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Moving metal: Both Ford and Holden spent millions to shift new cars in 2005.

Decelerate, brake, turn, light throttle: Ford expects a slower 2006 sales year

Ford logo17 Nov 2006

THE commodities boom in Western Australia has helped prop up new-vehicle sales during 2006, but Ford Australia believes overall sales for the calendar year will not surpass 965,000.

This will be down around 24,000 vehicles on last year’s 988,269 sales record – and 5000 below the official Federal Chamber of Automotive Industries estimate – but, as Ford Australia president Tom Gorman points out, it will still be the second best on record.

"I don’t know that we’ll see exactly 965,000 but somewhere between 960,000 and 965,000 would be our forecast," he said.

There were also two sales events that occurred last year that Mr Gorman does not see happening this year – Holden’s "you pay what we pay" campaign and Ford’s own response, which was the "one, two, three" cashback program.

Mr Gorman said Ford would not repeat that program this year and he believed it was unlikely Holden would release a price campaign so soon after the launch of the VE Commodore.

"For Ford in November, we are not going to produce the numbers that we produced last year," he said. "We had a lot of marketing money in the marketplace and we were running out of high levels of Falcon stock and we spent a lot of money to move the metal." However, Ford plans to still be aggressive for the remainder of the year. Ultimately, how the year ends would depend on the success of run-out campaigns, Mr Gorman said.

On the back of slowing sales this year Mr Gorman also believes 2007 will be a stagnant sales year, thereby shelving any expectations of sales smashing the "magic million" any time soon.

After last year’s boom year, some analysts and company executives had predicted that sales this year would hit one million. However, petrol price volatility and interest rate woes have slowed demand, particularly for large cars.

By contrast, the light- and small-car segments have benefited from changing buyer habits. Thanks largely to the commodities boom in WA, new-vehicle sales are up almost 14 per cent over last year while retail sales are off between three per cent and eight per cent in other states.

The traditionally better-selling states of Victoria and NSW are down almost five per cent in year-to-date terms over last year.

Next year, Mr Gorman expects the light and small-car segments to maintain their momentum and large cars to lift sales from around 13.6 per cent this year to 14 per cent on the back of the newer offerings.

"The industry overall will be the same," he said.

 center imageLeft: Fiesta and Focus (below).

For 2006, light cars are tipped to make up about 12 per cent of the overall market with small cars around 22 per cent.

However, Mr Gorman believes the mix of SUVs – down by 15,000 total units this year – will grow slightly next year as petrol prices settle from their volatile highs this year.

New entrants like the Mazda CX-7, Holden Captiva and Subaru Tribeca will also offer buyers a broader range.

"There’s a lot of interesting crossover activity," he said. "So we see that segment growing next year." Given Ford’s sales prognosis for 2007, Mr Gorman said the company’s recent realignment of production and 20 per cent reduction of workers were in line with its overall sales expectations for 2007.

From November 20 Ford will reduce production from 450 cars a day to 360. Its move follows similar realignments by Holden and Mitsubishi. Ford will also close its factories over the traditionally slow Christmas period for four weeks.

"For us what’s important is to produce with stability and predictability," Mr Gorman said. "Even if you take a down day a month you lose your rhythm in manufacturing it isn’t the right thing to do, so what we’ve done is be more conservative in terms of setting our market plans for next year." Mr Gorman said if the market was stronger Ford had some flexibility to lift production through overtime.

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