How long for Geelong?

It's a question that needed to be asked. With all that's going on at Ford Australia, how can the Geelong engine plant remain viable?

Two new engines are being introduced for the locally manufactured Falcon and Territory ranges. One, the imported diesel V6 for the Territory, promises to deliver performance levels akin to those of the inline six's, with the added benefit of significantly lower running costs.

The other engine is the EcoBoost four-cylinder planned for introduction in the Falcon within 12 months. While it's a harder sell than the diesel Territory, positive word-of-mouth for the EcoBoost four could kill a lot of six-cylinder sales.

Ford won't reveal the minimum production figure for operations at the Geelong engine plant to remain viable, so the facility's future may well be uncertain, but within Ford the feeling is positive, despite a precedent for threatening closure of the plant.

"We have absolutely no plans to change production of the inline six," said Sinead McAlary, Ford's Public Affairs Director, in conversation with the Carsales Network today. Up for discussion were changes in the market over the past few months -- changes that might have some impact on the viability of the engine plant -- or otherwise.

"Obviously we don't have LPG in our mix at the moment," said McAlary, by way of explaining the change in fortune for the Falcon.

"We stopped producing LPG in September; we had built some stock forward, but we have pretty much run out -- and LPG normally makes up about 25 per cent of our model mix. We had planned for the fact that the first half of this year -- until LPG comes on stream -- that it was going to be difficult.

"There were a few... one-offs, like the Queensland floods, for example. Our Queensland dealers didn't want us to ship more cars to them for a period of time... because they were either affected by the flood or people weren't buying them... that's starting to clear up.

"Rental buying has been quite low in January and February as well. A number of the rental car companies have postponed deals... and that may well be because of the reaction to floods in Queensland..."

Originally Ford had planned to bring out the four-cylinder Falcon this year, but the retail launch is now scheduled for 2012. So what's the reason for the delay and does it have anything to do with shoring up sales of the six-cylinder variants?

"[The EcoBoost] is not really delayed," says McAlary. "It was always going to be really, really late this year. What is happening now -- [it's] still up in the air -- we may still do our media launch before Christmas, but in terms of production, when it's actually on sale, that will be in 2012."

McAlary explained that Ford often built a buffer into the company's launch programs, allowing at least a week or so between the media launch and the retail launch. Any unforeseen problem discovered during or as a result of the media launch can be corrected before the car officially goes on sale.

In the case of the EcoBoost Falcon, the media launch would have been/will be so close to Christmas that few staff would be available to resolve issues arising prior to the car's retail launch. Furthermore, the big-buying fleets would be on their end-of-year break by that time.

As a consequence, it was decided by Ford to push back the EcoBoost Falcon's retail launch while staff were on leave over the Christmas/New Year period.

Ford's own research indicates diesel-engined medium SUVs are now nearly as popular as petrol-engined models and that trend is set to continue. Indeed, Falcon and Territory Line Director for Ford Australia, Russell Christophers, told journalists during the technical presentation for the upgraded model that he expected diesel-engined medium SUVs to achieve sales parity with petrol SUVs by the end of this year.

Information subsequently received at the Carsales Network reveals that Ford expects 70 per cent of new Territory sales at launch will be diesel variants; the petrol variants of Territory accounting for just 30 per cent of the total.

"Launch mix will definitely be higher than what we anticipate it will be as an on-going running rate," McAlary responded, "because there has been a build-up of demand -- and our dealers are sort of getting a fair amount of interest. We will be concentrating on diesel at launch, but I think 70 per cent would be too high as an on-going mix level...

"Also... we need to get a lot of diesel vehicles into dealerships at the start, to build up stock levels... so it's not anticipated it will continue at the rate. We think it will fall to the 55 or 60 per cent rate."

Mondeo sold 735 units in February -- nearly 300 more than February 2010. It's still well short of Falcon sales, but with its own EcoBoost engine scheduled for later this year -- potentially delivering Falcon-like performance in the significantly lighter car -- is the Mondeo snatching the larger car's customer base?

Well no, not current customers, according to McAlary.

"The really big thing for us is that a lot of our Falcon wagon customers -- once we'd decided not to continue Falcon wagon -- we were looking to move them over to Mondeo wagon. That's actually working for us. That's a strategy that's paying off."

And if the diesel accounts for even half of all Territory sales, that might count heavily against the petrol six if sales of the Territory don't pick up across the board, following the introduction of the SZ model.

For her part, McAlary believes Ford Australia has all bases covered and production of the inline six at Geelong is safe.

"We've known we were going to introduce EcoBoost and the diesel for a couple of years now, so obviously we've planned for that. 70 per cent is definitely too high of a mix for on-going [sales], in terms of diesel for Territory. We will also be promoting the petrol version of Territory.

"And don't forget the other new thing we have this year is LPI, which goes through the engine plant. We anticipate that that engine is actually going to take away a lot of the reasons why people haven't bought LPG in the past -- there's been the perceived degradation in performance, there's been [packaging] issues, et cetera.

"We're looking at positioning LPI much more aggressively than we have done with LPG in the past. So we've balanced out where we think it's all going to flow -- and the engine plant has obviously been taken into consideration as part of that. We see no concerns with that at this stage.

"We think [the LPI six is] a good opportunity to attract more retail buyers. That's how we'll be targeting it, as well as catering to the fleets and small business owners that are very keen on it already."

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