Is Ford Enjoying Full-Size Success?
Today’s Detroit News has an interesting item on Ford’s D3/D4 platform strategy, based on the thesis that
The remade Taurus has emerged as a flagship for the Dearborn automaker, restoring luster to a nameplate that had become synonymous with “rental car,” and helping to revive an automaker that had become dependent on trucks and sport utility vehicles.
As Jack Baruth’s Capsule Review of the Ford Five Hundred shows, the D3 platform offers good space and comfort, and the recent update and return to the Taurus nameplate has been rewarded with steadily-increasing sales. And though the Taurus has fought back to become a Ford-brand flagship (likely at the expense of Mercury), its platform-mates have been consistent underperformers on the showroom floor. Flex has sold in the low 3k monthly range, while MKS and MKT have been thoroughly beaten in YTD sales by the Cadillac DTS and Escalade, themselves hardly the most competitive alternatives to the big Lincolns.
But Ford insists that Taurus makes up the bulk of the volume required to pay off development costs for the D3 platform, and that incremental volume off of luxury versions only fatten the profits. And with the Taurus commanding a $30k average transaction price (thanks to a 20 percent SHO mix), it’s no slouch on the retail market itself. Best of all, Ford isn’t spending much to market the Taurus, and is rehabilitating an important nameplate by moving it upmarket. And with analysts figuring the D3 platform is slowly paying itself off, why call it a failure?
For one thing, using luxury brands to add enough incremental volume to barely make the platform’s minimum volume is not a recipe for long-term brand strength. As long as Loncoln’s flagship can be had for $10k less with a Taurus badge, it will be no surprise to see Taurus transaction prices running high, and volume remaining healthy. Unfortunately, it also leaves the MKS without a unique, competitive flagship. Flex, meanwhile, might bring new buyers into the Ford brand, but it’s also expensive for a Ford, and can be loaded up to the point where an MKT only makes sense for consumers with a flair for the Lovecraftian. And when the 2011 Explorer hits the market in earnest, the Flex’s already-weak volume will only plummet further.
On the other hand, the Explorer looks likely to help bring Ford’s D3/D4 platform back into the serious volume numbers. If Ford can resist the temptation to create a Lincoln rebadge, market it well, and keep Taurus volume up, it will have made a silk purse from the sow’s ear that was the Ford Five Hundred. In the meantime, calling the D3/D4 lineup a success is a bit like calling the auto bailout a success: yes, things have improved, but at a significant cost, and they’re not out of the woods yet.
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The more I see the Flex, the more I absolutely love it. Its basically the return of the old wagon, and it looks crisp and unique. Not to mention perfectly preportioned. The square shape gives it utility and an actually usable 3rd row. Too bad I have absolutely no use for a vehicle the size of any D3, despite how good many of them are.
I don't get how Ford is making money on such volumes. The last Ford products we bought were in late 80s and mid 90s. I had a Sable (read as Taurus) wagon and they were selling 400-500,000 of the combination annually. When we bought our Windstar, their volume was knocking at about 20,000 monthly. As the selection of vehicles Ford makes increases, show room size goes up, the stocking of parts and training of dealer technicians increase vastly. Smaller, in urban area, dealers are physically out of room and expansion is very expensive. We had our local Ford dealership fold a few years back. To the auto purchaser, the price of new Fords in the $30-$40,000 range seems surreal. I personally feel that Ford hasn't regained enough of a quality reputation for this size investment. Ford needs a "home run" desperately.