Ford Sticks With Small Car Plans

November 4, 2008

Ford CEO Alan Mulally kicked this week off by saying that the Detroit carmaker will not veer from its previously stated strategy of bringing small, fuel-sipping cars to the marketplace.

Mulally’s assertion comes during a dramatic decline in fuel prices which have re-energized sales of larger SUVs and trucks. Ford has been touting its 2009 F-150 pickup truck with an aggressive advertising campaign focused on Sunday NFL games. Mulally, however, believes that the drop in fuel cost is temporary. “Prices are going to stay relatively high,” Mulally said in Automotive News, “even though they’re down right now.”

Ford’s small car plan starts with bringing its European models, the Focus and Fiesta, to the US in late 2009. There has also been talk of bringing a redesigned, rebadged version of Ford’s microcar, the Ka, to the US marketplace. The Ka will hit the streets of Europe in the spring of 2009. “If it proves to be a success, the Ka could find itself on our shores by mid-2011,” a company spokesperson told Hybridcars.com. Mulally did not confirm this move.

“It will be really interesting to see how far down we go in size.”

Alan Mulally
chief executive, Ford

The challenge for Mulally comes down to a question of dollars and cents. How can small cars be made to be more profitable? Most sub-compacts and microcars have profit margins of $2,500 to $3,500. By contrast, most SUVs can provide $8,000 or more in profit for the manufacturer. Mulally believes there should be a degree of balance throughout the brand. He said that small cars and larger ones should compliment one another.


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  • sean t

    Good vision, Alan.
    Good for Ford, good for the USA.

  • PatrickPunch

    Do you remember crude oil proces when hurricane Katerina struck?

    They were at the same level as today. Then people considered oil prices high, so today they are still high. last summer they were very high.

    Also, oil price should not be the only driver for fuel economy. Here are some other good resons for not spilling oil:
    - save some oil for future generations
    - reduce green house gases
    - make the switch to non-petroleum based energy easier
    - …

    Furthermore, which carmakers are making money? Those that invested in fuel saving technology.

  • Will S

    ““If it proves to be a success, the Ka could find itself on our shores by mid-2011,””

    2.5 years could be an eternity when oil prices start their climb back up. IF and COULD are not very reassuring words for the surety of decliining oil production and its assured effects on gas prices. At least he recognizes that the current low in oil prices is temporary; there may be hope for Ford yet, though holding out hope that their profit drivers (trucks) remain popular is a bit too fanciful. What is their 2010 Prius killer; have they conceded that ground (for now) or are they holding their cards close to their chest?

  • RKRB

    Thanks for the article. It’s good to see Ford take this stand, which should be good for the environment and good for the company, since a profit margin of $8000 isn’t much good if the vehicles are not selling! Smaller cars may have another side effect — many people will find they are more pleasant to drive.

  • Picky McPicky

    I find it very disturbing that auto manufacturers are putting profit ahead of need. Consumers are tired of big gas guzzling cars. They are tired of feeling guilty that they are contributing to the poor air quality of our nations cities.

    They DON’T care if a auto manufacturer makes $8,000 or $2,500 per car. Hopefully, a Obama presidency will reveal this selfish, profit mongering way of thinking in Detroit. I am all for free markets…but a free market only works, if you give the consumer a product that they desire. GET THIS DETROIT…give us value…give us hybrids, plug-ins, electric vehicles. We don’t care about your wallets….We care about OUR wallets. Cut the fat in your companies to make a $2,400 profit margin work for you Detroit…There is no other way…We aren;t buying your big gas guzzlers that make you $8,000 profit anyway. Would you rather sell a million cars at a $2,400 profit or 10 at $8,000 profit?

  • John Smith

    Hey Picky – Americans don’t really want microcars. They want Suburbans that get 50MPG. We love the space and comfort and don’t really want to give it up. Only high gas prices force us into small cars, but it’s not like we’re happy about it. And chew on this – even with the lousy economy and high gas prices this summer, the F-150 pickup alone is still looking at 500,000 sales this year. So it’s not like the truck market is gone sir.

    Oh, and you know where a lot of those “selfish” profits go? To a quarter million active American employees and another million or so American retirees.

  • Gerald Shields

    John Smith, you said:

    “Hey Picky – Americans don’t really want microcars. They want Suburbans that get 50MPG. We love the space and comfort and don’t really want to give it up. Only high gas prices force us into small cars, but it’s not like we’re happy about it. And chew on this – even with the lousy economy and high gas prices this summer, the F-150 pickup alone is still looking at 500,000 sales this year. So it’s not like the truck market is gone sir.”

    Yeah, you right. With the current technology out there, you wonder, why can’t we have a Cady Escalade or a Dodge Durango Hybrid that can do 50 – 100 MPG? While small cars are cool, you can only make so much profit from them.

  • Reese

    “The Ka will hit the streets of Europe in the spring of 2009.”

    http://en.wikipedia.org/wiki/Ford_Ka

    I may be mistaken but I’m very sure I saw this car in England 3 years ago.

  • Samie

    John is right on and I’m glad he gave that reminder to many that see narrow views of what most American like. Not to say that smaller cars are not important for the future but stop a think if the economy was good and we had the current gas prices many American’s would go back to what John accurately calls comfortable big sized vehicles. That is why I’m hoping that Ford takes their Hybrid Escape seriously and will continue to offer better mpgs with lower prices for future updates.

    I just wonder why Ford does not want to offer a diesel option for the F-150 right now. But I will say sounds like Ford is offering a more balanced business plan for the future even if they are giddy over lower gasoline prices so they can sell a few more trucks.

  • sean t

    Reese,
    Ford Ka was sold in Australai > 5 years ago. It was a failure and has been discontinued. It couldn’t compete against Toyota Echo (Yaris now) and Honda Jazz (Fit in USA)…

  • RKRB

    -Reese: We saw many Ka’s during a visit to Italy two years ago. One of our hosts said they are sort of like the Citroen 2CV of many years ago, and have a certain “following.” It’s neat that Ford can appeal to this kind of audience.

    -Samie: The diesel that Ford offers in its bigger trucks is not terribly fuel-efficient, and is offered mainly because it has superior torque and towing ability. It also appears to need a bigger and heavier frame than the current F-150 has. Engines take more money to develop than Ford could justify, and if they could buy diesels from someone like Mercedes or BMW, they would still need to adapt them to their chassis. Good idea, though.

    -Reply to McPicky: Oh, come now, you can’t be serious! Would you rather have Ford and GM go the way of Fannie and Freddie (which provided so much cash to Sen. Obama’s campaign, by the way)? Speaking of selfish profit-mongering and obscene profits, Sen. Obama’s vastly over-financed campaign money could have gone to help the poor or the environment, instead of his ego or his mega-ads. Maybe he could have a fund raising campaign for the nation, rather than raising taxes.
    Bankrupting companies is not even good socialism, and if we take away more of Ford and GM’s profits, we will take away Ford and GM too. That won’t help the UAW, their retirees, or the taxpayers. You should be happy that Ford is bringing in some good products and that they are taking care of their union workers rather than shipping their production to China.
    If “we want small cars so much” then people will buy them without being talked down to in your terms. Would you force people to buy whatever you happen to think is good for them? Detroit has made hybrids, and until recently they weren’t selling all that well. So much for those ideas in your column.

  • ex-EV1 driver

    Don’t buy this. Its just another attempt in the cycle to keep us addicted to oil. More miles per gallon of oil isn’t is going to get us off of oil. No oil use is.
    The cycle is this:

    1. Raise the price of oil and make huge profits. Force the American people to buy miniscule, uncomfortable cars where they are miserable.
    2. Drop the prices of gas so that Americans, yearning for a little comfort go out and buy bigger, more comfortable cars again that burn huge amounts of gasoline
    3. repeat

    The only solution is to get cars that do not require petroleum products. Plug-ins are really the best option but bio-fuels and natural gas are at least better than gasoline or diesel burners.

  • Will S

    Gerald said;

    >” the F-150 pickup alone is still looking at 500,000 sales this year. So it’s not like the truck market is gone sir.”

    Such cultural inertia is one reason America is addicted to oil, with some quarters salivating over “Gas Tax Holidays” and “Drill Baby Drill”. The party is over, only some don’t realize it yet.

  • Picky McPicky

    All you idiots are dumb as a box of rocks. Wake up from your mega car utopia. You don’t really like that big car. You were told to like that big car. Hypnotized…mesmerized…by the lure that bigger is better. Or maybe you all are buying that big car to hide other physical deficiencies. It may draw the ladies in the car boys, but it won’t be enough for a second date.

    I fell to that big car foolishness. Bought an X-5 and a Tahoe. Got tired of the many women that got in the car wanting that second date. I now own a Hyundai and it’s the smallest, cheapest and most satisfying car I have ever owned. You goofballs don’t know what you are missing…Oh and I still get the ladies. It seems they like a man that is confident enough in himself and doesn’t need to hide behind the perception and would rather them experience the reality.

    You all are posers!

  • DJB

    Looks like Ford sees the writing on the wall. Running out of oil is not a matter of “if” but “when”. As we run out it will get more expensive and the ability of the auto industry to survive the transition to the next mainstream auto fuel (or fuels) will depend on being able to deliver fuel economy.

    Remember, vehicles are just one form of transportation. Being truly green means designing communities where walking, biking, and public transit are convenient options. This can only be done if we build denser, mix different land uses up more, make room in our streets (or sidewalks) for bikes, etc.

    Expensive gas and parking help too.

  • Picky McPicky

    DJB
    Very smart and reasonable comment. If we can get these lazy, fat cat, big car obsessed people to maybe discover that they have legs, muscle mass and the power to transport themselves using their own bodies, then we can really become less oil dependent.

    Besides buying big cars to compensate for their physical shortcomings, the SUV is an extension of their family room couch. They basically have made their car into a cushy sofa, complete with drink warmers, DVD players, snack compartments, etc. so that they can continue to enjoy their lazy couch potato ways in their car.

    Reasonable and intelligent people don’t need this extravagence. This overcompensation of car size is one of the reasons our economy is in the dumpster right now. We have over extended ourselves, in every way…just because the catchy car jingle said we would be sexier, more successful and able to perfrom superhuman tricks if we bought that Big, strong SUV. People forgot that they would have to figure out a way to pay for these empty promises of grandeur.

    Like I said earlier, all of you idiots that said that America desires big cars are have less intelligence than a box of rocks. That Kool-Aid you drank had some drug that altered your common sense. Listen to what your dad said people when you were young…that same dad that grew up in the depression…never…ever live above your means…in fact…it will benefit you long term to even live below your means…

  • veek

    McPicky: Could you please tell us what you have been drinking/eating/smoking/doing, so we won’t do it?

  • Picky McPicky

    Veek,

    Why would you embarrass yourself with that comment? I hope you don’t have kids. That would really suck for them. We really don’t more people in this world spreading the type of ignorance you obviously subscribe to to todays innocent youth. I don’t do drugs…never touched them, but I have a procedure that I think you can benefit from…a Lobotomy.

  • Picky McPicky

    One more thing Veek,

    My business heroes are/were, Sam Walton and Warren Buffet. Both had an austere sense about them. Sam drove a beat up truck and Warren drives a Honda at times. Ever seen Wal-Marts headquarters? I have…Looks like a reconverted high school built in the early 50′s. They expanded their office space using metal, Butler Buildings. They live below their means…are fiscally conservative and would be embarrased that the average American making less than $100,000 a year would feel compelled to but a big, expensive SUV. Get that Lobotomy yet? Here’s some background on the procedure… http://webspace.ship.edu/cgboer/lobotomy.html

  • veek

    McPicky: I rest my case.

  • Picky McPicky

    Rest your case? What case would that be? The case of beer you downed before writing your post? A bad case of Loving YOU? Get a life…go make whoopee with your big, car while you are at it.

  • Nick the nano-tech engineer

    I’m with Picky on this one. Out of the 120 employees we have, only 2 drive big cars and they have been trying to sell them on Craig list for 7 months with no phone calls or offers. Car dealers are ony offering 40 cents on the wholesale book value for a trade in. The desire for big cars is as dead as the dino.

    I hope the Big Three don’t get their bail out money and go out of business or at the very least, the government nationalizes a GM and lets the people decide what they really want. Put to a vote…the American people will want efficiency, 80+ MPG or better gas mileage (the technology is here believe me), and smaller, but technologically advanced cars.

  • New Mustang Owner

    You people mostly do not understand Americans. I finally was able to buy a Mustang that I love more than any other vehicle I have ever owned. Further more the Mustang has so many options that you can keep increasing its value and MY personal enjoyment.

    You know people that rave about small cars fail to mention physical safety. Take it from me. I guy ran a stop sign on me 2.5 years ago and almost took my life. I have lived in hell and am still there now due to the lack of medical care. Yea you say all this when a big semi runs you over and there is nothing left of that little car and you have no way to get out of its way (hint: no acceleration)

    I feel far more safer in a vehicle that is capable of providing side and front air bags and has got a front end that at least will give me a good chance to not be in the position I was in after my last wreck.

    I feel very sorry for all of us that we some day will probably have to go to small nothing cars. I will wait till we have flying saucers before I risk my life again.

    You never know when that car wreck is coming and I am unfortunately an expert on it. They are not my fault either.

    Lastly Americans want Mustangs right now but most likely just cant afford new cars period.

    Also I get the best vehicle care and service from the dealer I bought my Mustang from that I ever got and never imagined. I have invested a few more thousand dollars into my car through the
    dealer and that customer care is not found typically in the Auto industry.

    I hope other Americans read what I am saying and have faith in Ford like I do. I think every manufacturer has there particular cars or trucks that are their trademark. The Mustang cannot go.