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No end to crisis at Ford

2006-05-08 10:45

Poornima Gupta

The No. 2 US automaker, facing a deepening financial crisis, has seen its US market share fall by over 5 percentage points in the last five years to 18 percent in 2005.

Ford has pledged to slow that costly erosion this year, but some analysts say even that modest goal could be a stretch given the vehicles Ford intends to roll out and the intense competition in the market for trucks and sport utility vehicles.

"Of all the automakers, I am most negative on Ford," said Erich Merkle, director of forecasting, with the consulting firm IRN Inc. "There is no continuity to their product development."

Karl Brauer, editor-in-chief of leading auto industry research Web site Edmunds.com, agreed that there appeared to be a lot of "thrashing about" in the Ford product division.

Brauer cited Ford's decisions to rename all of its Lincoln vehicles with acronyms, a move that will turn the Zephyr sedan into the MKZ, and the sudden elimination of several high-performance vehicles.

"There's been a real lack of direction on Ford's part," he said. "Ford does not appear to have a focused product plan."

A rebound in the U.S. market is key to turning around Ford's money-losing North American auto operations, where it is cutting 14 plants and up to 30 000 jobs.

Ford says it is making progress on the product front and intends to add sales by launching more models in new segments by no later than 2008.

Need to feel the passion

Joseph Barker, senior manager of global sales forecasting for CSM Worldwide, said Ford badly needs "edgier cars and trucks that exude passion."

The carmaker's North American vehicle development division has seen a lot of change as its problems have deepened, including the departure of product chief Phil Martens after just two years.

Ford has said it wants to diversify away from its heavy reliance on SUVs and pickup trucks.

Some of its car launches with "edgier" designs - like the Fusion, the Zephyr and redesigned Mustang - have seen strong sales.

But other models have been criticized for conservative styling and underpowered engines. The Five Hundred and Freestyle crossover wagon are now being supported with sales incentives, an indication of weak showroom demand.

"Ford must address its conservative design theme (and) their inadequate powertrain lineup," Barker said.

Ford's Explorer SUV, which saw only limited design changes in its recent relaunch, saw sales fall 42 percent last month even as sales of rival General Motors Corp.'s new Tahoe SUV rose 34 percent.

Ford spokesman Said Deep said the stylish Fusion, Zephyr and Mustang embody the design of future Ford vehicles.

"Those are really more examples of what we are doing going forward," Deep said.

GN stronger?

Analysts said that GM, which is also battling a market share decline, appears to have a better portfolio of new vehicles.

"General Motors is going to take risks with their future products, and we feel that's the way you have to go," Barker said.

Taking design risks also paid off for DaimlerChrysler AG's Chrysler Group. The muscular Chrysler 300 sedan with its prominent grill was an instant hit. So were the aggressively-styled Magnum wagon and the Caliber compact hatchback.

Ford is launching redesigned Expedition and Lincoln Navigator SUVs this year, but some experts say the automaker did not go far enough to make the new models stand out in a shrinking segment of the market at a time when fuel economy is at a premium.

Another Ford debut this year will be the Edge, a new entry in the fast-growing "crossover" segment. Crossover utility vehicles, or CUVs, offer the convenience of an SUV but a car-like ride and improved economy.

The five-seater Edge, while stylish, could fall short when shoppers compare it with competitive vehicles such as Toyota Motor Corp.'s Rav4, which seats seven, critics say.

Ford launched a campaign intended to create excitement about its vehicles under the tagline "Bold Moves," including television ads featuring singer Kelly Clarkson.

But Merkle said unless Ford has the right products, no amount of marketing will save it.

"They have to fix the revenue side of the equation," Merkle said. "As long as that continues to decline, unfortunately Ford is not going to be able to cut plants and cut people quick enough."

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