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Ford Canada's Dave Mondragon (Anthony Jenkins/The Globe and Mail)
Ford Canada's Dave Mondragon (Anthony Jenkins/The Globe and Mail)

The Lunch

Hit the cruise control? Not Ford's Mondragon Add to ...

It would hardly be the end of the world if Dave Mondragon took his foot off the accelerator.

After all, Ford Motor Co. of Canada Ltd. has grabbed first place in the Canadian vehicle sales race and hung on to it – except for the odd month here and there – since February, 2010. Dealer profits were double the industry average last year. The auto maker has launched new vehicles in critical segments in Canada. Its parent company is making tidy profits.

But easing up might be akin to declaring victory and Mr. Mondragon, a former football player, will have none of it.

“Every time we’ve done that we’ve fallen apart,” the outgoing Ford Canada president and CEO says. “We’ve been very stupid in the past. We make a lot of money; we start to buy and expand in vertical and horizontal integration. We get into businesses we don’t know. That will not happen again.”

This is the new Ford and on a larger scale, the new Detroit auto industry. The mantra that there is still work to be done to make the industry bulletproof is being chanted by not just Mr. Mondragon and his bosses in Dearborn, Mich., but also senior executives across town at Chrysler Group LLC and General Motors Co.

Mr. Mondragon is a 25-year veteran of Ford whose first job after graduating from Northeastern University in Boston with an MBA was at a Ford plant in Edison, N.J., where he sold computers to dealers. He has experienced his share of downturns over the years, but the crisis of 2008-09 that drove Chrysler and GM into Chapter 11 bankruptcy protection and eventually a bailout by Canadian and U.S. governments was the biggest gut-check.

“I went home [at Christmas]2008 and checked all my bank accounts,” the California native recalls over a lunch of soup, wraps and a bottle of water at the conference table in his sixth-floor office at Ford Canada’s headquarters in Oakville, Ont. “I looked at my résumé. I hadn’t looked at my résumé in 20 years.”

As it turned out, he didn’t need it. Ford escaped the worst of the disaster and never had to ask for government help. That was thanks mainly to what chief executive officer Alan Mulally describes as the world’s largest “home improvement loan,” a refinancing of more than $20-billion (U.S.) that gave Ford a stockpile of cash that allowed it to survive the worst of the crisis.

But it was more than just survival, because the money meant Ford was able to invest in new vehicles and new technologies, so it was poised to take off when the recovery came.

Ford is still getting a positive view from consumers and a sales bounce by virtue of not having taken any government money, Mr. Mondragon says, but the new and redesigned vehicles in Ford’s showrooms are crucial in vaulting the company into the No. 1 spot in sales.

“If [customers]came in and they saw the same product that we had back in 2004-05, they would have considered us, but they would have walked out,” he says.

Instead, they’re walking in, with the newest cars on the lot, the Fiesta subcompact, Focus compact and Explorer crossover driving Ford to a year-over-year sales gain of 6 per cent as of the end of June.

While there’s no doubt the new products from Ford, Chrysler and GM are vast improvements on the vehicles they made in the runup to the crisis, their gains this year – particularly on the car side – have come amid problems for the Japan-based auto makers that normally dominate the subcompact and compact markets in Canada.

The earthquake, tsunami and power crisis led to parts shortages that choked off supply of those key cars for Honda Canada Inc. and Toyota Canada Inc.

The imminent return of full production and full competition from the Japan-based companies is one of the things keeping Mr. Mondragon from putting his feet up.

“We’re looking over our shoulder a lot because we know there’s been some real challenges for the Japanese, but those are good brands that have a strong product lineup,” he notes. “They have loyal customers and they will come back. And when they come back, they’re going to want to take back [market]share from someone.”

Now that the vehicle lineup is where Ford wants it to be, he identifies two challenges that need to be met – changing the perception that the company’s passenger cars aren’t worth considering and making the experience of buying a vehicle a pleasant one.

The latter challenge is the Holy Grail for the entire industry.

“Nobody’s figured it out,” Mr. Mondragon acknowledges, but he points to Honda as offering the best experience among the mass market auto makers and Toyota’s luxury Lexus division as the leader among upscale brands.

Improving the buying experience starts with upgrading the company’s 440 dealerships across Canada.

He estimates 80 per cent of the outlets are old and have not had major work done on them for 20 years.

Dealers are, however, eager to step up, he says, buoyed by a year and a half of sales leadership and anxious to stay on top. About 300 have agreed to renovate their operations or build new facilities, each spending from $1-million to as much as $15-million, for a total of $300-million to $500-million.

The new dealerships will include wi-fi and work stations in the waiting areas, and see-through layouts so customers can watch their vehicles being repaired.

State-of-the-art outlets are merely the price of admission, though, in the hypercompetitive sales environment.

“The behavioural change is the key to the experience,” Mr. Mondragon acknowledges, which means more training of dealership personnel so that customers are treated with more courtesy and respect both when they’re buying a vehicle and when it’s in for repairs.

The focus is on building trust and making the purchase process more transparent.

Convincing the car-buying public that Ford offers more than F-150 pickups and Explorer utilities is a different challenge and will take a longer time to overcome, he says.

He says if he approaches 10 people on the street, nine of them will say Ford makes great trucks, but won’t even mention passenger cars.

“We’re doing a great job in terms of moving our brand consideration on the car side, but people still think of us as a truck company. It’s going to take many, many years to get that word out.”

The success of the subcompact Fiesta is an example of how the word is getting out, he says, pointing to fact that it is No. 2 in the segment after just 12 months on the market.

______

CURRICULUM VITAE

Roots

- Born: Nov. 6, 1960

- Raised on a 10-acre farm in Stockton, Calif., one of nine children

Education

- BA in psychology, California State University, 1983

- MBA, Northeastern University, 1985

- Walked out of an interview with IBM when they insisted he take a four-hour assessment test

Family

- Wife Stacey, son Nick, 12, and twin 7-year-old daughters Jessica and Emily

- Gave up golf when the girls were 1. “My time with them is on the weekend. From Friday night on is family time.”

Career

- Last job before CEO of Ford Canada was general manager of southwest U.S. market, which covered Texas and Oklahoma. About 80 per cent of the sales were trucks, making it a key high-profit and high-volume region for Ford in the U.S.

- Co-chairman of the Canadian Automotive Partnership council.

- More than 10 moves in 25 years

In the garage

- His first car was a white, 1970 Oldsmobile Cutlass Supreme, jacked up with chrome mag wheels.

- Now a 2011 Ford Explorer and F-150 Raptor pickup truck.

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