Ford sees strong crossover gains as SUVs decline


By Poornima Gupta

DETROIT, June 28 (Reuters) - Ford Motor Co. sees recent sales gains for crossover vehicles such as the Edge as evidence the strategy to protect the struggling automaker's market share is working, an executive said.

Ford posted a 67 percent rise in sales of its line-up of car-based, crossover utility vehicles in May and was on track for a gain "just as eye-popping" this month, George Pipas, Ford's chief sales analyst, said in an interview with Reuters.

And the monthly sales increase came before Ford rolled out a three-year, interest-free financing offer on all of its vehicles, a discount offer that takes effect on Friday.

"Incentives should help close the month on a strong note, but the crossovers would have posted an impressive result ... with or without the incentives," Pipas said on Thursday. "They have been strong all month long."

While Pipas declined to forecast Ford's overall sales for June, he expected it would be a "solid month" for both the industry and Ford, based on early results. Full June sales figures will be released next week.

Counting the Taurus X wagon, which went into production this month, Ford has five crossover vehicles. That includes the Ford Edge and its upscale cousin, the Lincoln MKX and restyled versions of the Escape and Mercury Mariner.

Commuters on Detroit-area highways have also spotted test versions of the Ford Flex, a boxy crossover with an edgy look intended to counter criticism Ford has been too conservative about styling.

The Flex goes on sale in 2008 and will be joined by a later Lincoln-badged crossover on the same platform as Ford attempts to find a new class of vehicles for a generation of consumers abandoning truck-based SUVS.


Ford has lost about 1 percentage point of its U.S. market share every year since 2000 as consumers moved away from heavier and less fuel-efficient SUVs, a market segment where it had a stronghold with vehicles such as the Explorer.

Ford is now working to hold its overall share of the U.S. light-vehicle market at about 14 percent as it restructures by shutting 16 plants and cutting more than 50,000 jobs under a plan it calls the Way Forward.

"We have the freshest line-up of crossovers in the industry and the highest growth in the industry," Pipas told Reuters. "This product is a linchpin of the Way Forward strategy."

Sales of crossovers -- a category pioneered by Toyota Motor Corp.'s RAV4 a decade ago -- overtook sales of traditional SUVs in the United States last year and Pipas said he had been surprised by the pace of that shift.

In 2000, there were just 14 car-based utility vehicles on sale in the U.S. market, but by 2009 that is expected to rise to up to 80 models, he said.

Ford has said it sees crossovers topping 3 million units in annual U.S. sales before the end of the decade, making them a dominant category.

Meanwhile, the decline in truck-based utilities such as the once hot-selling Explorer has been a major drag on Ford's results compared with the SUV boom years of the 1990s.

The Explorer was the third-most-popular vehicle for three years running until 1998 in the U.S. market. Through May, the Explorer had plunged to number 46 in the rankings, according to the Power Information Network.

A study by the industry tracking service released last week showed the percentage of owners of mid-size SUVs who traded in their truck-based vehicle for a similar-sized crossover had more than doubled in the last three years.

Pipas said Ford would look to build more momentum for its crossovers with more head-to-head marketing of the kind that it rolled out late last year when it challenged consumers to compare the Fusion to the Toyota Camry and the Honda Accord.

By doing that, Ford hopes to get consumers who have abandoned the brand to put it back on their shopping lists.



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