Is FG's base model too basic?

In contrast to Holden's cunning launch of the 2006 VE Commodore, Ford was underprepared last week when it launched the new FG Falcon -- at least in terms of its latest base model specifications.

Most brands, including Toyota, struggle to reconcile fleet expectations with today's retail and user-chooser buyers. These, often aspirational, purchasers now run a mile from any vehicle that has a 'company car' taint to it. Any company ignores this at their peril -- and it appears, unlike Holden, Ford has ignored it.

Mitsubishi paid the ultimate price for this association, as for much of last year 380 struggled to attract more than a handful of private buyers per month versus 800-900 fleet sales. Cut-throat margins and no retail fat meant that Mitsubishi not only struggled to make money on the 380, the 380's downmarket fleet association and flooded near-new market kept private buyers out of the mix.

It is a fate that threatens all local manufacturers as more importers pick up plump retail spoils with slick models that are big on image and presentation, but not always so big on substance or cost. BMW's bare-bones entry models are prime examples.

Holden's way around this during the VE launch was to announce a newsworthy $34,490 starting price on its base-model Omega without air-conditioning. It generated widespread coverage with little scrutiny. How did Holden get away with it?

As soon as Holden announced the fleet Omega, which in real terms usually sells for much less than $34,490 even with air-conditioning, Holden told everyone that it was not meant for the retail buyer. Instead it quickly moved the spotlight onto its special Commodore V-Series model as the range starter.

When it is virtually unheard of for a company to announce an extra value special at the start of an all-new model as dramatic as the VE Commodore, what was Holden thinking?

This V-Series with its upmarket Cadillac associations was also priced at $34,990 but came equipped with air-conditioning and the 17-inch alloy wheels, rear spoiler, body-coloured mirrors and handles missing from the Omega. In other words, Holden appeared to be presenting a car that a retail buyer would want to take home for exactly the same price as the poverty-pack fleet version. That was the really clever part.

By definition, anyone recording this process can only assess it from a retail buyer's perspective, not a fleet manager's eyes when only retail figures are supplied. In this context, the VE Commodore V-Series appeared to make the private buyer look like an absolute winner, even compared to the fleets!

When actual fleet transaction prices are closely guarded secrets and can sometimes be up to $10,000 below retail even at this level, only an inner sanctum of industry experts can accurately assess what's being presented in terms of equipment and pricing.

Holden played this card masterfully by creating the impression that private purchasers were getting a good buy with the VE Commodore V-Series, exactly as it needed to do if the new model was to succeed.

It is fair to speculate that the Commodore's almost double sales rate over the Falcon is made up of more than Holden's fair share of more profitable retail buyers. At the other end, the Toyota Aurion is now nipping at the Falcon's heels when Toyota has also been more successful with its retail marketing and positioning.

Fast forward to April 8, 2008 as Ford presented its new FG range and pricing starting with the XT at $36,490 or $300 under its direct Commodore Omega rival now fitted with air-conditioning and six airbags for $36,790. Proud company executives were quickly placed under the pump by a media pack closing in on the company for not including its $300 curtain airbags as standard.

Yet 18 months ago, Holden's non-inclusion of $2000 worth of air-conditioning in the base VE Omega hardly raise a murmur. So what's going on?

The truth is that most fleets would happily pocket the $300 saving that Ford's missing airbags generate. In this context, Ford's $300 advantage might prove useful.  When the FG Falcon's retail focus is a safe family car, the omission becomes an emotional issue and did so last week at the FG launch when both local rivals are so equipped.

In the absence of any retail FG entry model with curtain airbags to move the focus away from the nasty cut-throat business that fleet purchases have become, Ford's massive safety investment in its fresh new FG model lost considerable credibility. This has the potential to undermine the FG range when Holden's pre-emptive strike put curtain airbags in all models ready for the FG's arrival.

Never mind that the FG Falcon XT has a base engine and transmission that cannot be matched in a Commodore until you spend another $3000 (and even then, it's not as good). To match the XT's climate control, you also need to spend another $3000 on a Commodore -- except then you can't buy the better engine and climate control together until you spend $45,790 (even if the climate control is dual-zone at that point).

Ford's real mistake is that very little of the FG XT's presentation matches its upmarket engineering and core feature content, something that the lack of curtain airbags (despite the relatively inexpensive optional cost) exposed.

The XT's industrial black plastic grille not only links it too closely with last year's model, it does little to enhance the new shape. In the same category are the steel wheels with last year's plastic wheel covers, that make it even harder to spot the new model. The empty foglight sockets in the front spoiler are an unnecessary reminder of what should be there.

And while the cabin is new, it is basic at XT level.

So Ford's benchmark new FG range is a car which at XT level few people forking out their own $40K would want to take home. The shame is most Australians will base their opinions on the whole new FG Falcon range based on the XT and therefore potentially miss the huge advances concealed under the skin, and indeed, the more retail focussed G-Series models further up the range.

Even the XT badge belongs on a light truck, not a discretionary feel-good car purchase. The fact that the XT was not renamed Futura or equivalent to match Omega when the new XT is closer to that level than previous XT models may also need addressing.

When most of today's large car purchases are driven by the heart more than the head, releasing such a fresh and competent new model as the FG Falcon in a base level so low on the 'feel good' factor as the XT seems unnecessarily risky.

There were elements of this week's FG launch that were dangerously close to the original AU Falcon Forte fiasco when Ford last tried to launch a Hyundai Excel equivalent in the large family car segment.

Footnote: Just in case Ford did get it right at the FG launch, both Holden and Toyota had fallback positions: Holden has just announced a VE Commodore 60th Anniversary Special Edition which adds $8000 of extra value including rear parking sensors, leather seat inserts, 18-inch alloy wheels, leather steering wheel, silver dash highlight, front grille insert, Bluetooth connectivity and '60th anniversary' rear badge for a sharp $33,990.
Toyota ramped up late last year with its Aurion Touring SE pack which added parking sensors (front and rear), a six-disc CD changer, premium instrumentation with trip computer, dual-zone climate control, 16-inch alloy wheels, a rear spoiler, leather-bound steering wheel and leather-trimmed gear shift knob for an all-up price of $34,990.

It's a dog eat dog world out there…

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