Raj Nair: Ford tech chief says sedan sales hit by SUV/crossover boom

[Biker16]

Ford tech chief says sedan sales hit by SUV/crossover boom

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Automotive News Europe | February 13, 2016 06:01 CET

 

Ford Chief Technology Officer Raj Nair says sedan sales are suffering most from rising demand for crossovers and SUVs.

 

Almost worldwide we see an increase in desire for utilities and the segment that's suffering the most is the sedan whether it's the CD sedans or even C and B sedans [midsize, compact and subcompact sedans], Nair told Automotive News Europe.

 

He said that sedans will not disappear but he believes that crossovers and SUVs and variations of both are going to steal the majority of their sales from sedans.

 

He also cautions that trends vary between markets so while demand for minivans is falling sharply in Europe, they remain significant in other markets.

 

SUVs and crossovers are winning at the expense of minivans in Europe right now, although Ford initially stumbled in the region with its EcoSport small SUV, which was developed in Brazil and is built in India.

 

At first, European buyers were not impressed and the vehicle had to be substantially re-engineered and redesigned for local tastes.

 

The initial EcoSport offering was for the value segment. It was not intended to compete with very high-end premium B-sized SUVs" that are common in Europe, Nair said. But that's not a deficiency in the One Ford strategy or a deficiency in the platform and the capability. If anything it may be a deficiency in how we communicated what that vehicle was originally about.

 

Flexible approach

http://europe.autonews.com/article/20160213/ANE/160219993/ford-tech-chief-says-sedan-sales-hit-by-suv-crossover-boom

Edited February 14, 2016 by RichardJensen

[Anthony]

It seems so weird that as soon as FCA made their announcement about concentrating on trucks and SUVs, almost every automaker is agreeing with the assessment that cars are going to be the minority going forward.

 

While no other makers are going quite one-sided as FCA (more because they did it out of necessity) but I'm surprised at the outpouring of agreement. I was not expecting that.

 

 

 

Edit: apparently I should not trust phone dictation without reading what it writes first

Edited February 14, 2016 by Anthony

[jpd80]

A frank admission that SUVs and Utilities in general will continue to increase sales at the expense of cars.

current reductions in sales of Ford cars is expected to continue with little chance of reversal.

If and when gas prices increase, the sales shift will be to smaller Utilities and not back to cars.

 

That forecast changes the complexity of Ford's future plans and notes a permanent shift in buyer preference

away from cars. From now on, car projects will depend on Utility platforms for their viability, the opposite of the past.

[RichardJensen]

cars are going to be the minority going forward.

 

Well, in fairness, the trends have been pretty obvious to all.

 

The problem is FCA's declaration that these changes (like low oil) represent something 'permanent', and that they're basically going all-in on repeating the mistakes of the 90s.

Edited February 14, 2016 by RichardJensen

[Anthony]

 

Well, in fairness, the trends have been pretty obvious to all.

 

The problem is FCA's declaration that these changes (like low oil) represent something 'permanent', and that they're basically going all-in on repeating the mistakes of the 90s.

 

 

Oh I agree with you, it just seems that after the FCA announcement, the floodgates opened. It was like everyone was waiting for SOMEONE...ANYONE to say it before they would.

[blazerdude20]

There just isn't a lot of appeal to driving a sedan. Utilities offer more space, AWD not usually available on sedans, and the mileage is very close to sedans.

[StangBang]

Well history is just bringing us back around to covered wagons. They are just self propelled now.

[jpd80]

 

 

Oh I agree with you, it just seems that after the FCA announcement, the floodgates opened. It was like everyone was waiting for SOMEONE...ANYONE to say it before they would.

That was different, FCA couldn't find a way to make its cars profitably so decided to exit those segments.

The other companies have agreed that Utilities will continue to grow but have not suggested stopping car production.

[Anthony]

That was different, FCA couldn't find a way to make its cars profitably so decided to exit those segments.

The other companies have agreed that Utilities will continue to grow but have not suggested stopping car production.

Yup, no doubt. From my original post above :

 

While no other makers are going quite one-sided as FCA (more because they did it out of necessity)

[jpd80]

Yup, no doubt. From my original post above :

 

I know what you said but there's the difference.

 

The big news for FCA was not increasing focus on Utilities, it was the axing of their compact

and mid sized cars

 

By contrast, the other car makers are simply continuing to follow the Utility trend, one they have been

doing so for years. The difference is that their cars are still profitable and not being axed.

Edited February 15, 2016 by jpd80

[MKII]

Ford Chief Technology Officer Raj Nair says sedan (not hatches or wagons) sales are suffering most from rising demand for crossovers and SUVs.

Almost worldwide we see an increase in desire for utilities and the segment that's suffering the most is the sedan whether it's the CD sedans or even C and B sedans [midsize, compact and subcompact sedans], Nair told Automotive News Europe.

[Anthony]

I know what you said but there's the difference.

 

The big news for FCA was not increasing focus on Utilities, it was the axing of their compact

and mid sized cars

 

By contrast, the other car makers are simply continuing to follow the Utility trend, one they have been

doing so for years. The difference is that their cars are still profitable and not being axed.

 

 

Actually, that's exactly what I meant. They did it out of necessity. They could no longer afford to keep development or marketing dollars on their car line and their saving grace (utilities and trucks) were selling like hotcakes, so they made the decision to go with what was making money and cut out what wasn't (for better or for worse).

[rmc523]

Ford Chief Technology Officer Raj Nair says sedan (not hatches or wagons) sales are suffering most from rising demand for crossovers and SUVs.

 

Almost worldwide we see an increase in desire for utilities and the segment that's suffering the most is the sedan whether it's the CD sedans or even C and B sedans [midsize, compact and subcompact sedans], Nair told Automotive News Europe.

The point is, nowhere did they say "we're going to cut sedan development" or "were dropping our sedans". They simply said demand for utilities is increasing, and will appropriately allocate development budget to them.

 

Chrysler literally said they're dropping their sedans, only to say at best they'll find magical partners somewhere to offer some rebadge in the "future."

[Anthony]

The point is, nowhere did they say "we're going to cut sedan development" or "were dropping our sedans". They simply said demand for utilities is increasing, and will appropriately allocate development budget to them.

 

Chrysler literally said they're dropping their sedans, only to say at best they'll find magical partners somewhere to offer some rebadge in the "future."

 

 

It gives them an excuse to cut R&D in the short term to save cash. I've got a feeling by the time a new 200 would be introduced, the company (if it still exists) will look much different (Chrysler and Dodge either completely gone or a merger with another company). They are hedging their bets on a partner and pooling their resources on what currently makes money.

 

In a way, it makes sense in the short term, but if things don't go perfectly for them (ie. finding a viable partner that can give them the product and cash infusion) then they are dead in the water. I don't think they are going to find a magical knight in shining armor. I think they are living on borrowed time.

Edited February 15, 2016 by Anthony

[Kev-Mo]

SUV's rule the roost - unless your car is named: Camry, Accord, Corolla or Civic.

[rmc523]

 

 

It gives them an excuse to cut R&D in the short term to save cash. I've got a feeling by the time a new 200 would be introduced, the company (if it still exists) will look much different (Chrysler and Dodge either completely gone or a merger with another company). They are hedging their bets on a partner and pooling their resources on what currently makes money.

 

In a way, it makes sense in the short term, but if things don't go perfectly for them (ie. finding a viable partner that can give them the product and cash infusion) then they are dead in the water. I don't think they are going to find a magical knight in shining armor. I think they are living on borrowed time.

I agree. Short term, I can understand not wanting to divert resources to the sedans when SUVs/crossovers are popular. But as you said, if they can't find a partner (really who, aside from perhaps a minor player - say Mitsubishi for example - would be willing to partner with them if they're basically asking for them to make the car for FCA?), or if the market does shift back to sedans, they're screwed.

[akirby]

The difference with Ford is that they have competitive cars and sedans available if or when the market shifts back. And most of the new SUVs are on unibody platforms shared with cars. It's not the same as Ford basically abandoning cars in favor of large BOF SUVs.

[J-150]

The difference with Ford is that they have competitive cars and sedans available if or when the market shifts back. And most of the new SUVs are on unibody platforms shared with cars. It's not the same as Ford basically abandoning cars in favor of large BOF SUVs.

They learned their lesson from the last recession.

SUVs and CUVs to pay for competitive platforms and drive trains that carry the low selling cars.

[akirby]

They learned their lesson from the last recession.

SUVs and CUVs to pay for competitive platforms and drive trains that carry the low selling cars.

 

And their sales are almost evenly split in the US between cars, utilities and trucks today. That's a very balanced portfolio that can be adjusted as needed to suit the current market condition.

[bzcat]

There is still room for EcoSport in Europe but as a competitor to other "value" oriented entries like Dacia Duster.

 

Raj's comment about EcoSport seals the deal for me... I'm convinced Ford has a proper premium B-segment CUV coming that can command the same prices as competitors' B-segment CUV. Perhaps this is why Fiesta program is so delayed... they probably went back to the drawing board after EcoSport bombed in Europe.

[630land]

I disagree about cars having "no appeal". Most Utes are driven alone and not "filled up" with stuff. Some simply like the seating, even though it's harder to change lanes and turn corners. And try parking the beasts in city centers. But one aspect is the seating is same as drive thru windows, so drivers can get their daily fix of fast food.

 

Fashion changes, so don't assume that anything is "permanent". Some said in the 70's that "Americans love their full sized cars", and where are they now? Same with whenever there is gas crunch, it's "everyone is going to small cars, permanently".

Edited February 16, 2016 by 630land

[akirby]

It's not harder to change lanes or corner. You're thinking of large BOF SUVs. These are more like tall station wagons. Parking is no worse than cars either, sometimes easier due to the higher seating position and better visibility.

[Hybrider]

I, for one, prefer the smoother ride of the sedans, not to mention that sedans can be designed much sportier to my eyes.

[jpd80]

I disagree about cars having "no appeal".

No one has said in this thread.

 

Guys,

Utilities aren't just giant truck based SUVs, some in fact mimic car based station wagon

and compact hatches, so the field is wide open for those wanting something particular

and this is also an opportunity to sharpen the value and performance proposition of

cars as desirable products, they no longer have to carry vanilla base models.

 

for example, 1.5 EB and 2.0 EB and AWD is common place in Escape

but are at best exclusive in Focus.... Maybe that changes and we get

to see more affordable performance variants that buyers appreciate

and are prepared to pay for.....

Edited February 18, 2016 by jpd80

[sullynd]

I think one of the big drivers towards S/CUVs, four door cars and trucks, and generic colors is the increasing cost of vehicles. If I'm going to pay that much for a vehicle, and hope to hold on to it for a decade, I want something that will meet most of my needs for that length of time.