Detroit's Battle for Better, Smaller Engines
There is a new battle shaping up between General Motors (GM) and Ford
(F) over engine superiority. And it's not the race for who can achieve
the highest horsepower. With gas prices expected to stay above $3 per
gallon and pressure on automakers to reduce carbon dioxide emissions,
the new battle is over which companies can shrink their engines' sizes
and displacements without compromising driving performance or leaving
power-hungry customers behind.
What does this really mean? Gas-thirsty V-8 engines in passenger cars
and crossover SUVs will soon be an endangered species. This fall, Ford
will launch the first in a series of smaller engines it is calling gas
turbocharged direct-injection engines, or GTDI engines. These engines,
the first of which will appear in the 2009 Lincoln MKS sedan, will
achieve a 15% improvement in fuel economy over Ford's current engines.
Over the next five years, Ford expects to put 500,000 vehicles equipped
with the new engines on the road worldwide, with faster growth after that.
Automakers, especially U.S. companies, have been locked in a mindset of
"bigger and faster is always better" for decades. Indeed, horsepower
wars have been seen as a close cousin to the trend of bigger, thirstier
SUVs. The crescendo of this thinking was perhaps reached in 2003 when GM
showed a concept car at the Detroit Auto Show, the Cadillac Sixteen,
which achieved 1,000 hp. In a stark reversal, GM said this month that it
is scuttling its plans to build a new V-8 engine for its passenger cars
and will instead, like Ford, focus on high-performance V-6s. Pickup
trucks and SUVs will continue to offer V-8s.
The MKS sedan will be introduced with what Ford may call, for marketing
purposes, the "EcoBoost" 3.5-liter twin-turbo direct-injection V-6,
expected to produce 340 hp. This same engine will migrate to other Ford
models including the Taurus, Edge, and Lincoln MKX crossover SUVs in
2009. The boost in fuel economy compared with a V-80- is 2 mpg, or about
15%. Ford also plans to use the engine technology in four-cylinder
engines as a way to match performance with larger 3.0-liter,
six-cylinder engines while getting 5 mpg better fuel economy than the
V-6s achieve. And there is a 7% to 15% reduction in CO2 emissions per
vehicle with an EcoBoost engine.
The EcoBoost engines don't pack the "wow" factor of, say, hybrids, which
beat competitors in some cases by 15 to 20 mpg, or the promise of
plug-ins, which will be able to go up to 40 miles on an electric charge.
But Ford global product development chief Derrick Kuzak says Ford's new
gas engine strategy will deliver major savings of gasoline and carbon
dioxide emissions because of the millions of vehicles Ford sells
worldwide each year.
Kuzak, a soft-spoken man who is a contrast to many Detroit product
executives who trumpet the latest horsepower boost, hydrogen car, or
futuristic design, is hoping that Ford's engine strategy will appeal to
customers who do their homework on the Internet. According to Kuzak, a
customer's initial investment in EcoBoost technology, which will cost a
little more than standard engines, will be regained through fuel
savings—less trips to the pump—in just 2.5 years. "That compares with
more than seven years to recoup the price of a clean diesel engine and
more than 11 years to get back the investment in a hybrid."
Advocacy and Marketing
Part of the appeal of hybrids and diesels, though, up to now is "badge
appeal." Buyers of Toyota's (TM) Prius and Volkswagen's (VLKAY) TDI
diesel vehicles are not just consumers, they tend to be advocates. They
not only want to be seen in their more fuel-efficient cars, they try to
convert their friends. Ford's new chief marketing officer, Jim Farley,
who came to the automaker after a career at Toyota, says marketing of
the new technology will be key to success. "People will have to feel
they are doing something for the planet as well as for themselves, and
we have to figure out the right name, badging, and advertising to convey
that," says Farley.
Dumping V-8 engines in passenger cars, especially premium and luxury
cars, is a marketing risk, but perhaps one whose time has come. For two
decades, Honda's (HMC) premium division, Acura, has not offered a V-8 in
its flagship sedan, the RL. Before that, the Acura Legend sedan only
went as high as a V-6. American Honda chief Tom Elliott has said on more
than one occasion that the U.S. management team for the Japanese
automaker has repeatedly made the case, to no avail, to their Japanese
parent for a V-8 for both the RL and the Honda Ridgeline pickup.
The RL sold an anemic 6,262 units in 2007, down 45% from 2006. The Lexus
LS (BusinessWeek.com, 2/14/07), which only comes in a V-8, by contrast,
sold 35,000 units, up 75% from the year before.
Many buyers just can't accept that smaller is better. Ford, for example,
when it launches a redesigned F-Series pickup this year, will no longer
offer a V-6 engine, which had such a low purchase rate that Ford
couldn't justify sticking the engines at the factories.
A New Era
Oddly, though, GM is seeing signs that its Honda V-6 engine strategy is
pointing the way to a new era. The new direct-injected V-6 in the 2008
Cadillac produces 305 hp, while its Northstar V-8 in the Cadillac DTS
(BusinessWeek.com, 1/19/07) generates only 275. The fuel economy of the
DTS, a slightly larger car, is 15 mpg city/23 highway, while the CTS
(BusinessWeek.com, 10/22/07) is rated 17/26. The same high-performance
V-6 could go into the DTS and improve fuel economy while boosting
The Lexus LS sedan only comes in a V-8, generates 380 hp, and gets 16/24
mpg. Lexus clearly engineers its sedans for power and fuel economy in a
smarter way than Detroit automakers.
Ford, which is launching gas-electric hybrid versions of the Ford Fusion
and Mercury Milan later this year, is not making big promises of
delivering more hybrids or plug-in cars at a certain date. But it is
working on other improvements to whittle away at fuel economy. Kuzak
says between 2012 and 2020, Ford figures to reduce the weight of
vehicles between 250 lb. and 750 lb., depending on the vehicle, without
compromising safety. Such savings can add a couple of miles to each
gallon of gas. "No automaker can wait around for technology to arrive;
we have to make the most of what we know and have now," says Kuzak.