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Ford to trade on Territory success

Global SUV: small but important export deal with South Africa has increased Ford Australia's standing within the Asia-Pacific Ford world.

Ford Australia's regional Asia-Pacific design role gains momentum

Ford logo29 Mar 2005


THE Ford Motor Company expects to see its Australian operation play a more forceful role in vehicle development throughout the Asia-Pacific region.

According to Ford Motor Company vice-president and Asia Pacific and Africa chiefoperating officer, Peter Daniel, the success of the Broadmeadows-built Territory and the breakthrough export deal struck with South Africa, had strengthened Ford Australia’s standing as a supply source in the region.

"As you’ve seen with the Territory, I think Australia has been acknowledged globally now within the Ford system to say they’re a credible PD (product development) source, so longer term we’ll have to explore more what we can do toutilise Australia across our region," Mr Daniel said.

"I think there’s the capability there to lunch off what they’ve already shown with Territory and what they’re capable of doing. So I would, longer term, expect to see Australia play a forceful role in PD within the Asia-Pacific region."Mr Daniel said rising affluence levels in ASEAN countries had also madeAustralia a better prospective vehicle source, however he stressed thatfuture export contracts would hinge on governments striking more free-tradeagreements in the region.

"As the free trade opens up between Australia and the rest of Asia, that creates potential opportunities for us with the Territory," he said.

"There is a free-trade agreement between Australia and Thailand – that opens up a possibility for us to explore the business opportunities further– (and) if we can get further breakdown with free trade, that will potentially open the door for more exports."In addition to trade, further export barriers for Ford Australia include production constraints at Broadmeadows, the substantial amount of additional investment required to make Territory compatible for left-hand drive markets, and product similarities across different Ford operations that can force two or more operations to compete for a single export deal.

Ford’s RWD vehicle platform for the Middle East derives from North America, forexample.

"We’re looking at expanding our platforms and using them across regions globally and then there is, in a lot of cases, a ‘beauty contest’ betweenwhich one you choose – which one is more efficient, which one is more or less investment than the other," said Ford Motor Co executive vice-president and Asia Pacific and Africa president, Mark Shulz.

Mr Schulz said new export deals were not considered a "critical" requirement in ensuring Ford Australia’s future as a vehicle manufacturer – but that new opportunities should nonetheless be sought.

"I don’t know that it’s critical, but I would say that all the affiliates that we work with should look for opportunities," he said.

Announced earlier this month, Ford Australia’s export deal with South Africa will initially be worth 2000 Territory models per annum. Deliveries startin April.

"This is a big step, really, for the whole Ford Australia team," said Ford Australia president Tom Gorman. "We’re now recognised within the Asia-Pacific team as producing outstanding vehicles and to add South Africa to our list of export customers is a big step forward for us.

"We’re going to put it out there and see how it takes and then we’ll decide where we go from there."

Ford boss insists Falcon sales must improve

FORD Australia must do better with sales and marketing of its Falcon large car, according to president Tom Gorman.

Down 3.5 per cent after the first two months compared to the corresponding period in 2004, Falcon currently accounts for 34.2 per cent of the market – 8.1 percentage points behind the market-leading Holden Commodore, which is alsodown 2.3 per cent YTD.

"We should be doing better than this, and that’s a challenge back to our team– this is one segment where I think we do have a fantastic product, and even though the segment is declining we’re not happy with our market shareperformance here," Mr Gorman said.

"Are we a long way from where we want to be? No, we’re not a long way from where we want to be. But we can do better on this product."Notwithstanding Ford Australia’s long-term plan to take back market leadership in Australia, Mr Gorman said he wanted Falcon to return to its 2003/4 level of around 36 per cent.

He would not disclose how this could be achieved, however he did indicate that Ford was not about to stage an aggressive "blunting" operation this far out from the VE Commodore launch, which will occur in around 12 months’ time.

An all-new Falcon is due in 2007.

"Every company has a blunting strategy. We all have a rough idea what the other guy is going to do and when he’s going to do it, and I think that tactically, as marketeers, when we sit down and review our actions we don’t think of our actions in vacuum," Mr Gorman said.

"We look at our actions relative to where the other guy’s strengths and weaknesses might be.

"The fact of the matter is that to start now, I’m not so sure that that’s the right strategy."Mr Gorman said competitive pricing in the large-car segment, migrationof Falcon customers to Territory and the company’s pre-occupation withensuring Territory was successful had all contributed to the Falcon’s sales decline.

"I don’t want to draw the picture here that Falcon is in a position where it’s acrisis – it’s not anywhere near a crisis," he said.

"Some of the lost volume that we had, frankly, in the last month has been at the entry level. The market is getting more competitive and you can look at the pricing activity in the marketplace, it has been very aggressive but, again, we’re not that far away from where we want to be.

"(But) we need to make sure we stay focussed on our key product lines. We had a great month with Territory, and that can sometimes be a distraction –you know, you get excited about pushing Territory, and marketing the Territory, and you take your eye off the ball somewhere else," he said.

"As a company we have to stay on the bread-and-butter products for us, which are Falcon, Ute, Territory, Focus – those are the key areas where we have to make sure we stay focused.

Boom market to end - Gorman

FORD Australia president Tom Gorman has indicated that the Australian automotivesector would not be able to sustain its record sales run and has forecast 955,000 sales – the 2004 total – for the 12 months ending December 31, 2005.

This is well below the Federal Chamber of Automotive Industries’ (FCAI) official forecast, which remains at 980,000 for total vehicle sales in 2005.

According to Mr Gorman, who is also the FCAI president, sustained growth in thebooming small-car segment would be difficult to sustain, as would sales madeas a consequence of the five per cent tariff reduction for imported passenger cars.

"The growth in the small-car segment in particular, I think that reflected a great deal of pent-up demand largely coming in the guise of Mazda," Mr Gorman said.

"Mazda has said that they were short product all last year so I think they’ve now been able to get some of that product in and that has led to them being able to satisfy a lot of customers that were waiting at the back end of last year.

"I also think that even though a lot of action was taken in December pre-tariffreduction, I don’t think the consumer really grasped that, and then immediately posttariff reduction, I think there was a lot of excitement and activity in the marketplace.

"Whether that excitement now lasts through the full year – I don’t see it happening."

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