Newer Ford Models Cannibalizing Sales of Older Siblings

Ford enjoyed strong U.S. sales in January of two key models: the Focus C-car, up 59.7% compared with year-ago, and the Explorer SUV, up 35.5%.

But the success of these newer models came at the expense of the older Fiesta B-car, down 18.0%, and the Edge cross/utility vehicle, down 6.7%.

The Focus, launched early last year, and the Explorer, which entered the market in late 2010, both have been cannibalizing sales from the older models since their debut, WardsAuto’s data shows.

Edge deliveries in October 2010, a month before the Explorer began production at Ford’s Chicago assembly plant, were a healthy 10,185 units. But once the new SUV began rolling into showrooms, it began to chip away at demand for the Edge.

Last March, the two utility vehicles were neck and neck, selling 12,388 units and 12,482, respectively. But the parity was short-lived as the Explorer began pulling away in April. With the exception of September, the Explorer has outsold the Edge every month since.

The story repeats itself with the Focus and Fiesta, except that Fiesta deliveries from the get-go never have been particularly strong, peaking last March at 9,787 units and declining every month since.

Not only has the Focus been beating its smaller sibling, but by a significant margin. The largest disparity was last June, when Fiesta deliveries fell to 5,535, compared with the Focus’ 21,385.

Erich Merkle, Ford’s top U.S. sales analyst, recognizes the pattern but insists it’s a good problem for the auto maker to have.

“The two vehicles (Focus and Fiesta) are close together in terms of size and price point,” he says in a conference call with reporters and analysts. “At this point in time, (the) Focus is the newer vehicle and people are gravitating toward it.”

Merkle confirms a similar scenario is playing out between the Explorer and Edge.

Ken Czubay, vice president-U.S. marketing, sales and service, is quick to defend the Edge’s performance, noting its retail deliveries rose 11% in January. “So consumers are still driven to the Edge,” he says, adding that incentive levels on most vehicles are consistent with year-ago.

Ford in January posted a 7.9% sales increase of its light vehicles, compared with year-ago, to 134,291 units based on a daily sales rate, with 24 selling days both this year and last.

There were some unexpected results in the month, including a 3.3% decline in Fusion midsize sedan sales to 12,933. Merkle says Ford is pleased with Fusion results, noting January 2011 was the second-best sales month in the Fusion’s history.

But the Fusion also may have been a victim of sales cannibalization, Czubay says. “The No.1 cross-shop is (the) Escape (CUV), so people are coming in and making their choice.”

Escape deliveries jumped 15.5% last month, compared with like-2011, to 15,333 units, according to WardsAuto data.

All-new models of the Escape and Fusion, due in showrooms in the second and fourth quarters, respectively, may provide a boost in sales to both vehicles.

Czubay says consumer reaction to the next-generation Fusion, unveiled at last month’s North American International Auto Show in Detroit, has been overwhelmingly positive.

The new Escape, with a more edgy design, also is testing well among potential buyers, he says.

“Consumers are saying (the) Escape matches their expectations of styling and functionality.”

Czubay expects the transition from the current Escape and Fusion models and their replacements should go smoothly.

In the pickup segment, where production of the Ranger already has ended, sales spiked 77% to 5,043 units. Czubay says he anticipates three more months of “solid” Ranger sales as inventories are depleted.

Ford ended January with 492,000 light-vehicles in inventory, including 171,000 cars, 184,000 trucks and 137,000 CUVs.

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