Ford Motor announced record profits this week and the Ford Focus compact car was the world’s best-selling vehicle nameplate through the first half of this year. So time for a victory party at headquarters in Dearborn, Mich., right?
No. In fact, I think some important parts of Ford’s overall performance are disappointing and I can also argue that Ford of Canada is underachieving.
Start with Canada. On the year, Ford of Canada has lost 0.1 per cent of market share, with sales up just 2.7 per cent through the end of September – in a market up 3.5 per cent overall. So Ford’s performance sales-wise in Canada is lagging the market.
Moreover, Ford’s growth is tied to the F-Series pickup. According to DesRosiers Automotive Consultants, F-Series sales are up a stunning 13.7 per cent on the year. Now that’s a truly amazing achievement, given the F-Series is coming off a record 2012, when more than 106,000 Ford full-size pickups sold. Moreover, the F-Series is facing hugely stiff competition from Chrysler’s Ram and General Motors’ Chevrolet Silverado and GMC Sierra, both of which have been reinvented for 2014. So kudos to Ford for growing big rig sales in a tough environment.
But cars? Under CEO Alan Mulally, Ford has pushed to make its car lineup the equal of the F-Series and other light trucks such as the Explorer and Edge. Around the world, the success of the Focus would suggest progress. But in Canada, there is much work to be done.
The evidence? Through the end of August, DesRosiers reports that Focus sales are down 3.3 per cent in Canada. It’s an even more troubling story for the Fiesta, which, by the way, Ford says in the world’s fourth best-selling nameplate. Fiesta sales in Canada were off 25.4 per cent through the end of August.
Some might say the Ford Fusion intermediate sedan is a bright spot: sales overall up 25.8 per cent, putting the Fusion in the No. 8 spot overall among passenger car sales. However, according to Polk registration data, just 60 per cent of Fusion sales are at the more profitable retail level. Less profitable fleet sales represent 40 per cent Fusion sales. Among competitors, 98 per cent of Honda Accord sales are retail. Toyota Camry? Eighty-five per cent retail. Nissan Altima? Nine-one per cent retail. If you’ve rented a mid-size car lately, was it a Fusion?
Meanwhile, Ford’s quality issues remain noteworthy. In the most recent J.D. Power and Associates Initial Quality Study (IQS), Ford ranked No. 27 of 33 brands, the same as 2012. And Consumer Reports ranks the Ford brand fourth from the bottom in its annual auto issue, with just 20 per cent of its vehicles recommended. Among mainstream brands, 89 per cent of Mazda’s models are recommended by CR, while 79 per cent of Honda’s are recommended and 73 per cent of Toyota’s.
I’d generally agree with CR’s overall assessment of the Ford brand: “Newer models drive like European sports sedans, but they’re let down by unreliable and complex controls and so-so-fuel economy. Hybrid technology is impressive.” Ford’s newest models look terrific and they have best-in-class driveability. But Ford hasn’t aced the big quality studies in a couple of years now. It’s time.
The point is, Ford is now immensely profitable, but there is work to be done. Ford posted a record third-quarter pre-tax profit of $2.6-billion this week, up $426-million from a year earlier (all figures in U.S. dollars). And Ford also boasted a combined profit in its three regions outside North America. South America and Asia Pacific Africa are back filling the coffers, and the losses in Europe are slowing.
Profits are wonderful, but I’d say it’s time to plow a very serious chunk of Ford’s earnings into acing the quality tests – especially into making complex technology simple to operate for the masses. That will silence the critics and scare the competition like nothing else.