Ford Death Watch 22: The Spin Starts Here

The Detroit News recently enlisted J.D. Power and Associates to help explain Detroit's pressure drop, and figure out how Ford and the other 1.5 can stop the rot. After gathering data from 500 survey takers registered on an opinions-for-cash website called Opinion Outpost, The Power That Is concluded that the domestics have their work cut out for them. (Surprise!) Only 40% of this infinitesimal sample of alleged intenders (‘cause if they weren’t intenders they wouldn’t get paid for the survey) would consider buying a domestic car, due to concerns about reliability, quality and fuel economy.

Todd Wilson, J.D. Power’s Director of Automotive Research pegged the blame on a simple misunderstanding or, to use the phrase currently in vogue within Ford et al., a “perception gap.” “The perception of quality is the point,” Wilson opined. Apparently, “Asians just have a better image of building a better product.” This despite the fact that many of Ford's cars and trucks are nestling at the top of J.D.'s reliability and customer satisfaction surveys.

To tackle these PR issues, Ford's ad agency (JWT) commissioned Car and Driver to test the Fusion SEL AWD V6 against the Honda Accord EX-L V6 and Toyota Camry XLE V6. At Ford's behest, the buff book invited 600 C&D subs to FedEx Field in Washington, DC to drive the trio of mid-sized motors. In a nationwide ad campaign launched yesterday (look for a "Special Advertising Section" inside next month's C&D), Ford claimed the participants rated the Fusion tops in “Styling,” “Handling,” “Performance,” and “Fun to Drive."

[NB: Ford PR declined to provide TTAC with the test data or methodology. Sources who attended the event report that one of the test Accords' radio and VSA (Variable Stability Assist) were non-operational, and Ford 'aides' touted the Fusion’s features, but not the Toyota or Honda's.]

Although inherently flawed (AWD vs. FWD?), the campaign reveals a new, feistier Ford. If only the general public shared the spinmeisters' optimism. The Detroit News' survey flagged one reason for a lack of consumer confidence in the Blue Oval: resale values. Now that the Taurus is ground chuck and the Freestar has been sucked into a black hole, the Blue Oval’s fleet of fleet-oriented vehicles is growing smaller, which will help restore used car values. On the other hand, FoMoCo has promised to fill Freestar fleet orders with an as-yet-unnamed product, and the Fusion, the muy picante Ford Escape and selected F-Series pickups are being dolled-up with attractive lease and finance offers. That's good for buyers, bad for sellers.

In any case, with roughly 530k current year units in U.S. inventories, Big Al needs more metal moved. Looking backwards, 2.6% fewer American consumers cruised from showrooms with new whips this year, and Ford was hit hardest. Mulally’s minions managed to move a mere 2.9m units. That’s 250k less than last year’s slumping results. December’s 13 point slide resulted in more Blue Oval blues, as ToMoCo outsold Ford for the third month last year. To add insult to injury, Toyota ate all of Ford’s lost 8% of annual sales, and then some.

The cost of freedom from debt will be high for Ford. But for whom? United Auto Workers (UAW) President Ron Gettelfinger and Mulally have begun negotiations on the union's '07 contract. FoMoCo’s main mofo is optimistic, declaring that “nobody cares more about Ford than Ron Gettelfinger.” Translation: Big Al reckons the UAW’s survival depends on these negotiations as much as the Blue Oval’s. Unfortunately, with the corporate coffers at capacity, FoMoCo will be hard pressed to convince the UAW to do all the giving.

Failure to succeed in ANY of these areas in ‘07 will hurt Ford’s chances for profitable operations within the next four years. With all eyes on Mulally, his motivation to succeed is personal, not just business. According to Casesa Strategic Advisors LLC, Ford’s $35m dollar man has hedged his bets. John Casesa says “if Mulally fails, then the [Ford] family will have to consider all options, including giving up the company.” If the family throws up its hands and surrenders, Mulally’s $3.6m stock options (and restricted units) would vest immediately; he would also line his pockets with twice his salary and projected bonus. Get ready for an interesting year.