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Ford Banks on Edge for Turnaround



Can Ford Motor Co. regain its Edge? The automaker certainly hopes so with the introduction of a new crossover aimed at the U.S. auto market’s fastest-growing segment.


The Edge is arguably the automaker’s most important product for 2007, coming along at a time when Ford struggles to reverse sharp declines in sales and market share that are generating billions of dollars in losses. The new crossover is critical if Ford hopes to catch up with import marques, like Honda and Toyota, which now dominate the crossover segment, which by Ford’s own analysis, is quickly replacing the once-booming sport-utility vehicle segment.


Equally important, the Edge has to give some grounding to Ford’s Bold Moves marketing campaign, proving to an increasingly jaded market there’s more to the marque than competent, but distressingly boring products, such as the Five Hundred sedan.


“The days of trying to convince ourselves” that bland product will work “is over,” said Mark Fields, Ford’s President of the Americas, following the first media test drive of the Edge, last week.


Specific style


While many crossovers are designed to look just like conventional sport-utility vehicles, Ford designers chose to give the Edge a more distinctive look, explained Peter Horbury, head of styling for North America, starting with the striking, three-bar grille that will become a central design theme on future Ford products. That’s critical if the automaker hopes to gain traction in the increasingly crowded crossover segment.


At the beginning of the decade, crossovers “were nothing more than a niche segment,” said Ford’s chief analyst, George Pipas, accounting for barely 500,000 vehicles a year. When the books close on 2006, however, sales of car-based utility vehicles should reach 2.4 million, exceeding those of traditional, truck-like sport-utes for the first time. Pipas estimates crossover sales will “be growing to probably three million by the end of the decade.”


The shift has been especially painful for Ford, which “basically defined the SUV segment since 1984,” with the launch of the mid-size Explorer, said George Peterson, director of the consulting firm, AutoPacific, Inc.


The Explorer, along with the big F-150 pickup, generated the lion’s share of Ford’s profits over the last two decades. But in the face of rising competition and the overall decline of the SUV, Explorer sales are currently running half their peak. With volumes down and incentives on the rise, the new crossover segment is a siren call.


The automaker’s earlier efforts have had mixed results. The compact Escape is one of the market’s more popular entries, but the full-size Freestyle suffered from the same damned-as-bland problems that have limited sales of the big Five Hundred sedan. Both models are due for reskins featuring what Horbury calls “the teeth” of the Edge, the chrome, three-bar grille.


Marketing like hell


Like its domestic rivals, Ford has not only seen a decline in sales, but a sharp slide in showroom traffic. A growing number of American car buyers now simply ignore domestic offerings, according to analyst Peterson. Getting them to put vehicles, like the Edge, back on their shopping list won’t be easy, even with good reviews for a vehicle Peterson suggested is “close to a home run.”


To back up new products such as the Edge, Ford is shifting ad resources from conventional media, such as network television, putting more emphasis on experience marketing — such as the traveling road show accompanying country music star Toby Keith on tour. And Ford is focusing heavily on the Internet, according to Edge marketing manager Jeri Wood.


Leading up to the launch of the new crossover, Ford created a special preview Web site using a proprietary algorithm to continually change the suggested price for the Edge, as well as the mix of standard and optional features. By measuring visitors’ response to the various alternatives, Ford determined both the final content and pricing — which starts at just under $26,000.


The Edge may be important, but with projected annual sales of 100,000, it will account for a modest share of Ford’s overall U.S. volume. So there’s a lot more coming. By the end of 2008, Fields noted, 70 percent of Ford’s products, by volume, will be new, including a production version of the well-received Fairlane people mover concept vehicles, which is expected to replace the slow-selling Freestar minivan.


As significant as that may sound, the real transformation won’t take until late in the decade. With the painful revision of Ford’s Way Forward turnaround plan, Fields’ team has torn up much of its vehicle strategy, he told TheCarConnection. Among other things, expect Ford to now target new niches, such as the fast-growing B-car segment.


To make a sound business case in a traditionally unprofitable niche, Ford will borrow heavily on the design and engineering work already underway in Europe, where these minicars are a central part of the market.


Turning Ford into a truly global company is critical, but difficult, process, those both in and outside the company agree. Ford has long operated like a network of fiefdoms, conceded Fields, where decisions were “often made by whim,” rather than sound strategy. That has only encouraged a corporate culture of “risk adversity,” Fields acknowledged, adding that “Now we have a clear point of view (which) allows us to be more decisive.”


The Edge is designed to demonstrate that new approach to the market. With the new crossover just hitting showrooms, Ford is anxiously waiting to see how the market, in turn, responds.



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