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Ford Increases Focus' Warranty, Will Boost Ad Spending

Monday September 9,2002

DETROIT -- Mr. Norihiko Shirouzu writing for the Wall Street Journal reported that Ford is trying to compete with Hyundai's Elantra and Honda's Civics, is planning a major marketing campaign to "reinvigorate" its small Ford Focus car.

They quoted Steve Lyons, head of the auto maker's Ford Division,"My immediate priority is to reinvigorate the Ford Focus," he went on to say that the effort will start with a move to boost its television-advertising spending and upgrade the Focus' powertrain warranty.

In a conference call with reporters Mr Lyons said that Ford plans to make a big commitment this (model) year" and will try to significantly boost its sales.

The Focus has been recalled eight times since its debut two years ago, and the National Highway Traffic Safety Administration has six different ongoing investigations regarding the Focus.

Mr. Lyons went on to say that Ford, which has been trying to return to profitability after posting a $5.45 billion net loss last year, needs to upgrade the Focus' powertrain warranty and spend more on its advertising to compete with its rivals, some of whom are offering a generous 10-year or 100,000-mile warranty and advertising heavily on TV.

He revealed Ford will offer a 5-year or 100,000-mile warranty on all 2003 Focus models, compared with the current 3-year or 36,000-mile warranty. "We believe this is the way to attract first-time and young buyers" to the Focus, as many of such consumers are now being lured away to Korean brands like Hyundai and Kia Motors Corp. Mr. Lyons added that Ford dealers "tell us this is an important part of their selling equation."

He went on to say he feels the extended warranty will be competitive because " it will be transferable unlike many of our competitors," whose warranties cover only their first owners. That Ford's powertrain warranty is transferable, said Mr. Lyons, will likely improve the car's resale value. "That's a big, big advantage."

In addition to offering a better warranty, the company plans to give "a significant boost" to its advertising spending for the Focus. "We are actually going to take our advertising budget to a level that is higher than even when we launched the car," said Mr. Lyons. The Focus hit the market two years ago.

Much of Ford's ad spending for the Focus will go toward TV, according to spokesman Mark Schirmer, with the amount doubling from a year earlier and increasing furthur in 2003.

Mr. Lyons added Ford will likely sell some "240,000 or so Focuses" in the U.S. this year. The aim is for the extended warranty and stepped-up advertising to boost sales to 275,000 to 280,000 annually, a level Ford achieved when it first launched the car.

He said the Focus "is going to be in our line for the long term and we are going to get very committed to it."