Million market possible – Ford boss

FORD Australia admits it faces a tough first half of 2007 as Falcon sales slump by almost a third from 2006 levels – despite the fact its president says the Australian new-car market could crack the magic million mark for the first time this year.

Australia’s still-dominant large-car sector bounced back in February after a shocking start to the year, but two record sales months overall have already put total industry sales on track to exceed the previous national sales record of about 988,000 set in 2005.

Ford Australia boss Tom Gorman says that while a more accurate industry trend for 2007 won’t be known until the end of this month, election uncertainty may be the only factor that prevents 2007 being a record sales year - following a fundamental shift in private buying habits that resulted in booming sales of light and small cars in the first two months.

Asked if 2007 could be Australia’s first million-plus new-car sale year, Mr Gorman said: “It’s not impossible but still too early to call. The industry is traveling at a seasonally adjusted rate through January and February of just under 1.1 million units.

“I don’t know if this is going to be a record industry or not – it would have to be over 988,000 to achieve that,” he said. “But there is strong underlying strength in the industry, there are new models coming in many segments and there’s an abundance of retail offers available in all of them“We were very surprised by the overall strength of market demand in February,” he said. “We’ve seen two record months in a row. January was 10 per cent higher than the all-time record set last year and February was almost 84,000. In February 2005 the industry was 81,000, which went on to become a record full-year industry too.

From top: Fiesta XR4, Ranger, Mondeo and Transit (bottom).



“We think the industry will continue to be strong. Obviously there’ll be some consumer concern as we go into the election and perhaps as early as October we might see some people sitting on the sidelines. But there’s no indication of that at this point.”

Mr Gorman said Ford’s current 2007 industry sales forecast is 965,000, but this would be reviewed after the first quarter – “but if anything our forecast will go up not down”.

“Based on the first two months of the year, I would think 965,000 is probably at the conservative end. We’ll see what happens in March but we’ll have to evaluate whether it’s a structural change or not.

“If you compare the January-February 2005 industry we’re running 9000 units ahead just in the first two months. The market in March 2005 was very low at 87,000 – we have forecast a little less than that for March of this year. If it comes in at 90,000 (this month), I think the million’s not impossible. But 90,000 would be an enormous month for March.

“We may very well be wrong in our SAAR (seasonally adjusted annual rate) factors, but what you can’t deny is that January and February were both very, very strong months.”

Mr Gorman said that while a “tidal wave” of new Ford models would bolster its bottom line this year, Ford faced “unique challenges” with Falcon in the first half.

“The first six months of this year will continue to be a challenge. For us the whole story is Falcon performance. Our stocks are in very good shape. Our production is in good order. We’ve taken a lot of the tough decisions we needed to take at the end of last year, so from a production standpoint we think we’re in a good position.

“But clearly it’s going to be a battle for us this year in the (large car) segment. We’ve set our plans accordingly, but it’s going to be a battle month in, month out.

“You will see pick-up from Ford in the second half of this year. We have an absolute tidal wave of exciting product coming in Focus (diesel), Fiesta (XR4), (a rededisgned) Transit, (auto versions of) Ranger and (the all-new) Mondeo.

“But the first six months of this year will see some unique challenges for us. Falcon will be a struggle.

“Some stabilisation in the large car market this year was good to see, but we still have a lot of work to do on Falcon as the year runs its course. We know that and we’re prepared for it and the second half will be better for us,” said Mr Gorman.

Don’t wait for Falcon, Mondeo bargains

FORD says customers shouldn’t wait for unrivalled run-out deals on the BFII Falcon as it enters its final 12 months on sale.

“We could go chase (sales) volume in the near term and go slash and burn price and do all that and then what happens when the all-new falcon comes out?” said Ford Oz boss last week.

“There has to be a cohesive story so that you’re not in a position where the consumer has such sticker shock, and you have so destroyed the brand value that when the new one comes out people say it isn’t worth what you want me to pay for it.

“You walk a very narrow plank here. I’ve done this before so I know what it feels like. When you’re in the process of exiting one product and getting an all-new one in the future, you have to run the business properly and avoid the temptation of just dumping volume today, because you’re kidding yourself when you try to launch the new one.

“We want to go through an orderly transition from the BFII to the new Falcon and it takes some bravery to do that because as you know the pressure is always on to chase the volume,” he said.

Similarly, Mr Gorman says Ford is prepared to risk slower sales of both Falcon and the upcoming new-generation Mondeo by pricing the European designed and sourced mid-sizer right into the heartland of Falcon’s price range.

“We’re trying to be true to our brand DNA, which fundamentally is we make driving cars and every segment we compete in, from Fiesta to Focus to the new Mondeo later this year, to Falcon and Territory… our strategy is building great driving cars and that’s a critical part of our overall marketing strategy.

“Our primary source of engineering as you know is Ford Europe. We see them as a great engineering source and we believe that within the Ford world we know how to do it well here in Oz and they know how to do it well in Europe.

“So when you combine the domestic portfolio with the imported portfolio you get a brand DNA that makes sense.”

Mr Gorman again referred disparagingly to Holden’s mid-size model strategy, which recently saw the Opel-designed Vectra effectively replaced by GM Daewoo-built Epica, to be launched next month from a bargain-basement $25,990.

“We’re not about just bringing in Korean product, rebadging it and selling it at the low end. That’s not what we’re doing. We’re really trying to build our brand and if that means we have to be premium priced then so be it.

“We recognise that in the short term that may mean we have to walk away from some volume – and clearly in those segments we’re not the volume leader – but we do believe it gives us the position where we can stand by the product in terms of what it delivers.”

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