Ford slump: No panic here

Ford’s slump to seventh on the sales charts and a 5.9 per cent market share is not ringing the alarm bells at the Blue Oval’s Australian headquarters.

In fact, the company continues to insist its ‘transformation’ plan is on-track even as it warns there are more rugged sales months to come before there are any external signs of improvement.

According to official VFACTS figures, there were 6023 Fords registered in Australia in March and 16,402 for the first quarter, which leaves it seventh for the month and the year overall.

If it continues this way the Blue Oval is on track for its lowest annual sales result in Australia since the early 1960s.

“An external party would go ‘oh my God you’re a six per cent player, you’re seventh in the market last month'. For us we are ahead of our internal benchmarks,” Ford marketing chief David Katic (pictured) told motoring.com.au.

“We understand number seven — wow that’s not good. But it’s where we are in the product cycle and where we are in the transition of the brand,” he added.

“We keep working our plan and it’s a long term plan.”

As both Katic and new Ford boss Graeme Whickman have insisted previously, sliding sales are a direct result of a decision to get out of high-volume low-profit fleet and rental business based around the Falcon and concentrate on the retail market.

This is being driven by the shutdown of the company’s Australian manufacturing facilities and the death of Falcon that looms by October 2016.

Ford is also pointing to the run-out of a series of significant volume models – Mondeo, which has just been replaced, and Ranger and Focus, which are overhauled on the next few months – as contributors to its sales performance.

“We are expecting we will have some weak results right through to the second half because we are running out of Ranger and we are coming into the truck quarter (the highest sales period for utes is toward the end of the financial year) and we are going to be pretty tight on supply.

“On Focus we are tight too.”

The significantly overhauled Ranger and all-new Everest SUV spin-off are due in July, the Focus update in October and the Mustang sports icon in December. The company has committed to launching 20 new models onto the Australia market between December 2014 and 2020.

Katic revealed the run-outs were having a more significant impact on sales results than in the past because Ford was deliberately choking supply of the old model to avoid a glut, discounts and damage to future residual values.

“If you have a lot of the old car when you launch the new car you have to discount the old car and that drops your residuals,” Katic explained. “And our corporate strategy is to move away from large fleet rental business and go to retail, and if you are going to go to retail then you have to improve your residuals.

“So you have to start making decisions like let’s have clean run-outs, launch the new car properly and over time build your residuals and you build your sales success.”

One model not in run-out that has slumped in 2015 is the Fiesta mini, which is down more than 21 per cent year-on-year compared to 2014. Katic attributed this to cutting fleet and rental sales and a supply shortage of entry-level models.

Meanwhile, the small EcoSport SUV is up in 2015 but has sold only 411 examples in three months. Yet in this booming segment, the new Honda HR-V has sold 2122 in two months and the Mazda CX-3 has found 814 new homes in its first week on sale

Katic said this was a problem related to the long-term public image of Ford as the 'Falcon Car Company' – which the company was trying to change.

“When people think of Ford they think of Falcon and it drives us crazy,” he admitted. “But the customers are always right.

“We need to expand peoples’ view that we are not just a large car company, that we are a full range supplier. So when a Mazda or a Honda bring a vehicle like that (small SUV) to market it’s much more consistent with their primary brand, so it’s an easier get.

“The discussion around EcoSport is not an EcoSport discussion, it’s about Ford primary brand and making the primary brand not about large cars but a full range of vehicles and that is something that will take time.”