Bold Moves: Why Ford Is Not Walking Into The 2008 Trap

Ford Street Racing

No matter how many Spring Cleanings I go through, a few relics somehow remain in my possession. The largest, in terms of sheer obsolescence and wasted space, are a series of milk crates full of Car and DriverRoad & Track and Automobile magazines dating from the mid-1980’s until just before the Great Financial Crisis.

Flipping through the pages of these periodicals, one develops a greater appreciation for the conveniences of 2018. The idea of having to call a 1-800 number for a printed brochure sent via snail mail, tear out a perforated card and attach a cheque to purchase a radar detector or look at ads for cigarettes seems comical, even for someone who grew up drawing little “Marlboro” logos onto their childish depictions of Formula 1 cars.

It seems equally comical, in the Current Year, that in 2006, at the height of pre-recession exuberance (and also when Ford was making some fairly poor quality vehicles), they’d have sponsored a game called “Ford Street Racing“, in an attempt to bolster their credentials with car enthusiasts. 12 years on, the notion of a high performance vehicle is just on the “still acceptable” side of politically incorrect, although the Overton Window is fast shifting. Some might argue that it already has moved on, given the incessant product cadence of hybrid supercars (there will be a hybrid Mustang in the near future), downsized engines (Ford’s own flagship, the GT, features a turbocharged V6 engine, which is still the automotive equivalent of a decaf espresso, no matter how powerful it really is) and the growing revulsion towards the mere idea of someone wanting to drive their own car, for pure recreation, at high speeds, high lateral g loads or some combination of the two.

One year ago, Ford had a lineup of performance cars consisting of:

  • The Fiesta ST, a cheap hatchback that was universally lauded by the automotive media as one of the best performance vehicles at any price, but still capable of returning 29 mpg combined
  • The Focus RS, a more expensive hatchback with 350 horsepower turbocharged 4-cylinder engine and all-wheel drive
  • The Fusion Sport, which packs 325 horsepower and all-wheel drive in a nondescript wrapper
  • The Taurus SHO, with 365 horsepower, all-wheel drive and lineage that traces back to the days of Ford owning Volvo (this is a good thing)
  • The Mustang
  • The Ford GT

By 2020, those will all be gone, along with their civilian variants, which are the darlings of daily rental lots, and not much else.

Those of us with an industry background have known for some time that a shift was occurring where consumers were abandoning traditional sedans and hatchbacks in favor of SUVs and pickup trucks. We all knew that the day would come when some historic sedan nameplates would have to be axed, but nobody was willing to fire the first shot.

Ford’s CEO, Jim Hackett, an outsider with zero industry experience prior to this, has so far seemed to be fixated on pumping Ford’s “mobility” programs, perhaps in a bid to appease Wall St analysts who are apparently unhappy that Ford’s valuation is not even close to that of Tesla – though the current consensus price/earnings ratio of 7.27x is higher than GM (5.7x) and FCA (5.65x)(1).

Despite my initial estimation of him as yet another “mobility tourist”, Hackett has demonstrated extreme courage and forward thinking in deciding to kill off the passenger car lines, which have historically been low margin (if not negative margin) and mostly sold to rental fleets, government agencies and other channels that are seen as less desirable than “pure retail” (i.e. a customer purchase driven by organic demand) sales.

The most interesting criticism of Hackett has come from certain corners of the media who have waged a campaign of “concern trolling“. Their argument is that Ford has not yet learned from the mistakes of 2008, and is setting itself up for another catastrophic scenario where oil prices will rise again, leaving the company with a lineup overly weighted to trucks and SUVs, which will again be unpopular with consumers.

This is demonstrably false. A model-by-model analysis of 2018 fuel economy versus 2008 would be little more than digitally delivered sleep medication, but the above photos show a comparison of the “volume” (i.e. best selling) trims of the Escape CUV, the Fusion sedan and F-150 pickup truck. In every single case, the newer trucks get better mileage than the 2008 model cars. Today’s F-150, when equipped with the 2.7L V6 and 10-speed automatic transmission, actually beats the 2018 Fusion with the same engine (and a 6-speed gearbox).

Of course, there’s an argument to be made that easy consumer credit is letting vehicle shoppers buy more car – or truck – than they could otherwise afford. To examine that in-depth would be to veer far off on a tangent, but there is merit to it.

What I want to dispel is the notion that we will see another collapse of the Detroit 3 due to their decision to shift towards trucks and SUVs. This argument tends to come from a certain caste of American society, who, not coincidentally, advocate for mass adoption of autonomous driving and despise the Trump Administration. Again, I must mention that it’s possible to make strong, fact-based, logic arguments against both human driving and the 45th President of the United States.

However, the individuals I mentioned above couldn’t really care about the health of Ford’s financials, or their car/truck product mix. Instead, their antipathy to trucks, SUVs and the people that buy them is driven largely by aesthetics. They tend to live in urban, coastal areas and possess a large amount of social and cultural capital, but little in the way of economic capital – though they tend to be surrounded by individuals with all three. They are often highly intelligent and have refined tastes, but falsely conflate refinement with feeling entitled to nice things. They haven’t fully processed that intelligence is not a voucher for the material trappings of success, which often come with immense sacrifices in terms of familial and social relationships, not to mention health and overall well-being.

To mask their inner envy and resentment, they mock people who live in less fashionable suburban locales and live lives far removed from what a resident of New York, San Francisco or Washington D.C. would view as aspirational (the most ironic point of all is that these suburbanites are often much more financially secure, if not wealthier in absolute terms). Unlike the 2016 Presidential election, which would have required real, on-the-ground reporting to understand the inevitable outcome, the move towards pickups and SUVs requires only a brief analysis: the delta in fuel economy between passenger cars and these vehicles has narrowed, if not reversed, and they offer greater utility for consumers who have a family and the associated trappings of one, plus the higher driving position ingress/egress attributes that consumers desire.

Furthermore, trucks, SUVs and crossovers are much more profitable than passenger cars. If Ford truly is gearing up for a major shift towards mobility (think, subscription-based services, on demand/shared electric-vehicles with autonomous driving technology etc), then the need for a healthy and profitable vehicle lineup today is even more urgent, since this will fund tomorrow’s advances in transportation. Unfortunately, certain voices in the fourth estate have chosen to abdicate their duty to understand the topic they are reporting, and instead shape the narrative by ramming facts through their epistemological Play-Doh Noodle Makin Mania Set and getting a facile, unsatisfactory thesis out the other end.

Now if you’ll excuse me, I’m off to play some old video games.

(1) As of 5/10/2018

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