It’s probably just synchronicity, but this year’s sales results have shown some surprising—and surprisingly depressing—trends for the Ford Motor Company … you know, the one U.S. automaker that successfully avoided bankruptcy proceedings in 2009. Despite that significant financial and reputational advantage, along with a number of well-received new products, Ford hasn’t been able to capitalize on market conditions to outgrow its cross-town rivals so far this year and, in fact, may soon be headed in the exact opposite direction.
At this stage, the Blue Oval trails both General Motors and the Chrysler Group by fairly large margins in terms of both September and year-to-date sales: Chrysler leads the way with a 27 percent improvement last month and a 23 percent jump year to date, and GM is firmly ensconced in second place, thanks to a September gain of 19.6 percent and a 16.1 percent upgrade in deliveries through the past month. Ford, on the other hand, notched a 9 percent September bump and is ahead of last year’s pace by 11.4 percent; but those raw numbers disguise the problematic situation in which Ford now finds itself.
At this rate, Ford may end up underperforming the industry—now up 10.4 percent on the year—before 2011 comes to a close.
So, what’s the problem here?
Focus, Fiesta, Fail?
If you’re looking for exemplars of Ford’s difficulties, you don’t have to search any further than the compact and subcompact segments. Here, the Ford Fiesta and Ford Focus were predicted to be surefire winners when they launched, since they were high-quality small-car products coming to market right when the country—and auto customers—were ready to embrace a new wave of fuel-efficient vehicles. Or something like that.
The reality, however, has been far different. Last month, the Fiesta earned 3,967 sales, representing a seemingly robust 30.1 improvement over September 2010. But the segment’s leader, the Nissan Versa, almost tripled the Fiesta’s September deliveries, finishing the previous month with 11,800 sales and a 68.1 percent monthly growth rate. The Hyundai Accent and Honda Fit outsold the Fiesta in September as well, with 4,525 and 4,734 monthly sales each. And sure, the Versa sedan and Accent are all new, but the Fiesta isn’t exactly old, and the Fit is very much a previous-generation model. That is, this isn’t a case where you can pin the Fiesta’s performance on it being at the end of its life cycle and having to face much newer rivals. Remember, too, the Chevy Sonic is only just now hitting dealership lots, and I wouldn’t be surprised if it caught up to the Fiesta in short order.
After all, the Sonic’s bigger brother, the Chevrolet Cruze, certainly had no problems catching up to and then surpassing the sales of the Focus. The Cruze has been a flat-out home run for Chevy, at some points topping the 20,000-unit mark in monthly sales. In September, the Cruze sold 18,097 units (a 423 percent improvement on the Cobalt’s September 2010 performance) while the Focus endured a fairly deep 24.1 percent sales slip to 10,309 units. And on a year-to-date basis, the Cruze tops the Focus by 187,524 sales to 137,315. Through the end of September, the Focus also is underperforming segment rivals like the Toyota Corolla, Hyundai Elantra, Honda Civic and VW Jetta.
The Ford Fusion did set an all-time September sales record, and that’s definitely an accomplishment worth noting. But it’s also worth noting that overall sales (and buzz) in the mid-size sedan segment have slowed appreciably in recent months—although there’s still plenty of volume in play here. Per data collated by the Wall Street Journal, there were 240,860 “Midsize” car sales in September, up .3 percent as compared to the same month last year, while sales of “Small” cars reached 160,334 units, an increase of 7.1 percent.
Sales of (Most) Real Trucks Are Real Hot
Ford looks better on the truck side of the business, but the problem is, so do Chrysler and GM. Going right to the full-size pickups, the Ford F-150 broke the 50,000-unit mark in September, achieving a 14.7 percent increase on its way to a 7.9 percent year-to-date mark—rates that are the lowest of the four big U.S. contenders. The corresponding September/YTD increases, in percent, for the Chevy Silverado are 35.8/10.7; for the GMC Sierra, 25.5/19; and the Ram 1500, 45/26.
As those numbers make clear, the full-size pickup segment is suddenly relevant again, too, now that gas prices have sunk below $3.30 per gallon. And naturally, the demand is going in the same direction for all manner of large body-on-frame vehicles. Thus, the Ford Expedition recorded a 17.8 percent sales jump in September; that outperformed the industry, but didn’t come close to the growth of the Chevy Suburban and Chevy Tahoe, up 83.2 and 62.5 percent, respectively, in September. And their Professional Grade counterparts, the GMC Yukon and GMC Yukon XL, moved ahead an equally respective 44.8 percent and 66.7 percent.
This trend will continue as long as gas prices remain stabilized at this level, and there’s no immediate reason to think they won’t. As a result, Ford could be caught in a bind. The company’s focus on developing crossovers has no doubt paid off up to now—the Ford Edge, Ford Escape and Ford Explorer all were on the September top-20 list—but it’s getting caught short in the face of the returning demand for “real” SUVs.
In other words, Ford’s fuel-efficiency problem is that—at this specific point in time—the company is too fuel-efficient. With people now acclimated to driving conditions in which paying $3.30 per gallon of gas seems low, drivers are slowly but steadily migrating back to big trucks and SUVs, and that runs counter to the Blue Oval’s new reputation as a “green” brand.
A Familiar Story
How strong are customer preferences for these kinds of vehicles? Not only is demand outweighing any leftover worries about who took a bailout and who didn’t, but it’s also putting the brakes on Hyundai’s momentum. Now, it’s important to call out Hyundai here because that company, according to John Krafcik, president and CEO of Hyundai Motor America, recently emphasized to Wards’ Auto that “We’ve got a laser-like focus on leading the industry in fuel efficiency.”
And how’s that working out for Hyundai in recent months? Well, it’s true that the automaker set another volume record in September, but its numbers were up an unspectacular 11.8 percent, a performance that trailed 16 other brands last month. Tellingly, sales of its core cars—the Hyundai Sonata, Hyundai Accent and Hyundai Elantra—were up just 4.2 percent, and both the Accent and the Sonata lost ground as compared to last year.
The moral of today’s story: When it comes to predicting customer behavior, don’t pay attention to what people say, just pay attention to what they buy—and the price of a gallon of gas.