News - Ford
Sales slump as Ford builds for the future
Ford shifts its focus to private sales and is not fazed by sales drop: Katic
14 Apr 2015
FORD Australia says it is not concerned about its sliding sales and market share, as it takes a more “long-term” approach to building its business by concentrating on private sales.
The local arm of the Blue Oval slipped to seventh place on last month’s sales charts behind Japanese importer Mitsubishi, with Ford recording 6023 sales, a drop of 14.4 per cent over the same month in 2014.
Year-to-date sales are down by 18.5 per cent, with the American-owned car-maker again in seventh spot a significant decline compared with 10 years ago when Ford was the third best-selling brand in the first quarter of 2005 behind Toyota and Holden, with 32,323 sales.
Speaking with GoAuto at last week’s Mondeo media launch in Canberra, Ford Australia general manager of marketing David Katic said the company was more focussed on customer satisfaction and building the brand than sales data.
“We are taking the long-term view to our business,” he said. “We are not interested in last month's sales results, we are interested in building our business for the long term.
“That's why we spend a lot of time talking about investing in the consumer experience. All those investments are not to see more cars today, it's to sell more cars over the long term.” Mr Katic said Ford Australia’s business model had been reset, and the company was now concentrating on altering the public’s perception of the brand, which will stop manufacturing cars here by October 2016.
“We are changing our brand from being a large car, fleet-focussed brand to being a consumer-centric broad manufacturer of vehicles and that takes time,” he said. “And we are absolutely where we want to be.” When reminded of Ford’s position at number seven on the sales charts, Mr Katic was unfazed, detailing some of the strategies in place to transform the business.
“That means you don't do rental volume. Our rental volume this year versus five-to-six years ago is literally thousands of units’ difference – multiple points of market share,” he said.
“We have also reduced our reliance on heavily discounted fleet volume. That's all part of us re-orientating to be more retail focussed. Overall there is a strategic shift in our business to be a broad based manufacturer rather than focusing on Falcon sales, which, we all know, we have been focussed on over the years.
“The second element is launching all these new products this year so we are in run-out of our products.” The new product that Mr Katic referred to include the just-launched Mondeo mid-sizer, a mid-life facelift for the Focus due in August or September, the Australian-designed and developed Everest full-size SUV coming also in September, the updated Ranger ute in July and the Mustang pony car in the fourth quarter.
With Ford’s two top-selling models, Focus and Ranger, now in run-out, Mr Katic said there is pressure on dealers with stock running low on both models, which is also impacting the sales figures.
“Our Focus volume has fallen significantly this year,” he noted. “We are going to struggle on Focus from now until September, because when you go to change to a major new model, 12 months ago we had to forecast our sales, and we have been exceeding our number on Focus.
“Eventually when you exceed your sales you only have so many you can sell, so you can't sell them twice. Don't take my word for it call up a dealer and try and get Focus stock and they will tell you they are frustrated because they haven't got enough stock.” Ford shifted 2615 examples of Focus to the end of March this year, a 45.4 per cent drop over January to March 2014, which has pushed it behind the strong-selling Volkswagen Golf (5357).
Mr Katic said having pent-up demand for models was a “good problem to have” and – despite wishing they had healthier stock levels – it was part of the company’ s wider plan.
“When we get to the new model, we want to have very low level stocks of the old model, that always allows you to get off to a strong start with the new model,” he said.
He took a swipe at companies that continually offer heavily discounted models and promote retail offers, arguing that it has a negative impact on the brand and, ultimately, customers.
“We are not one of these manufacturers that stack them high and sell them cheap,” Mr Katic asserted. “We are not doing that because it damages your residuals long term, and it hurts the customers when they go to re-sell.” Discussing Ford’s slow-selling Kuga mid-size SUV, Mr Katic admitted that Ford was “late to that segment” and acknowledged its more established competitors, but said it could increase its sales slowly overtime in a similar manner to the Ranger ute.
“When we went into the Kuga segment, we have been deliberately cautious. We are very confident in the product, the write-ups you guys (media) are giving us are good, so there are no issues with product,” he said.
“What we know is we are in a segment with competitors that have been there for 15 to 20 years – (Toyota) RAV4, (Honda) CR-V, Nissan with its X-Trail – really strong brands.
“Kuga is exactly where we want to be, and I would just point to Ranger and we have grown that tremendously. That's what we think Kuga will do over time against those entrenched competitors.” Just 785 Kugas have found homes since the start of the year, well off the pace of the top-selling Mazda CX-5 (6128), Nissan X-Trail (4989) and Toyota RAV4 (4379).
When asked if dealers were in favour of the shift in focus to private sales, Mr Katic said the dealer network is supportive of the strategy, and highlighted positive gains in terms of customer satisfaction.
“We sat with our dealer network two or three years ago now and we said ‘look we need to change as a business from this large-car fleet company, Falcon company, to being a broad-spectrum manufacturer’. And our promise to the dealers was that we are going to give you globally cutting-edge products. We think we are delivering that,” Mr Katic said.
“What we need Ford and the dealers to work on is to deliver a best-in-class consumer experience. And our dealers have been tremendously supportive. Not once have they resisted us.
“Our customer satisfaction is ramping up significantly. We won CANSTAR's five-star customer service award in December last year. So we are starting to get some external plaudits for some significant progress.”
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