Follow Leader Ford's New Game Plan
When you’re climbing out of a steep hole, sometimes it’s best to take the line of the guy right in front of you.
February 14, 2007
Commentary
Competitive nature aside, Ford officials have to be pulling just a bit for General Motors to make a full recovery and maybe even outrun Toyota in the race to remain the world’s No.1 auto maker.
That’s because Ford, after struggling mightily to gain traction the last few years, now appears to be following much of GM’s restructuring game plan under new CEO Alan Mulally.
When you’re climbing out of a steep hole, sometimes it’s best to take the line of the guy right in front of you.
And it appears as if Mulally, just five months on the job and in the auto industry, has figured out that may be the best path for Ford.
Whether by coincidence or design, here’s where Ford and GM’s recovery strategies match up:
ÓFewer rebates and rentals. GM announced in late 2005 it would back off rebates in an attempt to increase profitability and boost resale values for its cars and trucks. And Ford is right on its heels. Although Ford reportedly still out spent GM by $1,200 per vehicle in January, that gap was $200 closer than in December. Both companies started the year with drastic cuts in money-losing sales to rental companies, with Ford taking its fleet sales down 60% in January.
IGlobal product czar. In December, Derrick Kuzak was named to the new position of worldwide product development director, reporting to Mulally. The setup echoes the one at GM, where Bob Lutz oversees all product and answers directly to CEO Rick Wagoner. And like Lutz, Kuzak now is pushing for platform sharing around the globe. In the future, look for a single architecture to underpin like models in North America and Europe. And don’t be surprised to see Ford’s Australian and U.S. operations get together on a rear-drive car platform, similar to efforts under way at GM.
Exports from Europe. Nothing is written in stone yet, but Mulally seems intrigued with the idea of importing European Fords to the U.S. Rumored possibilities include the Transit commercial van, S-Max multipurpose vehicle and Mondeo sedan. The latter two could be one way to give Mercury a product shot in the arm, similar to GM’s move to feed Saturn showrooms with Opel Astras built in Belgium.
gBig overseas push. Despite its financial squeeze, Ford isn’t slowing down on foreign investment. Among plans is a proposed $1 billion plant in Thailand to build small cars, mainly for export. If it follows through, the facility presumably would give Ford a source for low-cost cars that could be a match for GM’s South Korean-built Chevrolet Aveo.
GM definitely is a couple steps ahead of Ford on the recovery track, says Sean MacAlinden, chief economist for the Center for Automotive Research. He says GM has cut costs about $2,000 per car in North America and increased revenue $500 per vehicle, adding another $2,000 revenue boost is needed to match tougher foreign competitors.
“Ford is on the same path but is 10-30 months behind GM,” MacAlinden says.
But it appears, at least, Ford finally may have found its beacon.
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