Battered Ford braces for dismal sales report
The automaker is expecting to post a 20% decline in new car and truck sales today, when it releases its monthly results for January along with other automakers.
That is despite a lift from the first full month of sales of the new Ford Edge crossover, which still hasn't been delivered to more than 550 of the
3,700 Ford-brand dealerships nationwide.Last year, Ford officials said the Edge would be the most important vehicle launched in 2006, but shipping was delayed until Dec. 7 after manufacturing issues at the company's Oakville, Ontario, plant slowed the kickoff.
In a rare move, Ford held a briefing Wednesday in Dearborn to explain its dismal January sales results a day before the details were to be released and to emphasize Ford's recent successes, which could be drowned out in the sea of bad financial and sales results.
Ford ended 2006 with $12.7 billion in losses, its worst performance, and worldwide sales were down 2.5%, to 6.6 million cars and trucks. But Ford officials noted that the resale values of the company's vehicles are improving, and 10 of 11 Ford, Mercury and Lincoln cars now are recommended by Consumer Reports.
Mark Fields, Ford's president of the Americas, and Cisco Codina, vice president of Ford's marketing, sales and service in North America, were among those who attended Ford's "Beyond the Up and Down Arrow" event. Executives of this rank normally don't participate in the release of monthly sales results.
George Pipas, Ford's chief sales analyst, told the group that the dismal overall results for January would be driven by a deliberate 60% decline in discounted fleet sales to rental car companies, which aren't as profitable as retail sales.
Low expectations
Pipas also set low expectations for the future, noting that Ford might post severe drops in several months this year as a result of its intentional strategy to focus on sales to customers in showrooms.
Last January, Ford sold 190,353 cars and light trucks.
Pipas said Ford was deliberately cutting about 30,000 sales to fleet customers this January and that retail sales to customers during the month were holding up well, bolstered by strong economic growth and consumer spending nationwide.
While Ford is deliberately lowering its sales to the fleet market, Fields noted that the automaker remains committed to stabilizing its share of the U.S. market this year. Ford had the same goal last year but saw its Ford, Mercury and Lincoln models lose a full percentage point of U.S. market share, ending the year with 16.4% of the market.
Overall, Ford's six brands have seen their share of the U.S. market slide for the past decade.
"Our aim is to stabilize our retail market share," said Fields, who is aiming for Ford, Mercury and Lincoln to settle in between 14% and 15% of U.S. market share. About 11 of those percentage points are expected to be retail share, with the remainder being primarily dedicated to fleet sales to businesses and government.
Edge's slow launch admired
Meanwhile, experts applauded Ford for taking its time in launching the new Edge, which they viewed as a deliberately slow effort to ensure the Edge's quality and reputation in the marketplace.
In November, Ford said it was replacing the manager at the Ontario plant where the Edge and its sister product, the Lincoln MKX, are built. The automaker also said release of the vehicles would be delayed from late November until mid-December.
Ford has denied that serious quality issues were at play, saying the delay was necessary to ensure consistent manufacturing throughput at the plant.
Eventually, Ford started shipping the crossovers Dec. 7.
Jim Sanfilippo, senior industry analyst with Automotive Marketing Consultants in Bloomfield Hills, said he is anxious to see how the Edge and MKX perform in showrooms, and he is not troubled that all Ford dealers don't have one to sell yet.
"People will forget they were late, but they won't forget quality," he said.
Erich Merkle, director of automotive forecasting at IRN Inc. in Grand Rapids, agreed.
"The ramp up is slower, no question, but Ford is really paying attention to the details."
-- Recruit: A person just good enough to hinder the retreat made necessary by their presence