Ford slides deeper into China rut after worst sales ever

[akirby]

Ford runs on RAZER thin margins, it's very unprofitable to keep multiple factories making the same car so I don't at all believe it's more expensive for Ford to import the Focus Active from China than to make it locally, perhaps on a micro logistics level but not on a broader level. Ford is not importing from China to save on labor costs, they are importing from china because they have the capacity there to feed one big c-sedan growth market (China) and one much smaller shrinking market (US). It was always about making this car sustainable and I think people lost the plot with their China phobia. Globalizing product production makes low volume product diversity possible and unfortunately we can't seem to take advantage of that possibility. I think people fail to appreciate how volatile the car market really is and Ford has to constantly balance risk while providing their customers greater product choice.

 

Ford has lost a tremendous amount of global marketshare, it's dropped consistently since the year 2000 where it ranked 2nd and could be bumped out of the top 5 by Nissan this year or next.

 

They'll be making at least 2 C2 platform suvs in Mexico - not at all hard or expensive to fill that out with Focus sedans and hatchbacks and wagons/active models. There is no way that's more expensive than shipping them from China.

[Assimilator]

 

They'll be making at least 2 C2 platform suvs in Mexico - not at all hard or expensive to fill that out with Focus sedans and hatchbacks and wagons/active models. There is no way that's more expensive than shipping them from China.

 

 

The Maverick is not C2 based, it's derived from the Global B. What are the two you're thinking of?

Edited July 9, 2018 by Assimilator

[fuzzymoomoo]

 

 

The Maverick is not C2 based, it's derived from the B2. What are the two you're thinking of?

Escape overflow

[akirby]

Escape overflow and I'm pretty sure at one time there were two C class utilities. B platform seems way too small for Maverick (IMO).

[akirby]

C2 Escape gets longer and Maverick would be the "short C" ute.

[jpd80]

 

It was clear that the only reason Ford was going to import Focus is that they needed MAP for Ranger/Bronco and the new Mexican plant wouldn't be ready for a couple of years. Ford even said it was far more expensive to import them from China than to build them in North America. Therefore the assumption was once they had factory capacity it would move back to NA.

Ford actually came out and said it saved a billion dollars by moving Focus production to China,

yes it was to free up MAP and Hermosillo but it's also cheaper to source Focus form an existing

Chinese pant than to make production space n North America.

 

The last 12 months has been a PR disaster for Ford, Jim Hackett can take the blame for that,

he is just terrible at communicating strategy to the press and he's spreading it to his senior VPs.

Under Mulally, there would be no white space vehicles, you either announce coming product or not.

[Assimilator]

The Ford Maverick is a cheaper utility intended to replace the EcoSport (in the US) and slot below the Escape, it's using a cheaper and ruggedized version of the Global B. They are actually building the Maverick mules off of the new Fiesta. This is very common for the segment, the Compass and Renegade are using B-Segment platforms, as are all other vehicles in this class. You can get very spacious vehicles out of B-Segment platforms.

Edited July 9, 2018 by Assimilator

[jpd80]

C2 Escape gets longer and Maverick would be the "short C" ute.

Correct, the B Subcompact Ute is Ecosport replacement, I doubt it would be built in Mexico but maybe Cauautitlan?

[bzcat]

Ford's problem in China boils down to 3 factors:

 

1. It has a really bad partner. Chang'an is the least competitive of the "Big 6" state owned former workers collective auto company. Ford was late to China and got stuck with Chang'an. Relationship between Ford and Chang'an has never been great. The namesake Ford brand only has 1 partner whereas VW, Toyota, and Honda each have two. Ford's initial strategy in China was to deploy Mazda as its second brand, like GM's Chevy+Buick or Hyundai's Hyundai+Kia strategy. But that got blown up when Ford sold Mazda and that severely affected Ford's overall competitiveness in China.

 

2. Ford is too slow in introducing new products. The slow roll of C2 programs has finally caught up to Ford's ancient line up. Focus and Kuga are the oldest vehicles in their class. Mondeo hasn't changed significantly since 2006.

 

3. Ford is not aggressive enough in moving into the low cost market. Part of it was the One Ford strategy which means Ford China had to stick with Ford's global architecture and platform. But the big weakness in Ford's product line up in China right now is the lack of low cost vehicles. The JMC and Yusheng brands are minor players compare to GM's Wuling and Baojun brands. And the Ford brand itself has only 1 value oriented car (Escort). Compare to GM, VW, or Hyundai, the three leading players in China, Ford's product line up only covers about 50% of the segments in China.

[akirby]

Ford actually came out and said it saved a billion dollars by moving Focus production to China,

yes it was to free up MAP and Hermosillo but it's also cheaper to source Focus form an existing

Chinese pant than to make production space n North America.

 

That $1B savings came from cancelling the new Mexico plant. Not because it was cheaper to build them in China and ship them here. It would be cheaper to build them in an existing Mexico factory.

[fuzzymoomoo]

 

That $1B savings came from cancelling the new Mexico plant. Not because it was cheaper to build them in China and ship them here. It would be cheaper to build them in an existing Mexico factory.

actually I believe the $1B figure comes from the money saved from the $500M initially shifting to Hermosillo, and they saved a further $500M by going to China.

 

I believe with the new tariffs in place that $1B figure HAS to be smaller now. Theres no way it isnt.

[jpd80]

actually I believe the $1B figure comes from the money saved from the $500M initially shifting to Hermosillo, and they saved a further $500M by going to China.

 

I believe with the new tariffs in place that $1B figure HAS to be smaller now. Theres no way it isnt.

Gotta love Ford accounting, all based on avoiding spending cash but now Tariffs look to have killed much of the advantage.

 

I think Ford double counted the $500 M not going to Mexico and then using existing Chinese plant,

it's still just $500 M not spent on another Focus plant.

 

I wonder if we'll see another rework of Ford's plan now that tariffs are in the picture,

we still don't know how this is all going to affect Canada and Mexico plants supplying the US.

Edited July 9, 2018 by jpd80

[akirby]

The new plant was going to cost over $1.6B. They cancelled it and said we'll import Focus. There's your cost savings.

[kyle]

The Michigan Central Railroad deal was handled rather well, but that's strictly a local thing. Ford is still basking in the positive glow that generated in the Detroit area.

 

That is funny as shit!

 

Good to know they can handle the land deals properly and fuck up their automotive business:)

[jpd80]

But San Louis potosi wasn't for Focus, it was for the AVs that went to the new Flat Rock Plant..

[fuzzymoomoo]

But San Louis potosi wasn't for Focus, it was for the AVs that went to the new Flat Rock Plant..

It was for the Focus first. The AVs were always going to go to Flat Rock, they just expanded that project when SLP got cancelled.

[rmc523]

Ford actually came out and said it saved a billion dollars by moving Focus production to China,

yes it was to free up MAP and Hermosillo but it's also cheaper to source Focus form an existing

Chinese pant than to make production space n North America.

 

The last 12 months has been a PR disaster for Ford, Jim Hackett can take the blame for that,

he is just terrible at communicating strategy to the press and he's spreading it to his senior VPs.

Under Mulally, there would be no white space vehicles, you either announce coming product or not.

 

Agreed - Teasing a new product (or product type) is fine, as long as there's a legitimate product behind it, and within a relatively short timeframe. Teasing a generic "white space" product with [insert product here we'll come up with it later] as the backing is a terrible image to portray, especially when you just announced cutting 1/4 of the lineup "because".......and announced it 2+ years early...

[rperez817]

Ford's problem in China boils down to 3 factors:

 

1. It has a really bad partner. Chang'an is the least competitive of the "Big 6" state owned former workers collective auto company. Ford was late to China and got stuck with Chang'an. Relationship between Ford and Chang'an has never been great. The namesake Ford brand only has 1 partner whereas VW, Toyota, and Honda each have two. Ford's initial strategy in China was to deploy Mazda as its second brand, like GM's Chevy+Buick or Hyundai's Hyundai+Kia strategy. But that got blown up when Ford sold Mazda and that severely affected Ford's overall competitiveness in China.

 

2. Ford is too slow in introducing new products. The slow roll of C2 programs has finally caught up to Ford's ancient line up. Focus and Kuga are the oldest vehicles in their class. Mondeo hasn't changed significantly since 2006.

 

3. Ford is not aggressive enough in moving into the low cost market. Part of it was the One Ford strategy which means Ford China had to stick with Ford's global architecture and platform. But the big weakness in Ford's product line up in China right now is the lack of low cost vehicles. The JMC and Yusheng brands are minor players compare to GM's Wuling and Baojun brands. And the Ford brand itself has only 1 value oriented car (Escort). Compare to GM, VW, or Hyundai, the three leading players in China, Ford's product line up only covers about 50% of the segments in China.

 

Thank you bzcat sir for this summary, it's very helpful for understanding the China market and why Ford has been floundering there.

 

Issues 2 and 3 also affect Ford's operations in India and other emerging markets.

[bzcat]

But San Louis potosi wasn't for Focus, it was for the AVs that went to the new Flat Rock Plant..

 

San Louis Potosi was for Focus. The speculation was also that it will be for Escape/MKC overflow or perhaps Transit Connect. We didn't know at the time that Cuautitlán and Hermosillo will be empty because we all assumed Fiesta and Fusion will continue.

[bzcat]

 

Thank you bzcat sir for this summary, it's very helpful for understanding the China market and why Ford has been floundering there.

 

Issues 2 and 3 also affect Ford's operations in India and other emerging markets.

 

Yes, #2 and 3 are also big problems in South America, which I've posted before as well.

[Assimilator]

I'm not necessarily disappointed that Ford's marketshare continues to shrink on a global level as long as they are proud of the products they are making. They may not be able to sell vehicles at the prices and volume needed to be an Automotive SuperPower like VW or Toyota. I certainly don't get the impression that Ford wants to be bigger, they never talk about sales leadership anymore. Perhaps Ford's outlook is more about being the 'next thing' instead of tackling the changing market as it exists today. Ford tends to show up at the right time with the right product, even if it seems like they are quite late. But they usually don't show up with half-measures...USUALLY *cough* EcoSport *cough* Ranger *cough*. I don't expect a Ford miracle but they are ambitious and hopefully we'll see that soon. I still think Ford will do fine... they have some great new technologies they are deploying at an industry leading scale, although I still have a hard time making the product count work based on the products I know are in development. I think Ford will still be more about getting the basics back in shape first.

Edited July 10, 2018 by Assimilator

[jcartwright99]

I'm not necessarily disappointed that Ford's marketshare continues to shrink on a global level as long as they are proud of the products they are making. They may not be able to sell vehicles at the prices and volume needed to be an Automotive SuperPower like VW or Toyota. I certainly don't get the impression that Ford wants to be bigger, they never talk about market growth. Perhaps Ford's outlook is more about being the 'next thing' instead of tackling the changing market as it exists today. Ford tends to show up at the right time with the right product, even if it seems like they are quite late. But they usually don't show up with half-measures...USUALLY *cough* EcoSport *cough* Ranger *cough*. I don't expect a Ford miracle but they are ambitious and hopefully we'll see that soon. I still think Ford will do fine...they have to with this many commitments.

 

Ecosport is a stop gap and we all know it....but it is selling. We all know the Ranger should have been out 5 years ago.

 

My take is the next 3 years will really be crucial to Ford because the now matters, just as well as the future. Their hybrid options over the next few years will define them so they better be great. I think they can do it with all of their experience with hybrids. They just have to give it their best shot, no half assin things. Hybrids will give us the best of both worlds without having to fully commit to electric. If they come out with an hybrid Explorer that has 0-60 under 6, 30/36 mpg and tow a decent amount for roughly the same price as the ICE version. Winner Winner chicken dinner!

[Assimilator]

I do think Ford will set the standard for the industry when it comes to electrification, perhaps not BEVs but definitely Hybrids which has been mishandled by the industry at-large. I'm excited to see how Ford makes Hybrids mainstream and desirable again. Ford's BEV program is less interesting right now but I think the Mach1 will be the right product to bring them back to the BEV market and should appeal to far more customers. It won't be the only one, the Mach1 really is the agreed upon shape of the mainstream BEV market, all the big boys will have something similar.

Edited July 10, 2018 by Assimilator

[1984Poke]

I do think Ford will set the standard for the industry when it comes to electrification, perhaps not BEVs but definitely Hybrids which has been mishandled by the industry at-large. I'm excited to see how Ford makes Hybrids mainstream and desirable again.

I had a Lincoln MKZ hybrid for 3 years (leased one from 2013-16) and loved it, and I understand the more recent Fusion/MKZ cars are even better. I never had any problems with the engine/drivetrain combination on that, my first-ever hybrid vehicle, and I am looking for my next vehicle to be a hybrid (I currently have a 2016 2.0L MKC).

 

I would seriously consider a hybrid MKX/(Nautilus) or hybrid MKC/(or whatever new nameCorsair??) or another MKZ as my next vehicle. I really hope Ford/Lincoln goes all in on making a name for themselves as makers of top quality hybrid vehicles.

[kyle]

Ford tends to show up at the right time with the right product, even if it seems like they are quite late.

 

A lot of their ability to pull out a late come back rests equally upon their dealer network. They are in the small towns where you don't find a Toyota or Honda dealership and also duke it out in the metro areas with the big boys.