Ford (F) wants investors to think that there is profit in small cars. Since there is no money in SUVs and pick-ups, that is the company’s only option. Gas prices are probably not going back to $2 a gallon.
The Ford PR machine ramped up recently making the case that the company could make a nifty margin on tiny vehicles which sell for under $20,000 a year. It will retool its factories to get cost-per-vehicle down.
According to The Wall Street Journal Jim Farley, Ford’s global vice president for marketing and communication, said in a presentation to journalists here that the new Ford Fiesta, the company’s latest stab at a small, global car, was "core to the DNA of the company and a catalyst" for necessary change.
Odd as it may seem, small cars are core to the DNA of Honda (HMC), Toyota (TM), Nissan, VW, and some divisions of GM (GM). Ford is racing to a segment of the vehicle market which is already extremely crowded and one where a number of its competitors have a significant head start. Toyota and Honda may be a half a decade out in front of Ford in the manufacturing and marketing of hybrids.
Ford’s is also up against the "quality" road block. There is not much evidence that consumers put the company at the top of the food chain in customer satisfaction. As a matter of fact, Ford may be close to the bottom.
Ford owned the SUV and pick-up markets and it was a hell of a business for a long time. In the small sedan part of the industry, it is at the end of a long line.
Douglas A. McIntyre
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