Industry Report: High Fuel Prices Playing into Fords Favor

Well-Meaning but Misguided Environmental Groups Targeting Big 3s Cleanest Carmaker

Ironically, Ford Motor Company has become the poster-firm of the environmental movement, but not because it was the first domestic manufacturer to offer a hybrid electric vehicle, nor because of its compressed natural gas (CNG) and ethanol-capable models (E85), or for that matter its innovative use of eco-friendly technologies such as continuously variable (CVT) and six-speed automatic transmissions. No, the irony lies in that the organization, Jumpstart Ford, which protested dealerships last year in an effort to bring the blue oval automaker to its collective knees, targets Ford as the worst of pollution offenders; no doubt citing the popularity of its F-Series light truck range, mostly used by industry for work purposes, plus the Explorer and Expedition SUVs. Trucks aside, Ford is the domestic-brand leader when it comes to fuel efficient cars.

Fortunately for Ford, the "non-enlightened" everyday buyer, who doesnt base their purchase decision on sensational podium rhetoric designed to capture the quintessential 15 second news bite, but rather via personal due diligence, by investigating which cars offer the most for the least, and then which ones deliver the best long-term value, with fuel economy playing an ever more important role in the final decision.

No doubt this is one of the reasons Ford is experiencing stronger sales recently, posting record new Escape Hybrid and Mercury Mariner Hybrid deliveries in April. Also a factor behind the upturn in hybrid sales was a generous incentive program targeting the two fuel-conscious vehicles, although Fords midsize sedans and crossover utilities experienced a positive boost in overall numbers.

Aprils car sales were up 8 percent, while trucks and truck-based SUVs, what the environmentalist movement normally targets, were down 15 percent, showing that the free market, and in that a need by consumers to thwart rising fuel costs, will more often than not dictate purchasing patterns. Over a total of 262,722 unit sales, Ford saw a drop of 7 percent.

Amongst the automakers cars, the strongest sellers include Fords compact Focus, at 17,917 units, down slightly from last year mind you, and Mustang, at 15,868 units - off by 18.9 percent from April 2005s near miraculous sales numbers in a personal coupe category that has all be gone away. Although the Mustang GT features a V8 engine, not normally associated with environmental friendliness, the majority of Mustangs are sold with a V6. Also popular is the old Taurus at 14,668 units, although Taurus sales are mostly fleet-oriented now and down some 15 percent from April of 2005, but the new midsize Fusion sedan also did well at 12,613 vehicles delivered. Also strong is the number one choice for police cruisers and taxi cabs, Fords stalwart Crown Victoria, up by 7.2 percent to 6,640 cars.

Over at Fords Mercury brand, the Grand Marquis is also experiencing a bit of a renaissance with a sales climb of 32.7 percent to 7,204 units, while its new midsize Milan created 3,557 new sales for the upscale Ford Motor division, for a total of 11,187 sold since it became available last year. Compared to the 2,753 Sables sold in April of last year, a car that is now discontinued, things at Mercury are on the upswing. The brands full-size Montego, a badge-engineered Ford Five Hundred, is also seeing stronger sales, with 2,760 sold; representing a 27 percent increase. The car definitely wont be replacing the Grand Marquis anytime soon, but being that most Montego sales are retail and not fleet, this should be seen as a positive trend. So far, Ford Motor Company of Canada isnt commenting on whether the Mercury brand will once again be sold north of the 49th, despite vehicles such as the Mariner compact crossover-SUV, Monterey minivan and Milan midsize sedan being ideal for the Canadian market. While only a tenth the size of the U.S., Canada could help to boost Mercurys numbers enough to offset the added cost marketing the brand - a task that is aided by the large contingent of U.S. TV channels broadcasting to our northern neighbor.

In the ever growing crossover-SUV market the Ford brand is still strong in both markets, its compact Escape still number one in its category in Canada. The model also represents some of Fords healthiest U.S. sales with 16,011 Escape sales in April, stronger than last year by 6.2 percent, although only moderate sales of its midsize Freestyle, at 6,491 units sold, showing a drop of 2.7 over April 2005. The recently redesigned Explorer is also off with only 13,772 sales in April, some 42.1 percent lower than April of last year, which shows a trend away from traditional SUVs towards car-based crossovers. No doubt, Fords upcoming Edge, which targets the midsize CUV buyer currently buying imports such as Nissans Murano and Toyotas Highlander, among others, will help keep Ford loyalists in the family.

The environmentalist lobby will be thrilled that one of the worlds largest SUVs is showing sales down by 100 percent, due of course to the Excursion being discontinued after the 2005 model, but Expedition sales are also weakened by 33.4 percent over April of last year, at 6,305 units delivered. A new 2007 Expedition should help right this wrong, although it may prove only to slow down the full-size SUV segments overall size reduction, as the introduction of all-new 2006 Explorer last year hasnt proven to be remedy enough to boost sales of this model.

The vehicle that continually bolsters Fords bottom line but simultaneously hurts its CAFE fuel economy ratings is the worlds best selling Ford F-Series (F-150/F-250/F-350), with sales that are also down in April, from 71,367 sold during the same month in 2005 to 64,749 units now, off some 9.3 percent. The F-Series slide shouldnt be seen as the beginning of a trend, mind you, as the truck normally averages close to a million units per year, fluctuating from month to month. A positive blip among blue oval trucks is a 4.8 percent rise in heavy duty models, to 1,341 units.

Of course, Ford Motor Company owns more than just its namesake brand, with Lincoln experiencing much higher retail sales thanks to the new Zephyr, soon to be renamed MKZ when it receives a more powerful 3.5L V6 as a 2007 model. The Zephyr has augmented a slower selling LS sedan with 3,378 new sales in April, and 11,162 since its inception last fall. A new MKX crossover, which shares the MKZs 3.5L V6 and a common architecture with the Ford Edge crossover, should also add new buyers to the Lincoln family.

On the negative both Aviator and Navigator sales are down substantially, but the new MK LT pickup has improved by 48.6 percent, to 1,021 units. Still, as good as this growth in an all-new segment is for Lincoln, it cant make up for 598 fewer Navigator sales and 1,360 fewer Aviator sales; the latter off some 89.7 percent from April of 2005. Yes, the MKX crossover couldnt arrive any sooner. A bit of positive news is that sales of the aging Town Car are up 1.7 percent to 3,693 units.

If youre a Jaguar dealer, its best to also have a Land Rover franchise as the 4x4 brand is experiencing record retail sales for the second month in a row. The leaping cat is languishing, mind you, with only its all-new XK seeing a positive April with a 122 percent increase of the same month last year. Its X-Type compact, S-Type midsize and XJ full-size models are off by 60.8, 27.9 and 41.6 percent respectively, equaling a total of 31.6 percent below its April 2005 sales. Ouch!

And Land Rover? Led by the immensely popular new Range Rover Sport, that experiencing sales of 1,548 units in April, from zero last year, the company is even able to weather a 34.8 percent drop in LR3 sales, a result that is no doubt affected by the popularity of the new Sport, and an almost total lack of interest in the compact Freelander; it suffered a 98 percent drop in sales showing just five new customers in the entire U.S. Good news is that an all-new Freelander is on the way, and that the brands priciest and most profitable model, the Range Rover, is enjoying an upturn of 2.3 percent over April of 2005.

One of Fords most successful brands, Volvo, is also losing out on the sales charts lately, at least among its volume sellers. While the entry-level S40 sedan is more or less holding its own with a slight drop of 0.5 percent, resulting in 2,100 new cars sold in April, deliveries of the V50 wagon have dropped by 41.4 percent to 310 units. Volvo will have a new V50-based crossover which should help bolster the brands compact sales, although with so few wagons being sold its days in the U.S. may be numbered.

The sleek S60 is also experiencing less interest than during April of last year, with sales down 14.7 percent, while interest in the XC70 wagon has ebbed some 33.1 percent. Among crossovers only the XC70 wagon is up, but by only 0.2 percent, while the more profitable XC90 lost some 9.2 percent; although its still the brands best selling model at 9,736 units. Although sales of the flagship S80 sedan are up by 10 percent, the big winner is the C70 with a 55.9 percent increase in deliveries.

So, while there are positive and negative sales trends to report amongst all of Ford Motors brands, the overall outlook is improving among its cars, at least. By offering leading-edge technologies that are biased towards reducing fuel consumption and toxic emissions, Ford is finally getting some well-deserved payoff for what has been a major overall investment thus far. The introduction of its more powerful yet more economical and cleaner Duratec 35, and in-house built six-speed automatic will do wonders to improve its reputation as a builder of import-fighting cars and crossovers, bolstered further when the automaker introduces its upcoming midsize hybrid models - the first to show up in Fusion guise - and may even appease those who have chosen to single Dearborn out as environmental enemy number one.

Of course, such a change of heart would take less politicking and more research on the part of the environmentalist groups, and with so much time and money invested in bringing Ford down, plus bandwagon momentum moving in their favor, organizations such as Jumpstart Ford will most likely continue their misleading campaign of stating half-truths in order to stir up the ranks.

For example, a recent headline on the home page of www.jumpstartford.com reads "PHEVs Leave Ford in the Dust - American demand for plug-in hybrid vehicles grows; Ford wont build them, and has to lay off workers." Of course, anyone who understands the automotive industry will appreciate the almost humorously inane tie-in of Fords unwillingness to build a micro-niche vehicle type and the need to trim its workforce. But why let the truth get in the way of a good story.

The reality remains that Ford is the leading domestic manufacturer of environmentally friendly cars, plus the only automaker producing not one, but two entry-level compact hybrid SUVs. Due to this the Dearborn-based automaker is experiencing stronger car sales than in its recent past, a trend that will most likely continue as long as fuel prices remain high.