By on October 9, 2009

The GLADhanders (courtesy:detnews.com)

Unlike Chrysler and GM, Ford has managed to minimize the downward depreciation spiral that’s been plaguing business models across Detroit. In fact, FoMoCo has increased its net pricing by $1.9b in the first half of this year alone. Ford explains this achievement with a reach back to history: a team of 19 P.H.D.s tasked with managing pricing, production and option mixes is given credit, and compared with the “Whiz Kids” of the post-war era in the Detroit News. “They are unbelievable,” gushes Ford’s Jim Farley. “It’s very scientific. I’ve never seen anything like it in our industry.” The Global Lifecycle Analytics Department (GLAD) was formed in 2000, as a modern-day equivalent to the statistical analysis pioneers hired to bring Ford back from the brink of oblivion in the 1940s. By 2005 the team, led by Rose “The Silent Lamb” Peng, had figured out that “the resale value of Ford’s cars and trucks was being eroded by sales of poorly contented vehicles to rental agencies.” Go figure. Let’s hear it for statistical analysis.

Instead of just trying to sell the vehicles to push up volume, we are actually giving the customer higher value with their product and pulling back incentives. At the end of the day, they will have lower cost of ownership and higher residual value.

And how did GLAD reach these conclusions about product mix and strategy? “Before, it was more art than science. Now it is definitely more science-based,” says Peng. And though Ford is spinning GLAD’s achievements as a triumph of neo-Whiz Kiddery, the emphasis on science seemed to yield results that make sense on the good, old-fashioned common sense level. And a rule-by-spreadsheet can have its downsides. Just ask the current batch of Wall Street “Whiz Kids.” Or the original Whiz Kid, Jack Reith, who “scientifically determined ” that Ford needed a new mid-range brand, a calculation that ended up in the Edsel debacle. And I’m not even going to touch the Vietnam War or the transition at Ford to an architectonic corporate panopticon (for obvious reasons).

All the same, results do speak for themselves. And like all things Ford, those results look good… when compared to GM and Chrysler. Can you imagine GM’s Susan Docherty poring over spreadsheets for hours, or earning the nickname “Silent Lamb”? Besides, even Peng admits that the Whiz Kid allusion is pure Ford PR. “I don’t think we can compare ourselves with them,” she says. “It is enough of a reward for us when the company uses our models.” Which is something no original Whiz Kid, a pack of high-flying, we-know-best executives, would have ever been caught dead telling a newspaper.

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80 Comments on “Ford Touts “New Whiz Kids”...”


  • avatar
    tced2

    They had “whiz kids” on Wall Street. The folks who created all the derivatives that were supposed to be immune to losses. That didn’t work out so well. I hope this set of “whiz kids” do better.

  • avatar
    mikey610

    Seriously, 19 PhDs to figure out that sales to rental agencies drag down residual values.

    Their next assignments: Predicting if the sun will rise in the East tomorrow, and determining the probability that the next week will contain 7 days.

    If they wanted to write the real story, they might focus (pardon the pun) on how Ford actually listened, and took action when presented market facts. Something GM and Chrysler still can’t figure out.

  • avatar
    jpcavanaugh

    Wow. See a problem, find a solution, put it into practice, and see if it works. It is sad that this is such a newsworthy event in a modern American automobile company.

    On the Edsel, I wouldn’t bash Reith too badly. Ford was trying to go head to head with GM in the 50s, and Reith knew that would be impossible with the old Ford Mercury Lincoln structure. Edsel was to be placed above Ford, and Mercury would move upmarket into Olds/Buick territory. The mid price market was where the growth was between 1945 and 1955. IIRC, Buick was the Number 3 seller in 1955. Unfortunately, the Edsel’s debut coincided with a nasty recession which killed the middle price market (it did not recover until the mid 60s). Rambler was the new number 3 seller in 1958 and the Studebaker’s Lark was a big hit in 59.
    Also, when Robert McNamara (another of the whiz kids) ascended to the head of Ford, he did his best to kill the Edsel, pushing Ford’s price range up and Mercury’s down, until the Edsel was a car without a parking place in the Ford pecking order. Add the fact that Edsel was drastically de-contented and more overtly Ford-like in 1959 (and even more for the nearly-aborted 60 model) and there was no way the car could recover.

  • avatar
    taxman100

    It’s Corporate America – the entire purpose is to “CYA” when it comes to making decisions.

    Create a “committee”, or better yet, hire outside consultants that can be blamed if things do not turn out correctly.

  • avatar
    grog

    Seriously, 19 PhDs to figure out that sales to rental agencies drag down residual values.

    Actually, it probably did take all of them to produce the *metrics* needed to show the corporate suits how the “art” mentioned in this story translates into figures.

    In the whole post-Demming world of the corporate insane (and this extends to the public sector to despite what most of the resident Repups and Glibertarians percieve), metrics rule uber alles…even if they don’t apply to the problem at hand. So, in order to speak in a language the suits understand, yeah, it does take 19 PhDs.

    At least in this case, it appears metrics do apply and were used in an appropriate way in concocting corporate policy.

  • avatar
    Autosavant

    Sounds like one of these “How many PhDs do you need to screw a lightbulb”

    make it a low-energy using expensive lightbulb.

  • avatar
    Autosavant

    Ford seems impressed with these 19, and I think I know why. I did teach automotive engineering courses to almost exclusively Ford Engineers a few years ago (I also had about 19 distance students from Ford and other makers, incl. the daughter of a recently retired Ford VP), and I was really shocked by their math illiteracy and general lack of any serious brainpower. They were trying to get their masters at a top U that shall remain unknown.

  • avatar
    Chicago Dude

    When explaining things to a reporter, you have to dumb down anything relating to math, science, or finance.

    Chances are probably very good that these “Whiz Kids” have a slightly more complicated job.

  • avatar
    TonyJZX

    this reminds me of robert mcnamara and his whole ethos of using maths to bomb the hell out of the germans

    i don’t think however these PhDs will convince me to buy a Ford… besides the Mustang they just don’t have that ‘pull’… oh and the Raptor SVT is pretty decent too

  • avatar
    Gunit

    I’ve seen this repeatedly in business over the years; every low level peon can see the problem, tries to tell management and gets some variation of ‘get back in line’. Management then hires some overpaid consultant to come up with the same solution and lauds them as brilliant and pays them a truckload of cash.

    Next thing you know they’ll come up with a fancy metric to explain why spending a couple hundred more on interior materials is good., or why confrontational dealers are bad….

  • avatar
    Tiger Commanche

    What a handsome bunch.

    I just completed a multiple linear regression analysis and determined within a 95% confidence interval that the only “modeling” these 19 PhD.’s will ever do is “predictive.”

  • avatar
    TonyJZX

    btw. PhD should be written like I just did… and it usually stands for “Piled high and Deep”

  • avatar
    Samuel L. Bronkowitz

    They’ll be whizzing in their undies if someone holds them accountable for actually turning the company around.

  • avatar
    Autosavant

    “In fact, FoMoCo has increased its net pricing by $1.9b in the first half of this year alone. Ford explains this achievement with a reach back to history: a team of 19 P.H.D.s tasked with managing pricing, production and option mixes is given credit, and compared with the “Whiz Kids” of the post-war era in the Detroit News. “They are unbelievable,” gushes Ford’s Jim Farley. “It’s very scientific. I’ve never seen anything like it in our industry.”

    Call me a cynic, but this sounds like the kind of 100%, USDA-choice BS LaNeve would come up with.

    Farley is no better. Mullaly would do well to fire both Farley AND Fields, and if possibly NOT replace them.. at least not with some clueless inbred chick like GM has.

    “IT IS THE PRODUCT, STUPID!!!!!!!!!!!!!!!”

  • avatar
    tparkit

    Total crap. This smacks of Ford trying to appear at once cutting-edge, hip, youthful, futurist, and progressive. Yup, a company certain to lead the way making smart products for world markets.

    BTW, if Rose Peng had a leadership brain in her head she would never have allowed herself to be photographed in a way that brutally diminishes her team members. Just one more bit of proof that she isn’t actually in charge of anything meaningful, and that none of these people have real jobs at Ford.

  • avatar
    Autosavant

    Just when we started Hoping that FOrd got its act together, we see this LUDICROUS Story!

    “IT IS THE PRODUCT, STUPID!!!!!”

  • avatar
    chainyanker

    Looks like they scoured the earth to find the best team members. Well, at least a very specific portion or the earth, anyway.

  • avatar
    tscurt

    No matter what they do or don’t, it is disenchanting to look at the picture and realize that if you want to hire whiz-kids these days, apparently they’re found in a certain ethnic group and it isn’t mine. Good thing they’re here.

  • avatar
    reclusive_in_nature

    Looks like they scoured the earth to find the best team members. Well, at least a very specific portion or the earth, anyway.

    +1 Yeah I thought the group looked a little disproportionately Asian as well. You’d think when you’re main target area is a giant melting pot you might want to diversify the team a little. Nice to see Ford not caving to affirmative action though.

  • avatar
    Autosavant

    “I thought the group looked a little disproportionately Asian as well.”

    When I first saw the pic, before reading the title, I assumed it was a meeting at GM’s SAIC SHanghai Automotive.

  • avatar
    kps

    The disdain for PhDs here is interesting. I think it’s remotely possible that they might actually know more about their field than a random internet poster — and that Ford (and American business in general) would be better off with more PhDs and fewer MBAs and LLDs.

  • avatar

    Not sure about the “kids” part.

    Must say I find Ford’s packaging far simpler and clearer than GM’s or Chrysler’s. I’m not sure if this helps sales or profits, but it does make the cars much easier to add to my pricing and specs database :)

    I do wonder what sort of research they do to figure out how to package options.

  • avatar
    Autosavant

    it is NOT any disdain for any PHD, it is a disdain for the incompetent, failed US Automakers, who have been losing Home Games to the Imports 35 years in a row, and instead of finally UNDERSTANDING that the key to success is

    “THE PRODUCT, STUPID!!!!”

    they go hire 19 so-called “PhDs” from unidentified Univs. and task them to do GIMMICKS instead of TRUE INNOVATION AND PRODUCT EXCELLENCE.

  • avatar
    Autosavant

    I have a far higher regard for the Ford team that came up with the outstanding ECO BOOST engine,

    than this bunch that has accomplished NOTHING even remotely like that, but instead showers us with trivial BS any ACCOUNTANT with a BACHELORS, much less an MBA, can figure out easily, such as resale value and lifecycle cost.

  • avatar
    Autosavant

    Can these 19 PhDs help design an ATTRACTIVE, INTELLIGENT, High-MPG Fusion replacement?

    Can they make it ACE the Car and Driver comparison tests and leave the accords and passats and camrys in the DUST?

    THAT I would respect.

    But I am 99.99% sure that this SMOKE AND MIRRORS BS will accomplish NOTHING of the kind.

  • avatar

    @ tscurt: It’s something I’ve picked up on, too. I wonder if this is indicative of who our new paymasters will be in the next 10 or 15 years….

  • avatar
    Autosavant

    If the 19 “geniuses” (NOT!!!) REALLY saved Ford all that money, I will look for PROOF when Ford posts their next earnings per share.

  • avatar
    Dynamic88

    3 takes-

    Take one; It takes 19 PhDs to figure this out?

    Take two; Thanks for the mathematical proof. It’s sort of an airy-fairy philosophical idea -that de-contented rentals are dragging down resale values- I’m not sure I’d be willing to believe it otherwise.

    Take three; Ford now understands what every average Joe has understood for years. That doesn’t quite put them in the same league with Toyota, but it puts them above their D-based competition.

  • avatar
    Autosavant

    (and even if FORD’s EPS rise, it is still not proof that it was the “gang of 19″‘s working.)

  • avatar
    wsn

    mikey610 :
    October 9th, 2009 at 12:59 pm

    Seriously, 19 PhDs to figure out that sales to rental agencies drag down residual values.

    Well, actually, I do think research work is needed to prove that.

    Your gut feeling isn’t always correct. Such as seen in the case when people believed that the earth is flat. It’s only a hypothesis before it’s scientifically/statistically proven.

    To add to that, many of the posters believed that having too many dealerships hurts GM’s profit outlook. I don’t buy that theory and would like to see some real research work on that. At least Ford isn’t cutting any dealership (yet). Probably these PhD’s do know more about the car business than the typical TTAC’er.

  • avatar
    Bunter1

    wsn-good thoughts

    The way everybody is just teeing off on these folks is pretty lame…sounds more like envy than confidence.

    Results are results, I resently saw a 10 year chart of market share for the top 5 sellers in the US market.
    Every one of the Debtroit makers shows distinct turn in the last year, two turned down more steeply than before, one is turning up.

    No prizes for guessing who is who.

    Bunter

  • avatar
    Detroit-Iron

    If Obama hires one of that crew to run the GWOT, the Vietnam analogy will be complete.

  • avatar
    Telegraph Road

    It’s strange that folks here are passing judgment on this team’s work without actually having seen or reviewed it, only based on a short and undoubtedly simplified description of it given to a reporter. And their ethnicity is irrelevant.

    Tom Friedman wrote in the NY Times: “When the best brains in the world are on sale, you don’t shut them out. You open your doors wider. We need to attack this financial crisis with green cards not just greenbacks, and with start-ups not just bailouts. One Detroit is enough.”

    Friedman would be impressed with this team in Detroit.

  • avatar
    WetWilly

    Their second accomplishment – after a week of 20-hour days, the “Whiz Kids” determined that SHO was pronounced “show.”

    After that, Farley realized Ford needed to let the world know who these geniuses are.

  • avatar
    NulloModo

    While the product is ultimately the most important piece of the puzzle, getting people to buy it and pay the most they are willing to is also important.

    The Chrysler Pacifica wasn’t a bad car when it came out, but they pushed heavily optioned upper trims hard and nobody wanted to pay that amount of money for it, which led to steep discounts, huge depreciation, major losses on leases and ultimately a failed vehicle.

    Similarly the VW Phaeton was an incredible car from an engineering standpoint, but it sold worth bupkiss because it was priced out of the market.

    On the other side of the coin, Honda could have still sold as many Fits as they did last year if they had increased the cost to dealers by $1000 per unit, but would have made a boatload more money.

    This also ties in with the story from yesterday about 30 day vs 60 or 90 day inventories. Having the right blend of options packaged the right way at the right price means you can have shorter supplies and still help the majority of customers get the car they are looking for.

  • avatar
    grobby22

    Will never understand the amount of anger and sarcasm and jumping on the band wagon of critisim this board seems to create. If someone has a good idea then give them credit. Ford is in much better shape than the other Two, lets see if they can keep it going.

  • avatar
    davejay

    Seriously, 19 PhDs to figure out that sales to rental agencies drag down residual values.

    The world is full of people who think they know better than everyone else; it is not uncommon for people like this to let go of their egos only when presented with a ridiculous amount of statistical data from people who have credentials that prove they’re smarter, ideally many of them. From that perspective, 19 PhDs sounds just about right.

  • avatar
    dwford

    If Ford has figured out a way to improve it’s net pricing in a down market, more power to them!

    This also ties into Ford’s push to reduce buildable combinations for all its models. Fewer oddball units = less discounts.

  • avatar
    rmwill

    Seems thats some of the posters here are much like Susan Docherty of GM. Think about that.

  • avatar
    Telegraph Road

    Wall Street’s physics PhDs may have brought its downfall, but Ford’s financial unit is not, and has never been, a TARP ward like its brethren at GMAC, Chrysler Financial, Citibank, Bank of America, JPMorganChase, and countless other financial institutions. Ford’s “whiz kids” deserve some respect.

  • avatar
    PeteMoran

    @ dwford

    If Ford has figured out a way to improve it’s net pricing in a down market, more power to them!

    Thanks. (Almost) the only sensible comment here.

  • avatar
    WetWilly

    I’ve read the article and I don’t see any mention of the “Whiz Kids” working their magic at Ford Financial.

    There is some other interesting repricing stuff in the article that I doubt will be revisited upon future failures, e.g. the “Whiz Kids” apparent involvement in the ridiculous price of the Taurus SHOw. Did their model fail to account for the existence of the Lincoln MKS Ecoboost that’s priced in the same neighborhood? To their credit, though, it only took 5 years for their models to figure out the rental fleet sales issue.

  • avatar
    MMH

    If this post were changed to, “Ford hired a bunch of PhD engineers to really quantify the issued in their manufacturing process” all the engineering types would be salivating over the upside. Instead, because these people elected to pursue postgraduate educations in a different field, but go into the same damn industry with the same damn goals, they get snarked at.

    Here’s the part I’ll get smacked for:
    @Autosavant – Try engineering a post with a reasonable thought process and an answer or two. Going all ADD (sorry Robert) on the caps lock key and screaming the same nonsense over and over is akin to Al Davis wondering why his hugely inspirational “Just win, baby!” campaign doesn’t have the Raiders in the Superbowl every year.

  • avatar
    NulloModo

    WetWilly – The SHO starts at around $38K, the MKS EcoBoost starts around $48K, I’d hardly call a $10,000 difference the same neighborhood. Fully optioned out both cars are still around 10 grand apart at $45K and $55K.

  • avatar
    50merc

    This team looks disproportionately Asian-origin because that’s the ethnic that tackles the hard subjects, like math and science. Ford would have to use supercharged Affirmative Action to get Joe College and Suzy Sorority on this team.

    These whizzes are doing valuable work — for Ford, that is. They figure out how to get me to cough up $1,000 for an option package when all I really want is a $400 component, not the overpriced fripperies that are thrown in.

    Go read NulloModo’s 5:09 comment again. He’s right on all points.

  • avatar
    rochskier

    @ Autosavant:

    I was really shocked by their math illiteracy and general lack of any serious brainpower.

    I’m not surprised by the first part at all. I’m an engineer, I was hired as an engineer, but my company doesn’t ask me to use my math background often.

    They’d rather I’d wet-nurse my drafters, do my planner’s job, and troll through the financial system to look at upcoming production numbers.

    It’s amazing how some knowledge vanishes in 3 or 4 years if you’re not using it regularly.

  • avatar
    mtymsi

    Wonder how many $45k Tauruses they’re selling. Unbelievable, I had no idea they were that expensive.

  • avatar
    dwford

    Hyundai figured out a way to rejigger the options packages on the 2010 Genesis sedan to raises prices by about $1800 vs the 2009s.

  • avatar
    Steven Lang

    Statistical analysis and building decision models that predict consumer behavior is critical for ALL car companies.

    Here’s an example that really hits home.

    Back in 2006 Daimler-Chrysler was shoving some of the strangest optioned vehicles I have ever seen. Long wheel base minivans with premium sound systems and power everything… but no rear air. Dodge Dakotas that had the upscale trim, but rolldown windows. I was seeing many of these literally hit the auctions before they were sold in the showroom. The dealers couldn’t do anything with them at all and either sold them with an MSO or ‘arranged’ to have a hailstorm write-off thanks to a freak storm in Atlanta that year.

    Now if this were a smart company with strong dealer relations none of these terrible decisions would have even be considered. But when an idea is floated around related to features and options, you have to use metrics to prove it. The reason is that millions of combinations are possible and you have to figure out the ones that will enable you to charge the most money. Like it or not, they all do it.

    If Chrysler had done the predictive modeling and dealer consultations before building thousands of those lame ducks vehicles, they may not have suffered the worst depreciation levels of the big three at that time.

    As it is these models did nothing but cheapen the brand, stuff the dealers with unusable inventory, and damage Chrysler’s overall resale values at the auctions and elesewhere.

  • avatar
    MMH

    +1 Lang

  • avatar
    WetWilly

    @NulloModo

    Fully optioned out both cars are still around 10 grand apart at $45K and $55K.

    You’re partially right; last I checked, the $3K MKS Ecoboost Appearance Package wasn’t available. And a check of Edmunds TMV of comparably equipped MKSes and SHOs showed a $6K difference.

    Given that and considering the accuracy of the “Whiz Kids” super pricing models then why is Ford already offering incentives on all Ecoboosted models? The Flex Ecoboost has barely been on dealer lots and there’s already $2500 in incentives on the hood.

  • avatar
    tparkit

    grobby22 : Will never understand the amount of anger and sarcasm and jumping on the band wagon of critisim this board seems to create.

    Try this explanation: Detroit’s failed and failing automakers, and their unions, have their snouts in the public trough for somewhere north of $100 billion, with much more to come. When one of them rolls out gee-whiz hype with an accounting abstraction like “increased (Ford’s) net pricing by $1.9b”, there’s going to be pushback. Ford has been beating the “net pricing” drum in its press releases for many years, as a way of showing progress despite questionable financial results. Net pricing, however, can be raised simply by selling more vehicles from model lines which carry higher prices, or by reducing incentives. Net pricing can increase simultaneously with sales slumping badly, productivity falling, and competitors nipping at the heels. It makes a great talking point when all else fails, and a handy, Volt-style distraction when a company is preparing to ask for yet another federal handout. Giving (oops, I mean “lending”) money to Ford can thus be positioned as an investment in a glowing future for industrial America.

    In-the-know readers, such as the ones on this board, remember the history of how the domestic auto industry is looting the American taxpayer. Like the Obama administration’s attempt to hide behind a claim that its stimulus will “save or create three to four million jobs over the next two years,” — a deliberately unverifyable metric — Ford’s happytalk about its whiz kids cuts no ice.

    It’s remarkable how you defenders of the government/union/industrial complex come out of the woodwork in a pack. Perhaps this is evidence of how influential TTAC has become, especially when it comes to keeping the American Citizenry informed about the auto axis.

  • avatar
    FloorIt

    @Dynamic88
    yes, it’s better to have some actual data to back something up than just a hunch that X is the reason.

    @NulloModo
    Chrysler did the same mistake in early 80’s with the K cars when they came out. Fully loaded models on the lots but pricing in ads were for base models.
    Back then option groups other than sport package were just starting to appear and you typically would have on dealer lots cars with piecemeal options like auto trans but only AM radio, bucket seats but 6 cyl. engine. I had to order my cars because dealers had fully loaded or base models on the lot, not the way I’d like them.

    Hope the new Whiz Kids can say with numbers why I have to get a sunroof to get a iPod sync system in my stereo. Do most purchasers want it that way or am I guessing?

  • avatar
    Rix

    My guess is that they are using some pretty sophisticated databases to troll through demographics to produce vehicles tailored to the market in specific quantities and price them to produce maximum profit. There are way more variables than price here.

    For example, if you can reduce the number of cars on lots without affecting sales. It is costing the company at least 12% of the car’s value per annum to sit on the lot. Because that is what they are paying in interest on their working capital at the margin. Say 2k-3k per year per car on the lot. Sure, the dealer pays floorplan interest, but that is still capital in the business by your dealers which gets filtered through into the cost of the product.

  • avatar
    NulloModo

    WetWilly – You don’t need the EcoBoost Appearance Package to get one to $55K – just take the top rapid spec and add 20″ wheels, self parking, adaptive cruise control, and extra wood in the interior. We have a couple optioned out that way on the lot right now.

    TMV pricing reports are a bit iffy considering how new the models are, I know we haven’t sold a Taurus for below sticker yet, though we just recently received our first SHO model. If you spec out a Taurus to about the same level of equipment as the base ecoboost MKS you end up with about a $7500 difference, although it isn’t apples to apples as the way options are packaged on the two models is different. In the end the point is that we haven’t had any real cross shopping between people looking at the MKS and people looking at the Taurus, the Lincoln buyers want the luxury badge, and the Ford buyers see the extra value in the Taurus.

    As far as the rebates go, there is a method to the madness. A lot of it has to do with getting deals financed through various banks, and the way that certain banks look at a loan to accept or refuse. Most banks will typically only finance 110 – 125% of a vehicle’s value (and whether they figure that from MSRP or invoice differs with the bank). Customers coming in with trades that have negative equity need those rebates to help ‘erase’ that negative equity in the eyes of a bank. A $30,000 car with a $2,000 rebate effectively sells for the same price as a $28,000 car with no rebate, but the car with the rebate and the higher original MSRP will be easier to get financed for a customer coming in with negative equity in their trade.

  • avatar
    dwford

    As far as the rebates go, there is a method to the madness. A lot of it has to do with getting deals financed through various banks, and the way that certain banks look at a loan to accept or refuse. Most banks will typically only finance 110 – 125% of a vehicle’s value (and whether they figure that from MSRP or invoice differs with the bank). Customers coming in with trades that have negative equity need those rebates to help ‘erase’ that negative equity in the eyes of a bank. A $30,000 car with a $2,000 rebate effectively sells for the same price as a $28,000 car with no rebate, but the car with the rebate and the higher original MSRP will be easier to get financed for a customer coming in with negative equity in their trade.

    Where is the first place a car salesman will take you if you still owe a lot of money on your trade? To the car on the lot with the highest rebate – for this very reason. Many many people buy a new car before paying off the old one.

  • avatar
    gaspassoregon

    are they the ones who figured that a 48k ford will fly? I drove and was very impressed w/ flex ltd w/ ecoboost- quiet, fast, tight, especially nimble for size (drove right after 2008 awd taurus x demo) and practical. I don’t know who affords these straight up, or at least is willing to go down that road? Perhaps the same people who were buying/leasing the hundreds of thousands of explorers? Impressed as I was, to soak the depreciation at that price point on a Ford seems a bit unfathomable (I watched my 60k 2006 5 series wagon end up valued 10k below its residual at 3 yr lease end- thanks for the advice dealership manager!- some of the best advice I ever got inside a dealership.) I dunno how Ford can move that type o metal.

    I know they are targeting Audi at times, but wow! perhaps a few more years of those “halo vehicles” performing and retaining real market value (ala Lexus introductory pricing perhaps) prior to that kind of customer exposure.

    I just can’t justify using/risking my hard earned money to subsidize the failings of these manufacturers to anticipate what was blatantly obvious. If we don’t support them, this country is going to be a backwater until a new manufacturing business model creates wealth. Personally, I’ll end up with a Toyota or Subaru again with this kind of new car pricing.

    Ironically, in the future we may end up the new low cost labor manufacturing hub (vs SE Asia) as we allow the American manufacturers to sink in the muck they created.

    48k indeed…

  • avatar
    NulloModo

    gaspassoregon –

    The thing is, $48K Fords have been flying for quite a while. Shelby Mustangs sit in the upper 40s/low 50s (coupe vs convertible) range, Super Duty trucks, especially diesel models, can easily top $50K, or even $60K for top trim models, King Ranch and Limited Expeditions price out above $50K when you give them some options, and we sell a lot of Platinum and King Ranch F150s that sticker at $45K+.

  • avatar
    dwford

    $48k may seem like a lot for a Ford, but have you priced out a Chevy Traverse? You can easily get up there.

  • avatar
    Monty

    @mtymsi :

    Wonder how many $45k Tauruses they’re selling. Unbelievable, I had no idea they were that expensive.

    http://www.thetruthaboutcars.com/september-sales-snapshot-mid-versus-full-size-fwd-sedans/

    No answer to how many of the top end $45K Tauri were sold, but in only it’s second month Ford moved 5,077 of them, apparently close to MSRP pricing. Some B&B members that are also Ford salespeople have noted that the Taurus is moving off lots as fast as they arrive at the dealers, which was also confirmed at my local dealer yesterday while I was waiting for my car. The salesperson I was speaking with noted that the dealership had only received 6 Tauri for September and sold all of them for almost list price.

    If Ford’s GLA Department was tasked with achieving higher transaction prices, perhaps they’re doing their job.

    One of the constant criticisms of the D3 was the amount of rebates needed to move the metal off the lots. If FoMoCo is increasing market share, and if transaction prices are closer to list, and if cutting costs without decontenting the vehicles is being achieved then hasn’t Ford answered the criticisms? In other words, Ford has done what the B&B has suggested, and yet this discussion has deteriorated into denigrating the GLAD members ethnic background and the relative merits of engineers, and complaints about higher prices on Ford vehicles, as well as questioning the validity of FoMoCo’s reporting of gains in transaction pricing as nothing but smoke and mirrors.

    Holy cow, does every auto manufacturer do everything wrong? Maybe I’m a “glass half full” kind of guy, but this is a positive coming out of Detroit in my mind.

  • avatar
    shaker

    IIRC, a few years back, Ford closed several plants and put a lot of line workers on the street in correctly predicting the downturn of the industry. These workers likely collected unemployment, paid less taxes, etc. thus placing a burden on the remaining taxpayers. This amounts to a “stealth bailout” (in my opinion), quite possibly engineered by these “whiz kids”, and while being what amounts these days to “sound business practice”, there are (permanently) laid off Ford employees who would look at that photo with jaundiced (yes, I went there) eyes.
    If these same “whiz kids” somehow give Ford a rebound in market share that would result in getting these well-paid workers back on the line, then I think some sort of moral reparation would be achieved – but my “spider sense” says that Ford will be building more cars in Mexico and overseas, with the hope that highly-paid PhD’s will consider a new Taurus, which is priced well beyond what the vast majority of American workers (in the “service sector”) can afford.

    Whew! the secretions from my “xenophobe gland” have subsided… Best of luck to FoMoCo.

    Edit: Full disclosure – I own a Hyundai Elantra. I shopped Civic, Versa, Rabbit, Impreza, Focus. The Focus was the biggest disappointment… pricing was way higher over the similarly equipped Elantra SE, and despite the Elantra’s somewhat “homely” appearance, the Focus’ schizophrenic design language (compared to its predecessor and Euro brethren) was a complete turn-off to me.

    A Ford Edge just drove up the street, (sounding like a manatee recently run over by a cigarette boat) as its little V6 mill struggled to haul 4300 lbs up a 5% grade. “EcoBoost” will help, but the vehicle is just too friggin’ heavy to see any “Eco” out of the “Boost”.

    The only reason that Ford has the market share it does is not because they make and market superior vehicles, but because of sour grapes over the GM/Chryco bailouts narrowing the choice for people who wish to buy “domestic” (who probably harbor prejudices of their own).

  • avatar
    50merc

    Quite a change from FoMoCo’s early days. Ol’ crazy Henry’s business model relied on steadily lowering prices to achieve tremendous volume that would yield the efficiencies that would allow a small profit per car. It worked.

    NulloModo reports “I know we haven’t sold a Taurus for below sticker yet” and “we sell a lot of Platinum and King Ranch F150s that sticker at $45K+”.

    Wow, fat times for Ford dealers. I like FoMoCo’s products, but hopefully Hyundai will be more customer-friendly. Maybe with the halo gone Camry will get cheaper. If only Mazdas didn’t look so darn goofy.

  • avatar
    BuzzDog

    @monty: “Ford salespeople have noted that the Taurus is moving off lots as fast as they arrive at the dealers, which was also confirmed at my local dealer yesterday while I was waiting for my car.”

    Last Wednesday I picked up a 2009 Taurus as a new company car; this was the lst 2009 that this particular dealer had in stock in what I refer to as “fleet spec” (base model, minimal options, white, gray interior).

    Interestingly, this dealership was also low on 2010 Tauruses/Tauri, and was selling them rather quickly. What’s even more interesting is that the pricing on the 2010 base model is not nearly as attractive as that of the 2009. So it seems as though this observation is correct; the brain trust created by Ford has determined that the resale value of the Taurus is negatively impacted by having thousands of them on the road in refrigerator white, with nothing but basic options.

    From a selfish standpoint, it’s a bit of a shame…this new company car is pretty sweet. For a free car, that is.

  • avatar
    Steven Lang

    So Shaker. You have bought a vehicle that came from the most heavily protectionist developed nation on Earth… and then accuse Ford of ‘placing a burden on the remaining taxpayers’.

    Here’s a bit of background for South Koreas restrictive policies on their auto industry.

    http://www.cvma.ca/eng/issues/southkoreatrade.asp

    Similar restrictions and barriers are placed on electronics and steel.

    Here’s a little dirty secret. Free trade is a myth when it comes to international trade. The sooner we acknowledge this, the better our nation’s long-term health will be.

  • avatar
    NulloModo

    50Merc –
    I didn’t mean to imply the Platinum trucks are all selling at sticker, definately discounts availible there, but many of them still end up in the mid 40s after discounts and extra customer purchased options are put into the picture. Also, just because the MSRP of a vehicle is high doesn’t mean the dealer makes a lot selling it. There is more profit selling a $20k Focus $500 over invoice than a $63k Super Duty $100 over invoice.

    Being able to hold close to MSRP isn’t being unfriendly to customers. Right now it is just supply and demand, more people want the new Taurus than the factory can supply cars to. If we have two customers for the same car and one is willing to pay sticker while the other wants to haggle, which do you think is going to get it? Bargain shoppers all know not to go after the brand new model when it is still hot. Give it a couple months or enough inventory to saturate the supply chain and there will be competitive discounting on the Taurus.

  • avatar
    Autosavant

    Ford should be totally ashamed of itself and never have publicized this utter FARCE!

    Common sense was not enough, it needed not one, but NINETEEN Effing PhDs to figure out that when you sell your POS at deep discounts to RENTAL FLEETS, you will screw up the resale values?

    Give me an effing break!

    How effing STUPID are these people?

  • avatar
    Autosavant

    “Right now it is just supply and demand, more people want the new Taurus than the factory can supply cars to.”

    Well, DUH!!!!

    Of course you do not have enough Tauruses, not only is it a NEW model, Ford has restricted its production to a VERY PESSIMISTIC 100,000 a year.

    Compare that to the 400,000 Tauruses of the excellent FIRST Generation, the Vehicle that SAVED Ford in the 80s, and which sold more vehicles each year back then than the Accord and even the Camry!

    How have the times changed! Now Ford hopes to sell less than 25% of that number, even in the first year of the attractive and exciting new Taurus, while each one of the Accord and Camry sell 400,000 and 450,000 pieces a year!

  • avatar
    Monty

    @Autosavant

    The competitors to the Taurus aren’t the Camry/Accord though, they’re the Avalon/Azera/Impala (Honda having no full-size model)*. Based on the nine month SAAR for 2009, if Ford can sell 100,000 (or 9,000 per month) it will be a success. The Ford Fusion/Mercury Milan/Licoln MKZ is the car that Ford would hope to sell 300,000 units to compete with Camry/Accord. Remember, Ford sold 400,000 Tauri in 1986, which was also a high water mark in vehicle sales of 16 million units, so to expect sales of 400,000 units of the Taurus in a year where sales may not crest 10 million is, to me, somewhat unrealistic.

    *The Honda Accord is now so bloated that it could be a full-size sedan.

  • avatar
    gaspassoregon

    I will be curious to see October and November results, whether the numbers keep going post c4c. Inventory of desirable, family capable(i.e. Moderately fuel efficient) vehicles is abysmal. Walking into a Toyota or Mazda dealer right now you would never know that we were in the middle of a 9-10 millon pace. I think the decimation of the market is really the disappearing of the gm n chrysler; 48k fords may/not continue to fly close to msrp. In reality, I think new cars are going to become much more of a luxury, much like air travel already has.

  • avatar
    50merc

    Thanks, NulloModo, for your reply. You’re right, of course: it’s supply and demand.

    “There is more profit selling a $20k Focus $500 over invoice than a $63k Super Duty $100 over invoice.”

    Double wow!

  • avatar
    dkulmacz

    tparkit,

    Your screed is better suited to a thread on GM or Chrysler, you should take it there.

    Your implication that increase in net pricing is a meaningless smoke and mirrors metric is laughable. Moving customers into higher-priced vehicles is not something that can be done by anyone on a whim, in order to manufacture artificial sizzle. It’s a very real sign of improving product. And to imply that reducing incentives is anything but good is ridiculous. To do all of this while also increasing market share in the midst of a recession is an impressive feat.

  • avatar
    tparkit

    dkulmacz, thanks for the smoke and mirrors. Here’s some water, and a rock:

    — Ford has not been moving customers into higher-priced vehicles. It has been selling fewer lower-priced vehicles. That raises the average price, and hence the net price.

    — Reducing incentives is an easy call when a company can raise profits merely by selling fewer of certain models of cars to certain classes of customers. Let’s ask, why would a company build and sell such cars for so long? And why should the taxpayers bail it out?

    — Market share is relative to competitors. Recession (or boom) conditions mainly govern the size of the total market, not how share flows between market participants.

    — Ford has increased market share recentlythanks to an absolute meltdown by its only two competitors for the buyers of “American” cars. We should only be astounded if this didn’t happen.

    — Let’s drop back to better benchmarks to see how the auto makers are doing. Here are the changes in US units sold by the major competitors over five years, comparing Sept 2009 to Oct 2004:

    -58% Ford
    -55% GM
    -63% Chrysler
    -29% Honda
    -26% Toyota

    Yup, Ford, down 58%, is just kicking butt on its competitors. Ford’s Whiz Kids and the glib, mediacentric talkers occupying the corner offices can take credit for as much of this confidence-inspiring performance as they want to. Then again, I think they would much rather talk about net pricing.

  • avatar
    PeteMoran

    @ tparkit

    Ford has not been moving customers into higher-priced vehicles. It has been selling fewer lower-priced vehicles.

    Eh? That statement doesn’t make any sense to me sorry.

    Ford has increased market share recently thanks to an absolute meltdown by its only two competitors for the buyers of “American” cars. We should only be astounded if this didn’t happen.

    I think you’re missing the key significance of shifting market share. It’s about the customer after-all. What is the customer choosing?

    The “departing” customer (from GM/Chrysler) has to evaluate their alternatives. The fact that Ford are in consideration with Toyota/Honda is the significance. No, not at the same rate. But Ford’s retention rates and market share are rising, albeit slowly. This means they’re getting themselves into the consideration of customers that would otherwise be moving to Toyota/Honda/Hyundai etc, away from GM/Chrysler.

    Here are the changes in US units sold by the major competitors over five years….

    Why do you switch to units sold?

    Retaining (or growing) market share and rising unit margin are about the best two KPIs Ford could hope for I think. Don’t you?

    The rest of the business structure has to execute as well now.

  • avatar
    don1967

    Whiz kids make a nice complement to old farts, but never a replacement. Intelligence and wisdom are two different things.

    The more I see Ford’s young PhDs schlepping turbochargers, capless gas tanks and other silly gimmicks in an attempt to distance the company from GM and Chrysler, the more I believe that the company is merely running off a different cliff.

  • avatar
    shaker

    Steven Lang:
    “So Shaker. You have bought a vehicle that came from the most heavily protectionist developed nation on Earth… and then accuse Ford of ‘placing a burden on the remaining taxpayers’.

    South Korea’s trade policies make sense for a small, land and sea-locked nation with limited natural resources; import raw materials, export more expensive value-added products. It wouldn’t make sense to import a significant number of cars to “balance” trade; their economy would collapse, and we’d damage an ally with a well-equipped (albeit, partially starved) Communist army on their northern border.

    All I’m saying is that Ford is not the glowing “castle on a hill” everybody paints them to be these days; they’re just another corporation that would rather hire a bunch of high-paid knuckleheads to squeeze every last dollar out of mediocre products as opposed to making innovative, fresh products that are so desirable that people will buy them on their own merits. The second step would be to design these superior products to be produced in USA factories to drive down unemployment and actually regenerate the market for their higher-priced cars.

    Of course, such a grandiose plan could only be pulled off by a team of PhD’s or something, and by a company that knows the meaning of “Corporate Citizenship”.

  • avatar
    Autosavant

    It is great to have a team of 19 deserving PhDs, as long as you give them a JOB to do, a Challenging job, to produce a breakthrough,

    and not to have them waste their time, at the end of which there is the above photo-op, politically correct and all,

    and the only thing the 19 have produced is what any ONE accountant, without even an MBA, already knows, and is almost TRIVIAL,

    namely, that if you deeply discount your cars to fleets, their resale will drop.

    !!!!!!!.

  • avatar
    joeaverage

    For those people who blame the Obama administration for “saving” Detroit – what would McCain/Palin have done?

    Its not left vs the right. It’s top vs the bottom here. The left vs the right is just a diversionary tactic.

    My guess is McCain/Palin also would have done a very similar bailout package for Detroit.

    Your feedback is welcomed.

  • avatar
    ZekeToronto

    joeaverage wrote:

    My guess is McCain/Palin also would have done a very similar bailout package for Detroit.

    And with fewer strings attached (if that’s even possible).

  • avatar
    PeteMoran

    Whiz kids make a nice complement to old farts, but never a replacement. Intelligence and wisdom are two different things.

    Whiz kids are those who have not yet been beaten into submission by the conservative lifer old farts who believe changes are “gimmicks”.

  • avatar
    don1967

    Whiz kids are those who have not yet been beaten into submission by the conservative lifer old farts who believe changes are “gimmicks”.

    Nobody is beating anybody into submission. I suggested that old farts can indeed benefit by having whiz kids around. But when the whiz kids start slapping hardware store novelty gas caps and turbochargers into Tauruses, you need the wisdom of somebody who’s been there before to intervene. Otherwise you simply repeat history’s mistakes.

    Remember that old farts are whiz kids too. They just have more practice at it.


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