Ford Throttles Up Production of Big-buck Expeditions, Navigators, in Bid for Boffo Profits
For an automaker worried about shrinking profit margins, spending an extra $25 million is just fine if it means cranking out 25 percent more high-margin SUVs. And the Ford Expedition and Lincoln Navigator, now minty fresh after years spent withering on the vine, certainly fit the description of “guaranteed cash generator.”
Ford plans to add that sum to the $900 million already sunk into the Kentucky Truck Plant in an effort to boost production of its full-size SUV models, knowing full well Americans buyers will snap them up the minute they roll off the line. Is there a clearer example of an automaker treating SUVs as a license to print money?
Speaking to media at the Louisville plant, Ford’s president of global operations, Joe Hinrichs, boasted, “We can sell every single vehicle we can produce here.”
This isn’t just a case of wishful thinking, it seems. After waxing poetic about the two models’ juicy margins, Hinrichs said, “The dealer feedback has been even stronger than we’ve hoped for.”
According to Ford sales analyst Erich Merkle, the two models, which aged well past their best-before date before 2018’s aluminum-intensive redesign, have proven popular enough to warrant the extra attention. “Because they’re turning so fast, we’re going to do everything we can to meet the demand that’s out there,” he said.
Expeditions average just 11 days on a dealer lot, Merkle said. Bolstering the model’s importance (and profitability) is the fact that, compared to the previous generation, twice as many buyers now spring for the high-zoot Platinum model. That trim, comprising 29 percent of Expedition sales in January, retails for $76,595. As well, some 84 percent of Navigators leave the lot in Reserve or Black Label trims.
Suffice it to say, average transaction prices ($57,700 for the Expedition, $77,400 for the Navigator) are nowhere near the models’ sharply increased entry price.
Ford is apparently so eager to feed retail buyers, an Automotive News source claims, that the company has barred employees from ordering an Expedition or Navigator through its manager lease program.
Why the desperate measures? Investors, and a steep drop in the company’s automotive profit margins. In the fourth quarter of 2017, Ford’s 3.7 percent margin was a full two points lower than a year earlier. Rising commodity prices, especially that of aluminum — of which the F-150, Expedition, and Navigator use plenty — takes much of the blame.
While Expedition sales fell 15.4 percent in January, year over year, Ford credits the drop to fleet order timing. Sales of the Navigator, on the other hand, shot up 97.5 percent compared to a year earlier.
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