Thursday, July 24, 2008

Ford to Bring European Models to North America

Ford this Thursday is expected to announce it will fast-track at least one of its European passenger cars for U.S. production. The announcement will come amidst Ford’s second quarter earnings report and an update on its restructuring plan.

The two cars that CEO Alan Mulally has been pushing Ford to build in the U.S. are the Ford Mondeo and European Ford Focus. I have also heard that some in Ford have been trying to make a business case to sell the tiny Ka car in the U.S.

It is vital that Ford build these cars in North America if they are to sell them, rather than trying to export them from Europe. The weak dollar makes such a move a loser. Ford would lose money on each Mondeo and Focus it would import from Europe today. Those cars are not “federalized” for U.S. emissions and safety standards anyway.

For years, Ford’s management has fended off calls to unify its product offerings in Europe and the U.S. The European Mondeo, for example, is a huge critical and sales success, and is widely viewed as a more attractive vehicle than the U.S. Fusion. Too, the auto press has long praised the European Focus, while Ford has chosen to sell a different Focus in the U.S.

When Ford launched the Focus in the U.S. and Europe in the late 1990s, it was the same car on both continents. The manufacturing launch, though, was chaotic and the U.S. Focus was beset with numerous recalls. Once Ford got the bugs out, the reputation of the car was damaged. The automaker has not remade the car from top to bottom since its launch, choosing instead to change the design while keeping much of the mechanicals beneath. The current U.S. Focus is selling well as the demand for fuel efficient cars has spiked. But the car is not critically praised much for design and performance. The European Focus, meantime, has been substantially upgraded twice.

Ford managers have pushed back against Mulally’s directive to “make it happen,” referring to his desire to unify Ford’s global product line and make some of the European product in the U.S. These are the same strategic planners in some case, though, who made Ford so top-heavy on trucks and SUVs and short of competitive passenger car products.

This is where the choice of Mulally should really pay off for Ford. An outsider who came to Ford in 2006 from Boeing Co., Mulally has a retort for long-time Ford managers who fight him on a decision that makes so much sense…”How’s that workin’ out for ya so far?” Not too well. Ford managers have painful memories of the company trying to sell the Ford Contour/original Mondeo globally. And who could forget the raging success of the Merkur Scorpio in the U.S. But those people are responsible for a alot of Ford’s problems today. It’s time to try it Mulally’s way.

But just because those Euro models didn’t work, it doesn’t mean that today’s Focus and Mondeo can’t be globalized with success. The designs are much better than those previous attempts, and the world is different when it comes to design. Last time I checked, Toyota was doing pretty well selling a global Camry and Corolla design.

Given the long-term prospects or oil prices, Ford would do well to have a full line of passenger cars that includes the Fiesta, Focus, Fusion, Mondeo, Taurus…Ka? What remains to be seen in Mulally’s announcement is whether or not the Mondeo will replace the Fusion, or be added to the lineup. There has already been a move to unify the design of the Fusion and Mondeo for each car’s next generation. Ford also has an updated design of the Taurus due next year. The update, as seen in spy shots and in a slide presented to dealers a few months ago, looks akin to the Mondeo.

The next generation Focus, too, was to be brought together. So, Mulally will be outlining whether or not the end result of this will be adding models, or just accelerating the merging of these model programs. Either way, Ford’s car lineup is going to get a needed boost.

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