Ford Simplifies Complex Trim Choices For Buyers
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DETROIT, Oct 29, 2008; David Bailey writing for Reuters reported that Ford Motor Co is rolling out a sharply simplified vehicle line-up for the 2009 model-year by slashing thousands of configurations of features from its order book in a bid to cut costs and smooth showroom transactions.
For Ford, getting back to its roots as a provider of solid transportation for the masses means making it much easier for a customer to research a car in the modern way, online, and find it at a local dealership.
The end result, Ford hopes, is a simpler manufacturing process with lower costs and easier sales for its dealers, who also could see inventory carrying costs go down with fewer undesirable models sitting unsold on their lots.
Most customers buy vehicles from the existing inventory at the dealership, so customers who do not find the cars they saw online at the dealer lot may leave empty-handed or a sale will require increased incentives.
The number of orderable configurations has been cut by 90 percent from the 2008 model year to 2009 -- reductions that reach 95 percent from the 2008 to 2010 period.
For example: the Ford Edge crossover could have been ordered 14,208 ways in 2008, and by the 2010 model year customers can order it in 204 potential configurations.
The Ford Escape had 5,472 possible combinations in 2008 and will have 429 in 2010.
And the 2010 Ford Fusion sedan will have 104 possible combinations, down from 2,602 in the 2008 model year -- including a "Rapid Spec" package of features Ford expects to make up about 25 percent of the overall sales of the Fusion.
That particular Fusion package includes power seats, windows and door locks, cruise control and an adjustable steering wheel with integrated audio controls for a stereo with compact disc player and the ability to hook up an MP3 player, satellite radio, moonroof, and the Ford Sync system.
Japanese automakers have focused for years on cutting costs by using common parts such as seat frames and latches that customers do not see, and offering options in simple groupings that reduce manufacturing costs and increase revenue.
Ford's reductions stemmed from a study conducted by nearly two dozen employees and a handful of dealers to find out what customers wanted in areas around the United States and increase their odds of finding the right vehicle on a sales lot.
The Ford team included representatives in marketing and sales through finance, with input from product development and manufacturing, where fewer combinations will reduce engineering and manufacturing costs as well.
"Less certainly can offer more to customers," said Brad Munn, Ford's cross-vehicle product strategy manager. "A tighter focus on delivering the combinations our customers want most can yield benefits across the board."
Ford has aimed under Chief Executive Alan Mulally to unify vehicle development to take advantage of global scales, and pare the dizzying array of vehicle ordering combinations.
The automaker has made progress under the plan, increasing its lead over U.S.-based rivals General Motors Corp and Chrysler in Consumer Reports' new vehicle reliability rankings, though still trailing the top transplant automakers.
For Ford, the question is whether its maneuvers on product development can translate to sales quickly enough with U.S. industry auto sales faltering in the deepest downturn in two decades and most analysts now looking to 2010 before a significant recovery in the world's most lucrative market.
The automaker posted an $8.6 billion net loss for the first half of 2008, following on losses in 2006 and 2007. It reports third-quarter results next week amid the world financial turmoil that has pushed U.S. consumer confidence to the lowest level since the Conference Board began tracking it in 1967.
Editing for Reuters by Gary Hill
