Ford July 2017 Sales Down 7.5% Overall; Lincoln down 2.5%

[fuzzymoomoo]

 

The early (Spring) changeover for Mustang's was a boost for much of the country for years. With the late changeover this year much of the country is going to miss out on the typical Mustang selling season. Obviously, we don't know the reason for the delay this year... engineering? vendor supply issues? But in any event, the late introduction is going to hurt a lot of dealers this year. Compared to a typical MCE, the 2018MY Mustang is more like an all-new car with all the changes. The hard core enthusiasts often place early orders with their particular specifications so that they can take delivery in the Spring and drive the car for a good part of the year before storing them for the Winter. If they place a retail order now for a 2018MY Mustang, they're not going to see the car until possibly New Year's or later. So why rush to place a retail order for a car that won't arrive for 5+ months?

 

The other problem with the late Mustang changeover this year was trying to plan 2017MY "balance out" inventory with 2017 Mustang sales dropping every month. Our dealership didn't want to load up on 2017 Mustang year-end inventory, have sales continue to drop each month and then have trouble getting 2018MY allocation because we have too much 2017MY inventory. Our dealership decided to be conservative and cut our 2017 Mustang inventory and took a few 2017's for balance out. There's enough Mustang inventory available for us to easily "Swap" or "Dealer Trade" for the 2017 Mustang's we need.

 

FYI... About a week ago, we had a customer that tried to by a 2017 Mustang GT Fastback Premium from a dealer about 25 miles from us. He had very specific requirements and gave the other dealer a large deposit to get the car for him and then they stopped returning his calls! He came to us and we got the car (2017 Mustang GT Fastback Premium, Grabber Blue w/Black Leather, Automatic, Navigation) from a dealer 210 miles from us and delivered it to the customer the next day. Others told him that he'd never find the car with his specific requirements but we proved them all wrong!

there's a rumor out of FRAP that the main cause of the delay is because they're still ramping up production of the 10 speed transmission in Livonia. Seems plausible to me.

 

Also they cut a shift of production at FRAP for the summer.

[rmc523]

but the big question is

 

 

 

Was the bumper dented?

 

 

Better Crash scores, Safety Features Standard including automatic emergency braking that you can't get on Escape oh and a Hybrid. All things that buyers in that segment market want. Of the buyers I know in that market 0 have/had the Escape on their list -- and some of those buyers could even get A plan.

 

Let's not pretend that the majority of Rav-4 buyers are just blind Toyota faithful they don't even consider anything else. Not saying Escape doesn't have its' own shortcomings, but still.

 

RAV 4 being quoted as outselling the Escape...hmm, maybe lack of inventory and lease residuals that have dropped 7 points from 36 months ago, raising payments on the same car with same selling price and structure over $100 a month, may have something to do with it. The Edge is in the same boat....and please no ATP comments....those don't sell cars....if you are not competitive consumers go elsewhere....We are also low on Transit Connects, couldn't sell any transits, the F-150s are in lower supply due to buildout...and seriously the lease programs are making customers cross-eyed.....some units aren't even within spitting distance of their immediate competitors....

 

Why are the lease deals so bad across the board?

[fuzzymoomoo]

woosh

[silvrsvt]

Why are the lease deals so bad across the board?

Well Ford was saying they where having issues with resale value with products, which wouldn't help with lease deals either.

[jasonj80]

 

Let's not pretend that the majority of Rav-4 buyers are just blind Toyota faithful they don't even consider anything else. Not saying Escape doesn't have its' own shortcomings, but still.

 

I agree the RAV4 wouldn't be on my list, but it is cheap and I do get the appeal in the market for a certain consumer. I would however get a CR-V/CX-5 over an Escape. The people I know are want safety, price and reliability. You also have Ford that did a basic update on it, and the fact without incentives it prices considerably more than a RAV4 or CRV as well so buyers cut it off the list when they do a simple price comparison. An XLE AWD RAV4 sticker is about $27,500, CR-V AWD EX is $28,000, Outback $28,805 and a CX-5 AWD is $29,095 and Escape SE AWD is $29,800. (Incentives do bring the Escape about mid pack with these prices, but that requires work figuring out what you qualify for and the feeling of being screwed over as you don't get this or that incentive so it seems like someone is getting a better deal than you) The Escape on the surface is more expensive than the competition, has less equipment, worse safety ratings, worse real world mileage and worse reliability. The Ford faithful buy the Escape.

[jasonj80]

 

Highlander is still much closer to Edge than Explorer in size. Only reason Highlander could be comparable to Explorer is the third row seating.

Highlander is right in-between. Length is 192.5"; Edge is 188.1" and Explorer is 198.3. The total loss of interior volume is in the area behind the 3rd row seat, Explorer has 22.1ft³ With the 3rd row seats up, vs 13.8ft³ of the Highlander.

Edited August 2, 2017 by jasonj80

[jpd80]

I don't know if this was a contributor but Ford's daily rental sales last month was just 4.4%

When that few daily rentals make up the 31% fleet percentage, Ford could hardly be accused of "fleet dumping"..

in fact, quite the opposite according to Deanh and Ice-capades, the lack of competitive financing and inventory

to key markets really impairs the ability of sales staff to get the deals done....

 

Would this be Ford's equivalent of stagflation - rising interest rates and commodity costs, fewer sales and less profit?

Edited August 2, 2017 by jpd80

[papilgee4evaeva]

Highlander is right in-between. Length is 192.5"; Edge is 188.1" and Explorer is 198.3. The total loss of interior volume is in the area behind the 3rd row seat, Explorer has 22.1ft³ With the 3rd row seats up, vs 13.8ft³ of the Highlander.

 

And Explorer has 37.8" of headroom and 32-33.3" of legroom in the third row, versus 35.9" and 26.7-27.7" respectively in the Highlander. Cargo area differences are huge, but they're not the whole story.

[focus05]

Ford has suffered from very poor product planning - not just rollout schedule, but actually reading the needs of the market; their products are often too limited for broad appeal (Focus with its backseat). Their C-segment CUV is average. Their midsize car is underwhelming and standing still as competitors accelerate. Their C-segment car is not quite right for the market. They have no real B-segment CUV yet (EcoSport is a placeholder). And then, it's all behind schedule. Their initial Ecoboost boost is also fading as competitors roll out with better GTDI engines. The 1.5 3 cylinder is behind. The 1.0 is now surrounded by equals (and some better). Their hybrid tech and strategy hasn't moved in years. Their new transmission rollout is slow. Their interior design has been stuck in reverse for about 5 years.

 

I used to be a huge fan of Mulally, but I realize now that he left the company on shaky ground with unclear operating and investment principles. Fields was unable to set them up. Let's hope Hackett gets the ball rolling.

 

On top of all of this, Ford cannot stay out of the news for recalls or lawsuits for this or that issue. The supply chain appears to be a wreck and assembly quality appears to be below standard for mass-market manufacturers. All of which needs to get straightened out.

 

All of this matters because the industry is starting to iterate much faster at the commodity level - software/tech, interior, powertrain. Body changes will slow and be reserved more and more for higher end vehicles where personalization can afford to go beyond colors. Ford isn't set up for this world, and they need to be in the next 2-3 years.

[fuzzymoomoo]

Ford has suffered from very poor product planning - not just rollout schedule, but actually reading the needs of the market; their products are often too limited for broad appeal (Focus with its backseat). Their C-segment CUV is average. Their midsize car is underwhelming and standing still as competitors accelerate. Their C-segment car is not quite right for the market. They have no real B-segment CUV yet (EcoSport is a placeholder). And then, it's all behind schedule. Their initial Ecoboost boost is also fading as competitors roll out with better GTDI engines. The 1.5 3 cylinder is behind. The 1.0 is now surrounded by equals (and some better). Their hybrid tech and strategy hasn't moved in years. Their new transmission rollout is slow. Their interior design has been stuck in reverse for about 5 years.

All of this is true. Mark Fields really screwed up product planning with his philosophy of riding out the slowdown.

 

I used to be a huge fan of Mulally, but I realize now that he left the company on shaky ground with unclear operating and investment principles. Fields was unable to set them up. Let's hope Hackett gets the ball rolling.

Except Mullaly did leave with proper planning in place. At the time he left, Focus was due to be replaced for MY2018, as was Explorer, Taurus and Fusion. All 4 of those plans were delayed or in the case of Taurus cancelled outright (we were supposed to get a version of the Chinese model as a next gen replacement but didn't. It was actually one of Fields' better moves).

 

On top of all of this, Ford cannot stay out of the news for recalls or lawsuits for this or that issue. The supply chain appears to be a wreck and assembly quality appears to be below standard for mass-market manufacturers. All of which needs to get straightened out.

True. Relationship with suppliers is supposed to be a two way street of communication. During the last 6-7 years it hasn't been. Suppliers have basically been given cart Blanche to do whatever they need to do without consulting Ford on changes. The chickens are coming to roost there. It's gotten a lot better with the new programs in the works, but there's still a lot of chaos that needs to be straightened out before some major product launches happen in the next 2-4 years.

 

As for the assembly plant quality, yeah where to start. Having a management structure that isn't just a bunch of dudes wearing reflective vests coming up with the dumbest solutions to simple problems is a good start. I can only speak to MAP and FRAP as those are the 2 plants I've worked at. Fortunately for FRAP, they still do things very similar to the way Mazda did it when they owned it and it was still a joint venture, but their quality control processes can be improved. Look at the back end of a FRAP built Fusion and you'll see what I mean. Then getting the Continental is the best thing that could have happened. It's forced them to step up their game on quality, and I think you'll really see it show with the 2018 Mustang launch. MAP on the other hand, oof. We have a lot of work to do before the Ranger launches. They really need to sort out the management structure first and foremost, then hire competent supervisors who have some experience in manufacturing. Hopefully the Ranger is easier to build than the Focus and C-Max (Especially C-Max) seem to be, or at least they spend time to streamline the process more than they did when they were planning for the Focus.

 

All of this matters because the industry is starting to iterate much faster at the commodity level - software/tech, interior, powertrain. Body changes will slow and be reserved more and more for higher end vehicles where personalization can afford to go beyond colors. Ford isn't set up for this world, and they need to be in the next 2-3 years.

Jim Hackett has already started green lighting and fast tracking programs that will fix that. You will be starting to see evidence of that within the next 2 years.

[jpd80]

That's a great read of the situation.

While Ford appeared to be very frugal and saving money by delaying all new product,

it felt like Ford was losing traction in the market. Dealers experiencing difficulty getting

competitive financing for customers while seeing residual weaken all spell trouble.

 

Can't help thinking that Ford lost a lot of money delaying new product especially Utilities

but would Ford have had enough capacity if sales really took of.....guess we'll never know.

Edited August 2, 2017 by jpd80

[fuzzymoomoo]

Can't help thinking that Ford lost a lot of money delaying new product especially Utilities

but would Ford have had enough capacity if sales really took of.....guess we'll never know.

 

With this game of factory roulette they're playing right now it's a little difficult to get a bead on exactly what capacity is now and will be in 2-4 years. We need to see where the chips fall when all these new models finally get here.

[rmc523]

I don't know if this was a contributor but Ford's daily rental sales last month was just 4.4%

When that few daily rentals make up the 31% fleet percentage, Ford could hardly be accused of "fleet dumping"..

in fact, quite the opposite according to Deanh and Ice-capades, the lack of competitive financing and inventory

to key markets really impairs the ability of sales staff to get the deals done....

 

Would this be Ford's equivalent of stagflation - rising interest rates and commodity costs, fewer sales and less profit?

 

In addition to leasing issues, haven't Dean and ice capades talked in the past about a dealer sales program that Mulally had but Fields stopped......it was something along the lines of a tiered structure or something like that? Where dealers pushed to bump up into the next tier for better rewards or something like that? I wonder if that's had an effect too?

 

Ford has suffered from very poor product planning - not just rollout schedule, but actually reading the needs of the market; their products are often too limited for broad appeal (Focus with its backseat). Their C-segment CUV is average. Their midsize car is underwhelming and standing still as competitors accelerate. Their C-segment car is not quite right for the market. They have no real B-segment CUV yet (EcoSport is a placeholder). And then, it's all behind schedule. Their initial Ecoboost boost is also fading as competitors roll out with better GTDI engines. The 1.5 3 cylinder is behind. The 1.0 is now surrounded by equals (and some better). Their hybrid tech and strategy hasn't moved in years. Their new transmission rollout is slow. Their interior design has been stuck in reverse for about 5 years.

 

I used to be a huge fan of Mulally, but I realize now that he left the company on shaky ground with unclear operating and investment principles. Fields was unable to set them up. Let's hope Hackett gets the ball rolling.

 

On top of all of this, Ford cannot stay out of the news for recalls or lawsuits for this or that issue. The supply chain appears to be a wreck and assembly quality appears to be below standard for mass-market manufacturers. All of which needs to get straightened out.

 

All of this matters because the industry is starting to iterate much faster at the commodity level - software/tech, interior, powertrain. Body changes will slow and be reserved more and more for higher end vehicles where personalization can afford to go beyond colors. Ford isn't set up for this world, and they need to be in the next 2-3 years.

 

Quality has improved in the last few JD Power results (much of that because of SYNC 3), but I agree, there's been a lot of quality and manufacturing issues lately that have proven costly.

 

I think it's definitely good news that Hackett has fast-tracked some programs; while they're still behind where they would've been, it's better than being even later.

[akirby]

The problem with the quality issues is they keep reoccuring, so they're not doing anything to address the root cause. I suspect it's a combination of poor and/or rushed engineering and squeezing suppliers too hard.

 

The Adaptive steering fiasco on the new Edge/MKX is ridiculous.

[rmc523]

The problem with the quality issues is they keep reoccuring, so they're not doing anything to address the root cause. I suspect it's a combination of poor and/or rushed engineering and squeezing suppliers too hard.

 

The Adaptive steering fiasco on the new Edge/MKX is ridiculous.

 

That's a concerning thought with pulling Explorer/Aviator up.....hopefully they'll sort things out before then.

 

What's been going on with the adaptive steering on Edge/MKX?

[akirby]

Defective steering wheels. They tried to fix them at first, then had to just replace the wheels. While driving the wheel would suddenly move 90 degrees. Just the steering wheel, not the actual vehicle wheels but that would be pretty disconcerting if it happened while driving. Typical of Ford problems like this there weren't very many replacement wheels available at first and some had to leave their vehicles with the dealer for a few weeks. Now they're replacing them pretty quickly. I'm guessing we've seen about a dozen reported on the edge and mkx forums, maybe a bit more.

[Kev-Mo]

Overall, I was very surprised that Ford sales were down so much for July. The Northeast usually tracks below the national results but our dealership had a very strong month which had me thinking that Ford's national results would be better. We easily outsold every one of our direct competitors, sold 20 more than a competitor that spent millions of dollars on their dealership reconstruction about 5 years ago but has a revolving door with staff turnover. We even outsold a direct competitor that as a routine business policy sells vehicles well below invoice in order to produce sales numbers.

 

Do you include Toyota and Honda stores as 'direct competitors' or just GM stores?

[akirby]

I thought he meant Ford dealerships.

[rmc523]

Defective steering wheels. They tried to fix them at first, then had to just replace the wheels. While driving the wheel would suddenly move 90 degrees. Just the steering wheel, not the actual vehicle wheels but that would be pretty disconcerting if it happened while driving. Typical of Ford problems like this there weren't very many replacement wheels available at first and some had to leave their vehicles with the dealer for a few weeks. Now they're replacing them pretty quickly. I'm guessing we've seen about a dozen reported on the edge and mkx forums, maybe a bit more.

 

Oh wow, that's crazy. I hadn't heard about that.

[Deanh]

RMC...the lousy residuals may be reflective of the saturation of off lease units coming back not worth what Ford speculated.....Market is absolutely FLOODED with used Fusions right now...ironically the refusal of ford to allow Dealers to purchase units at lease end for the residuals may be biting them in the backside.....

[rmc523]

RMC...the lousy residuals may be reflective of the saturation of off lease units coming back not worth what Ford speculated.....Market is absolutely FLOODED with used Fusions right now...ironically the refusal of ford to allow Dealers to purchase units at lease end for the residuals may be biting them in the backside.....

 

Hmm. The used market being flooded with Fusions can't help new sales either, especially considering how little was changed.

 

So what, dealers just let the units go or what?

[akirby]

 

Hmm. The used market being flooded with Fusions can't help new sales either, especially considering how little was changed.

 

So what, dealers just let the units go or what?

 

The lease returns are sold at auction.

 

So wait - are you saying that the fact I can buy a 2013 Fusion for $15K that looks exactly the same as a brand new 2017/2018 Fusion with basically the same equipment will hurt new Fusion sales?

[Deanh]

Ford really doesn't care about used car sales...their interest in in new car totals....and if they had allowed the dealers to purchase lease end vehicles at their residuals they most likely wouldn't be losing their asses at auction right now.....they actually do have a system where the dealer can obtain a desirable vehicle at lease end, but no dealer in their right mind is going to pay 3 - 4000 OVER said residual value....the system is significantly flawed / mis-managed. But they basically have dug their own grave, so lease end losses are HUGE, and subsequently new car residuals are being effected, thsu making new leases uncompetitive...fine line I guess. I recall a similar scenario two years after the Expedition was released ( initially residuals were in the 70% range )....when they came off lease, market was flooded and residuals dropped 10-15 points, and Ford was losing it big time when they came off lease....

[akirby]

Why would a dealer pay the residual value for a trade-in if you can go to the auction and buy the same vehicle for a few thousand less?

[Deanh]

@Kirby...sounds simple doesn't it?.....and heres where I think Ford has shot themselves in the foot...they were , and I say were, asking ridiculous prices...dealers weren't paying them knowing they could go to the auction and POTENTIALLY pay less...( especially on trucks ) and I think what happened is they got burdened with too much inventory, and then were forced to take losses, rather large ones...so now they are victims of the very process they created....they basically got too greedy...heck, they have even instituted a dismissal fee of $395 charged to the customer if they turn their lease in and don't get another Ford...wonder how THAT is going to go down, whats next...a GAP fee?....

Edited August 2, 2017 by Deanh