at record highs and the present lineup that Ford offers consists mainly of light trucks that traditionally have higher rates of fuel consumption than cars have. There is also another issue contributing to poor sales that Ford can control. This is the customer perception that American-made vehicles are poorly built and have lower reliability than vehicles made in Asia or Europe. Ford has had some serious problems with reliability as of late, including, but not limited to cruise controls that can catch fire and cause property damage and/or personal injury. Other issues concerning their trucks are they are reported to spit spark plugs with low mileage engines. The former is under recall and Ford has had a shortage of parts, while the latter management has chosen to let the customer pay for repairs. These repairs can be in excess of several thousand dollars.
During the SUV boom of the 1990’s, Ford and other domestic automakers had little incentive to address quality concerns or fuel economy. Fuel was inexpensive and disposable income among the buying public was high. Starting in 2000, fuel prices increased and in 2001, incomes fell flat. This is a trend that continues to this day. Ford has eliminated jobs and cut back on products in an effort to stem the financial ramifications of past corporate decisions. The issue of tightening credit is not unique to the housing industry. Tightening credit is also a factor that automakers have to deal with as the Dow Jones Industrial Average continues to lose value.
Scope of the Project:
One problem with deciding the scope of this project is that Ford Motor Company is a large, multi-national organization facing many problems in the United States and abroad.
Considering all the factors, implementing a project attempting to address all of the reasons for Ford Motor Company’s poor sales will be beyond the capabilities of this project.
It would be fiscally unfeasible to expect a firm beleaguered by heavy financial losses to implement a project such as General Motors has with the Volt, which is expected to carry a $40,000.00 price tag to the consumer. Although there is the possibility of a loan from the United States government as of late for $25 billion, this is still not a guarantee as of this writing. The said government has had to take over some very prominent financial firms, including AIG for $85 billion.
The money might not be there and Ford will have to find other ways to improve their financial standing. The main cause of their troubles that is within its control concerns the perceived reliability of their lineup and one of circumstances that are hurting sales. Customers buy trucks because they have capabilities that cars do not. If they are not reliable, they will purchase elsewhere. Ford’s trucks have the style and capabilities, but the perceived reliability is not there anymore. General Motors has, with limited success implemented a five year, 100,000 mile warranty on their new cars and trucks. Hyundai and Kia (Hyundai owns Kia) has a similar warranty on their vehicles.
Chrysler Group, as of this writing, owned by Cerberus offers a lifetime power train warranty on their vehicles to address real and perceived issues with their engines and transmissions on certain cars and trucks (the 2.7 liter V-6 in their Intrepid and Stratus models is still the bane of many consumers, including this writer who experienced an engine failure at 47,000 miles on his 2003 Intrepid).
A warranty will help in getting buyers into the showrooms skeptical about a vehicle’s reliability, especially when the vehicle is more capable than its more perceived reliable counterparts. The Toyota Tundra, Nissan Titan, Dodge Ram and Chevrolet Silverado, though good trucks, for example, may not have the positive visual impact that a 2008 or 2009 Ford F-150 has. This is a subjective matter, of course, but most would rather have a good looking car or truck over something visually controversial. The present F-150 was cited by J.D. Power to be a reliable truck.
Importance (Significance) of the Project:
Customers are the lifeblood of any business and this is an area in which Ford has been lacking as of late. Even the much touted Ford Flex, a crossover vehicle, has seen slow sales this year and has some people calling it a “hearse.” Ford has also had to delay the introduction of the newly styled 2009 F-150 to allow dealers to sell off the remaining 2008s. The auto industry in the United States in what is known by the public as the “big three” has besieged the Federal Government for loans of $50 billion dollars and scaled back to $25 billion as of late. This is still not a guarantee to date and the implications to Ford are enormous.
If they do not get this loan, they may be on the verge of bankruptcy and a major firm in the United States will have to close their doors. It will also mean lost jobs in areas that can ill afford to lose them. Michigan is a state besotted by high unemployment and lackluster economy even before the stock market lost nearly 700 points this week. The workers that depend on Ford for a paycheck will be hard-pressed to find new jobs should the worst case scenario arise. Investors stand to lose money if Ford goes bankrupt. If the government infuses money into the ailing automaker and it fails anyway, the taxpayers will have to pay for the loans.
Ford will have to increase their sales if they hope to stay a corporate entity, much less return to profitability. Time is of the essence and redesigning their lineup is going to be expensive. To complicate matters, this may not accomplish the objective. Similarly, the automaker is introducing the Eco Boost to help improve fuel economy in its fleet. However, it will only allow them to reduce the size of its engines without improving fuel economy across the board.
It may not improve sales for the amount of money spent either. Regardless, the firm owes it to its shareholders to turn a profit. Because the economy in Michigan is highly dependent on the auto industry, as is the United States, this is also a matter of national security. The federal government is debating whether or not to extend federal unemployment benefits beyond the standard length of time. Michigan has seen the highest unemployment rates in the nation for the past seven years. All of this has been a strain on state and federal budgets. The lack of tax revenue from job cuts and plant closings is something that governments on all levels are well aware of.
Ford needs to increase their sales in the interest of all of the stakeholders in their venture. The public has a stake in having the unemployment rate as low as it can. This means less unemployed to compete with in the job market. They also want a good, reliable and cost effective product for the money. The employees want to have a stable means of income and benefits to insure a fair standard of living, while shareholders want to maximize the value of their stock. Stockbrokers need something that is going to at hold and hopefully increase in value to sell. Outside suppliers, such as Lear Corporation want Ford to sell more vehicles because that means they will sell more interiors.
The governments need Ford to increase sales to see more tax revenue. This includes, but is not limited to, sales tax, income tax and even fuel taxes to improve roads. Even businesses such as grocery stores, bars, department stores, recreational vehicle dealerships, campgrounds, hotels and even home centers depend indirectly on firms such as Ford to provide income that allows them to hire more of their employees, provide benefits, and even in some cases, to stay in business.
CUV stands for Crossover Utility Vehicle; another common term is simply “Crossover.” Typically a Crossover or CUV is a car-based vehicle that stands higher than a typical car, but is usually used as an updated term for station wagon or estate car. The main difference is that the CUV is a unitized body frame and the engines are usually smaller as a result. The fuel economy is about the same as an SUV.
Light truck is typically what most of think of when referring to a pickup truck of any size, a minivan, van or SUV.
Fuel consumption, rates of: typically called gas mileage.
SUV stands for Sport Utility Vehicle, a large, truck-based station wagon with a large engine that typically has lower fuel economy than a car. They usually have power sent to all four wheels, rather than to the front as in most cars, or the rear as in full-sized cars and light trucks.
SYNC, a voice activated mobile phone and digital music system offered on Ford Vehicles and developed as a joint venture with Ford and Microsoft.