Ford's Product Strategy: New F-150's total performance upgraded
Enhancing high performance car and Lincoln brand to target 300,000 unit sales
Ford's GT Supercar slated to be launched in 2016
This report summarizes product strategy by Ford Motor Company, which is forging ahead with enhancing its light trucks and high-performance cars, as well as strengthening the Lincoln brand.
The percentage of light trucks sold by Ford, in relation to its total sales volume, has always been high. It has exceeded 66% every year since 2011. Ford is working to increase its profitable light-truck range even further, riding on the tailwind of the recovering U.S. economy and lower oil prices.
The all-new F-150 launched in the fall of 2014 is the first mass-market pickup truck with an aluminum-alloy body, which improves fuel economy. In addition, its stronger steel frame contains more high-strength steel, which enables the F-150 to tow even heavier loads. Ford plans to incorporate these latest technological advances also into its next-generation Super Duty series as well as large sports utility vehicles (SUVs) such as the Ford Expedition and the Lincoln Navigator.
Ford is considering reviving the Ranger midsize pickup truck that it discontinued in North America in 2012, as well as launching a new body-on-frame SUV based on the Ranger platform. These models will presumably be produced at its Michigan Assembly Plant, which underwent a considerable amount of renovation just a few years ago to switch from building the F-150 and other light trucks in order to build small, fuel-efficient cars such as the Focus and the C-Max. If Ford moves ahead with its latest plan to again build light trucks at the plant, the plant will once more need to be revamped accordingly.
Ford plans to offer 12 new high-performance cars between 2015 and 2020, in order to enhance its brand image and increase its profits. In 2015 and 2016, it will launch the Mustang Shelby GT350, Focus RS, Ford GT, and the high-performance F-150 Raptor.
Although Ford has basically neglected the Lincoln brand for 20 years, it plans to invest USD 2.5 billion (USD 5 billion including spending on engineering, advertising and other sales-related expenses for Lincoln) in the coming five years to significantly strengthen the Lincoln-brand model lineup. In 2016, it plans to revive the Lincoln-brand, large-sized flagship luxury sedan, the Continental. Ford launched the Lincoln brand in China in 2014, anticipating sales growth there. Ford announced that by 2020 it plans to sell 300,000 Lincoln vehicles globally, which is triple the number it sold globally in 2014.
Aggressive new car launches these past two years, including the launches of the F-150, Mustang and Edge, succeeded in setting new business performance records for Ford in the second quarter of 2015. Ford reported its highest quarterly profit in 15 years, with a pre-tax profit of USD 2.9 billion and net income of USD 1.9 billion.
Related report: Ford：Continued growth due to North American market recovery (Jul 2014)
F-150's overall performance upgraded
Ford's all-new F-150 released in the fall of 2014 came with a new, 700 lb. (320kg) lighter aluminum-alloy body. The OEM also incorporated more high-strength steel in the frame, resulting in greater towing capacity.
Ford furthered the redesigned F-150's overall performance, improving handling, acceleration, and braking responsiveness.
The F-150: improved fuel economy due to weight reduction and improved towing capacity due to a stronger body frame.
|The F-150 features an aluminum-alloy body (cab and box), a first for a mass-market pickup truck, which reduces the vehicle weight by 700 lb (320 kg). As stated below, the fuel economy ratings of the basic model equipped with the 2.7-liter Eco Boost V-6 engine exceeded those of the previous 3.7-liter naturally-aspirated V6 engine. Unfortunately, it could not push the highway rating to 30mpg, as hoped for before the launch.|
|Reducing the vehicle weight by a whopping 700 lb, which led to enhancing fuel efficiency, is a great achievement in itself. Ford, however, is anticipating that when this new aluminum body is combined with other new technologies such as a 10-speed automatic transmission still under development, the vehicle will get even better fuel efficiency. Over time, Ford plans to install numerous new technologies, which were not ready by the time the redesigned F-150 was launched, in successor models. With a lighter body weight, the F-150 achieves improved acceleration, handing, and braking responsiveness.|
|The aluminum-alloy body is said to be lighter and stronger than its steel counterpart on the previous model due to technological improvements in the aluminum-alloy compound, manufacturing process, and thickness of the metal. The stronger frame made of up to 78% high-strength steel (up from 23% in the 2014 F-150 frame) has achieved greater towing and payload capacities.|
Ford F-150's fuel economy (miles per gallon)
|Former model (2014)||V6 3700cc (NA)||17||23||19|
|Current model (2015)||V6 2700cc (EcoBoost)||19||26||22|
Add high-performance cars to raise Ford's brand image and profit per unit
|High-end F-150 Raptor slated for launch in 2016|
Ford is launching several new high-performance cars: the Mustang Shelby GT350 and GT350R (in 2015) and the Focus RS, GT and F-150 Raptor (in 2016). By 2020, the company plans to release 12 high-performance models as a strategy to differentiate the Ford brand.
According to Ford, high-performance vehicles built on mass-market models' platforms will produce higher profit per unit with a relatively small investment, even if the sales volumes are not particularly high.
At the end of 2014, Ford consolidated its "Ford's Special Vehicle Team in North America", "Team RS in Europe" and "Global Ford Racing Operation" into "Ford Performance."
Launch more light truck models; plans to revive Ranger mid-size pickup truck.
In 2011, passenger cars accounted for 50% of the U.S. vehicle market, while light trucks accounted for the other 50%. Thanks to a recovery in the U.S. economy and lower gasoline prices, the percentage of light trucks increased to 55.6% between January and September 2015. The percentage of Ford's light trucks (over 66% every year since 2011) has always been higher than the overall U.S. average. Ford has been developing its product range on the light-truck sector, which includes pickup trucks and sports utility vehicles (SUVs).
Although some individuals inside the company think that passenger car sales have more room to grow, it seems Ford is still giving greater priority to selling light trucks for the time being because they are more in demand and generate higher profit margins.
In addition to upgrading its current models, Ford could bring back the Ranger, a midsize pickup truck that it discontinued building and selling in North America in 2012. The company is also considering launching a body-on-frame SUV based on the Ranger.
Production: Plans to resume building body-on-frame trucks in Michigan
In looking at Ford's manufacturing base, light trucks have a great influence on the company's production operations. Several years ago, Ford stopped building trucks at the Michigan Assembly Plant and began building the fuel-efficient Focus and C-Max passenger cars there. It is now planning to go back to building body-on-frame light trucks at the Plant.
Since Ford cannot supply enough light trucks to the market, such as the Expedition, Explorer and Escape, it is speeding up assembly lines and making changes to shifts, in order to boost production. Ford, however, does not have any plans to build a new plant in North America, in consideration of future market fluctuations.
Ford to revive Ranger midsize pickup truck and develop midsize body-on-frame SUV
|Amidst soaring oil prices and rising consumer awareness for fuel efficiency, in 2010, Ford redesigned the Explorer, its midsize SUV, from a body-on-frame construction to a monocoque construction. In 2012, it discontinued building the Ranger, its midsize pickup truck, in the U.S.|
|There is, however, a strong demand for midsize pickup trucks in the U.S., where 250,000 to 300,000 units were sold annually from 2011 through 2014. Best-selling models include the Toyota Tacoma, Chevrolet Colorado and Nissan Frontier.|
|In August 2015, Ford announced that it is considering reviving the Ranger pickup and developing a Ranger based body-on-frame SUV. Ford terminated sales of the Ranger in 2012 because at that time it was considered to be too close to the specifications and price of the F-150. Now, though, Ford sees the potential in building a midsize pickup truck, since the F-150 is at a price point higher than that of midsize trucks. There is one idea to have the new SUV carry the Bronco name. The Bronco was a body-on-frame SUV built on the F-150 platform and sold until 1996.|
Ford resumes production of body-on-frame light trucks at Michigan Assembly Plant
|Under the leadership of previous CEO Alan Mulally, Ford invested USD 550 million to renovate its Michigan Assembly Plant in order to build small, fuel efficient cars. (Before being renovated, the Plant used to build the Expedition and the F150.) Ford transferred truck production to other locations such as its Kentucky Truck Plant, and since 2012 has been assembling the Focus, C-Max and their hybrid and plug-in-hybrid models in Michigan. In 2012, Ford thought that these models would play a more significant role in its product lineup.|
|Ford now plans to build the revived Ranger and the Ranger-based SUV at the Michigan Assembly Plant. The Focus, C-Max, etc. currently being built at the Plant will be built at its Cuautitlan Plant in Mexico. As for the Fiesta currently being built at Cuautitlan, it might be built at the Thai plant that already builds the same Fiesta.|
Ford-brand new and redesigned models
|2014||F-150||Use of an aluminum-alloy body reduced the vehicle weight of the all-new F-150 by 700 lb (320 kg). The actual retail price in the U.S. increased by USD 3,200. With well-established production operations, the F-150 greatly contributed to the increased profit in the second quarter of 2015 in North America.|
|The most luxuriously trimmed F-150 Limited, priced over USD 60,000; and the high-performance Raptor, are scheduled to be launched sometime in 2015 and 2016. A 10-speed automatic transmission, jointly being developed with General Motors Co., LLC, will be installed in the 2017 model.|
|Mustang||In the U.S., 96,000 units of the all-new Mustang were sold between January and September 2015, a 60% year-over-year (y/y) increase. In the summer of 2015, Ford introduced two high-performance Mustang models, the Mustang Shelby GT350 and GT350R.|
|2015||Edge||In March 2015, Ford released an all-new Edge midsize crossover equipped with a 2.0-liter EcoBoost engine that achieves the same fuel economy ratings as the previous 2.0-liter-engine model, which is 20mpg city/30 highway. Similar to the F-150, the design on the Edge is focused on riding comfort and improved performance rather than slightly better fuel economy. The overall length and height of the all-new Edge are slightly larger and the towing capacity increased to 3,500 lb (1,600 kg) with the base 2.0-liter engine.|
|Mustang Shelby GT350||The Mustang Shelby GT350's prices start at USD 49,000. The model comes with a 6-speed manual transmission and a 5.2-liter V-8 engine with Ford's first flat-plane crankshaft, which boosts output to 526 hp and torque to 429 lb-ft. Higher revolution and output were achieved through the use of the flat-plane crankshaft that has lower friction.|
|Mustang Shelby GT305R||The GT350R is USD 13,500 higher in price than the GT350. It weighs 60 lb (27 kg) less, thanks to carbon fiber wheels instead of aluminum ones. Since it is designed for car racing, no air-conditioner or audio device is equipped so as to offer more responsive driving.|
|Explorer||The Explorer, which underwent a radical "minor redesign", features new front and rear styling and is mounted with a 2.3-liter EcoBoost engine that replaced the 2.0-liter EcoBoost. As a result, Ford refers to this refreshed model as its new-generation (the sixth) Explorer.|
|The top-end Explorer Platinum was released in September 2015 to compete in the expanding luxury SUV market against the GMC Acadia Denali and Grand Cherokee Summit. Equipped with quilted-leather door trims, wood trimming, Sony's highest grade of audio equipment, and other extras, this model is equipped with interior features and materials never seen in previous Ford models. The new Explorer Platinum is priced from USD 52,970. Other Explorers are priced between USD 31,050 and 43,500.|
|2016||Focus RS||The high-performance 2016 Focus RS will be imported from Germany to the U.S. in the spring of 2016 and will be the first Focus RS to have 4WD. The Focus RS' prices (which start at USD 36,605) and its maximum output (350 hp generated by the 2.3-liter EcoBoost engine) are both double that of the regular Focus. It also is twice as profitable too.|
|Super Duty||The Super Duty will sport an aluminum-alloy body like that used for the F-150. The frame, which consists of 95% high-strength steel, is up to 24 times stronger than the current model and achieves greater towing capacity.|
|GT||The GT is a supercar equipped with a 3.5-liter V6 EcoBoost engine that generates 600 hp, and is built of aluminum and carbon-fiber-reinforced plastic (CFRP). Developed in deep secrecy even inside Ford, it debuted at the 2015 Detroit Auto Show. Ford plans to enter the next 24 Hours of Le Mans, driving the new GT. Priced at around USD 400,000, it will be launched in the latter half of 2016. Ford builds just 250 units of the GT per year.|
|F-150 Raptor||The F-150 Raptor is a high-performance variant of the F-150. While the current Raptor, launched in 2010, comes with a V-8 engine, the new Raptor will mount a second-generation V6 EcoBoost twin-turbo engine; and Ford's first 10-speed automatic transmission, which is being jointly developed with GM. The Raptor provides up to 450 hp maximum output and 450 lb-ft maximum torque. It is going to be priced between USD 50,000 and 53,000. (The regular F-150 models start from USD 26,315.)|
|2017||Subcompact Crossover||Ford plans to import to North America the EcoSport built in India as its subcompact crossover SUV model to compete against the Chevrolet Trax and the Honda HR-V. It will be released in North America in 2017 and carry a new name. Ford needs to make numerous design changes to sell it in the U.S. market.|
|Expedition||The new Expedition also is likely to sport an aluminum-alloy body, like the F-150 and the Super Duty. Ford intends to become even more competitive in the large SUV segment and gain ground on Chevrolet, GMC, and Jeep.|
|2018||Fiesta||The 2018 Fiesta will be larger than the current Fiesta and compete against the Honda Fit. Production is most likely to be shifted from Mexico to Thailand. In addition, by 2018, it might not carry the Fiesta name any longer.|
|Focus||Reportedly, the Focus will get a more round look and drop its dual-clutch transmission. Once the redesign is complete, it most likely will be built in the Cuautitlan Plant in Mexico instead of at the Michigan Assembly Plant, like current models.|
Source: Automotive News dated Nov. 24, 2014/May 25, 2015/ Aug. 17, 2015
Ford investing USD 2.5 billion to revitalize Lincoln brand
|Lincoln Continental to make a comeback in 2016|
Although the Lincoln brand is currently eighth in the U.S. in terms of unit sales of luxury-brand vehicles, in 2014 it posted the largest rate of growth in the segment (15.6%). The Lincoln MKC, which was launched in 2014, is a sister model of the Ford Escape and is the model contributing the most to Lincoln-brand sales. The all-new MKX, a sister model to the Ford Edge, will be launched in the fall of 2015.
In late 2016, Ford plans to revive the Continental, Lincoln's former flagship model that was discontinued in 2002. In 2019, it plans to launch a sister model to the Ford Explorer, which will carry the abandoned Aviator name.
In 1998, Ford sold over 200,000 units of the Lincoln Town Car and Mercury Grand Marquis, its large-sized, conventional luxury-brand sedans. In line with its current plans, Ford will concentrate more on luxury-brand SUVs such as the MKC, MKX and Navigator (the Expedition's sister model).
If Ford can sell 100,000 Lincoln models in 2015, this will become the most units sold since 2008. And if 2015 sales exceed those in 2014, this will become the second year in a row of higher sales year-over-year and the first time since 1997-1998.
The previous CEO Alan Mulally during the 2008-2009 financial crisis had to concentrate on raising efficiencies companywide and strengthening the lineup of fuel-efficient models. As a result, he was rendered powerless in terms of growing the Lincoln brand. In 2014, however, new CEO Mark Fields announced that Ford will invest USD 2.5 billion (USD 5 billion including spending on engineering, advertising and other sales-related expenses for Lincoln.) Ford will develop a new premium vehicle platform that will be highly flexible and can be configured for front-, rear- and all-wheel-drive vehicles, according to industry sources.
In China, sales of the Lincoln MKZ (sister model to the Fusion) and the MKC were launched in 2014, which became the first Lincoln-brand models to be sold in the country. Then, in 2015, sales of the MKX (sister model to the Edge) and the Navigator were launched. The all-new Continental is scheduled for launch in 2016.
Supported by an improved model lineup in terms of segment coverage, and by growing sales in China, Ford aims to sell 300,000 units of Lincoln-brand vehicles worldwide in 2020.
Lincoln-brand new and redesigned models
|2014||MKC||A sister model of the Ford Escape, the MKC was launched in 2014. With 18,000 units sold between January and September 2015 in the U.S., the MKC became the best-selling Lincoln-brand light truck.|
|2015||MKX||A sister model of the Ford Edge, the MKX is loaded with technological advances new to the Lincoln brand, including adaptive steering, pre-collision assist, and a 360-degree camera.|
|2016||Continental||The Continental, which was discontinued in 2002, will be relaunched in 2016．It will be a stretched version of the Fusion's CD4 platform, and will come factory installed with a 3.0-liter EcoBoost V6 engine that has been designed exclusively for the Continental. It comes with either FWD or AWD. The concept version was unveiled in the spring of 2015 at the New York Auto Show. The MKS, a sister model to the Taurus, will be discontinued after the Continental is relaunched.|
|Ford says that the name "Continental" still has a good air or ring to it in U.S. customers. The company will market the vehicle in China also, where many consumers there still consider it to be a symbol of "high society", as portrayed in older American films.|
|2017||Navigator||The Navigator, along with its sister model the Ford Expedition, is getting a redesign based on the F-150's new platform with an aluminum-alloy body.|
|2019||Aviator||The Aviator, a sister model to the Explorer, is planned to be a midsize crossover SUV. It will carry the Aviator name that was discontinued in 2005. Sales of the MKT, released in 2009, will be ended before the new Aviator is launched.|
Highest Q2 profit in 15 years, and even higher profit outlook in 2015 2H
In the second quarter of 2015, Ford achieved its highest quarterly profit in 15 years, since 2000, posting a pre-tax profit of USD 2.9 billion and a net income of USD 1.9 billion. Aggressive launches of redesigned models in the past two years, such as the Ford F-150, Mustang, and Edge; and the Lincoln MKC, have proven to be successful, as evidenced by the positive business results.
The driving force behind the record-breaking business results was Ford's North American operations, which helped to boost the region's operating profit margin to 11.1% and set a record-breaking pre-tax quarterly profit of USD 2.6 billion. Ford anticipates even stronger profit in the second half of 2015, as production of the F-150 and other new models gets into gear.
The all-new F-150's actual selling price is USD 3,200 higher than that of the previous model. Plus, it will be sold with a lower sales incentive. The current standard high-end F-150 variant, the Platinum, will be priced at USD 51,000. However, scheduled for release in 2016 are two ultimate, top-of-the line F-150 models, and they are the super luxurious F-150 Limited with all the trimmings imaginable, which will cost over USD 60,000; and the true high-performance F-150 Raptor. Both of these are expected to contribute to higher earnings.
According to one estimate, the F-150 has continued to generate 90% of the profits at Ford's automotive business.
Ford's consolidated results
|2012||2013||2014||2014 1H||2015 1H||2015 1Q||2015 2Q|
|Wholesales (in thousands of units)||5,668||6,330||6,323||3,250||3,264||1,568||1,696|
|Revenue (in billions of USD)||134.3||146.9||144.1||73.3||71.2||33.9||37.3|
|Pre-tax results (in millions of USD)
|7,966 6,256 1,710||8,608 6,936 1,672||6,282 4,488 1,794||3,980 3,089 891||4,273 3,313 960||1,405 936 469||2,868 2,377 491|
|After-tax results (in millions of USD)||5,596||6,593||4,633||2,300||2,809||1,630||1,885|
Results in North America
|2012||2013||2014||2014 1H||2015 1H||2015 1Q||2015 2Q|
|Wholesales (in thousands of units)||2,784||3,006||2,842||1,477||1,494||678||816|
|Revenue (in billions of USD)||79.9||86.5||82.4||41.6||43.3||20.0||23.3|
|After-tax results (in millions of USD)||8,343||8,809||6,898||3,940||3,937||1,340||2,597|
Ford's vehicle sales by model in U.S.
|2011||2012||2013||2014||Jan.-Sep. 2014||Jan.-Sep. 2015|
|Passenger cars||C-Max Crown Victoria Fiesta Focus Fusion Mustang Taurus||0 46,725 68,574 175,717 248,067 70,438 63,526||13,309 4,429 56,775 245,922 241,263 82,995 74,375||35,210 0 71,073 234,570 295,280 77,186 79,960||27,595 63,192 219,634 306,860 82,635 62,629||21,731 52,403 176,156 240,585 59,831 51,694||17,291 53,868 163,864 231,475 96,225 37,959|
|Light trucks||E-Series/Club Wagon E-Series Van Edge Escape Expedition||25,569 91,305 121,702 254,293 40,499||23,774 98,649 127,969 261,008 38,062||22,651 102,705 129,109 295,993 38,350||14,367 88,896 108,864 306,212 44,632||14,056 75,088 86,051 230,162 32,691||178 38,858 95,709 233,012 30,483|
|Explorer F-Series Flex Ranger Transit Transit Connect||135,704 584,917 27,428 70,832 0 31,914||164,207 645,316 28,224 19,366 0 35,216||192,397 763,402 25,953 0 0 39,703||209,994 753,851 23,822 20,448 43,210||158,652 557,037 18,536 3,310 31,944||190,171 564,451 15,062 86,085 36,827|
|Ford Brand Total||2,057,210||2,160,859||2,403,542||2,376,841||1,809,927||1,891,518|
|Passenger cars||MKS Town car MKZ||12,217 9,460 27,529||12,524 1,001 28,053||10,793 0 32,361||8,160 34,009||6,260 26,769||5,428 22,963|
|Light trucks||MKC MKT MKX Navigator||0 5,024 23,395 8,018||0 7,094 25,107 8,371||0 6,014 23,913 8,613||13,077 4,800 23,995 10,433||6,418 3,725 18,728 5,888||18,237 3,409 15,167 8,760|
|Lincoln Brand Total||85,643||82,150||81,694||94,474||67,788||73,964|
|Ford's market share||16.8%||15.5%||15.9%||14.9%||15.1%||15.1%|
|US Light Vehicle||12,779,007||14,492,398||15,603,678||16,531,070||12,432,208||13,053,284|
Percentage of passenger car and light truck
|2011||2012||2013||2014||Jan.-Sep. 2014||Jan.-Sep. 2015|
|Ford Motor||Passenger car||33.7%||33.9%||33.7%||32.6%||33.8%||32.0%|
|US Light Vehicle||Passenger car||49.6%||51.6%||50.1%||48.0%||47.7%||44.4%|
Source: Automotive News Note: F-Series include the Super Duty. 2014 results: F-150: 70,796 units, Super Duty: 53,055 units
Production Forecast by LMC Automotive: Ford production will be 6.77 million units in 2018
|(LMC Automotive、September 2015)|
According to LMC Automotive production forecast (September 2015), Ford's light vehicle production in 2015 will be 6.43 million units, up by 390 K units (6.4%) from 2014 and then gradually increase to 6.77 million units in 2018.
The increase of 390 K units in 2015 will mainly come from USA (190 K units) and Spain (120 K units).
The largest gains of production increase in USA are expected to come from the full year of Ford Transit and the redesigned Ford Mustang production, according to LMC Automotive. Production in USA will, however, gradually decrease to 2.11 million units in 2018. Ford will move production of the Focus and C-Max small cars from its Michigan Assembly Plant to Mexico in 2018. Production in Mexico will be around 440 K units between 2014 and 2017, however, will suddenly increase to 670 K units, up 51% from 2017.
Production in China in 2015 will be 930 K units, up 6.6% from 2014, in spite of overall slowdown in the market. The main driver is the newly added Ford Escort hatchback. Production in China, after 2015, will increase to 1.13 million units in 2018.
Production in Germany will increase to 800 K units, up 22.2% from 2014.
Production in Spain in 2015 will increase by 120 K units (42.7%). Ford has invested $2.6 billion in its Valencia manufacturing operations, transforming it into one of the world's most advanced and flexible auto plants.
Production in Turkey in 2015 will be 320 K units, up by 85 K units (36.3%) from 2014. LMC Automotive comments; "The production footprint has also changed in 2015 as Ford makes use of its Turkish affiliates (producer of the Transit Courier and Transit van) while withdrawing capacity from higher-cost Northern Europe." Production in Turkey will be over 320 K units through 2018.
Ford global production will be 6.77 million through 2018 (LMC Automotive)
|Source: LMC Automotive "Global Automotive Production Forecast (September 2015)"|
|(Note) 1.||Data indicates figures of only small-size vehicle, including passenger cars and light commercial vehicles with gross vehicle weight of under 6 ton.|
|2.||All rights reserved. Reproduction of any data will require permission of LMC Automotive.|
|3.||For more information or inquiries of forecast data, please contact LMC Automotive.|
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