Ford Putting its Eggs in the Hybrid Basket

Posted on March 5, 2009 by LCT Staff - Also by this author - About the author

DETROIT — New-car introductions are becoming increasingly rare as the auto industry suffers through its worst downturn in 25 years.

The Ford Motor Company is bucking the trend this month, however, gambling that its new Fusion hybrid sedan can interest some of the dwindling number of American consumers still interested in buying a new car.

Ford also hopes its Fusion hybrid will help separate the automaker in the public’s mind from its crosstown rivals General Motors and Chrysler, which both need more government loans to avoid bankruptcy. Ford has so far refrained from seeking federal aid.

“We are not about waiting for tomorrow and what it’s going to bring,” said James Farley, Ford’s global marketing chief. “It’s about what we’re doing today to bring out car after car after car.”

The industry has cut back considerably on new-model introductions — hardly a surprise considering the 18 percent drop in United States vehicle sales last year.

Last year, auto makers brought out 17 new models, not including redesigns of existing vehicles, according to data from Ward’s Automotive Reports.

That was about half the annual number of new models the industry turned out just a few years before. Now, with sales plunging to levels comparable to the early 1980s, automakers are delaying or canceling product programs to conserve cash.

The number of new models that will make a debut in 2009 will probably total fewer than 10, according to product plans revealed by the car companies.

“The environment is obviously not good as far as the economy and consumer confidence goes,” said Joseph Phillippi, principal in the firm Auto Trends Consulting.

Ford, however, is bringing out three new vehicles this year — the Fusion, with either a hybrid or conventional engine; the new Taurus sedan and the Transit Connect van.

Ford will introduce the Fusion Hybrid with an advertising campaign beginning Tuesday night on “American Idol.”

With Ford shifting its product lineup to emphasize more fuel-efficient small cars, the Fusion Hybrid is seen within the company as an important vehicle for changing perceptions in the marketplace, even though the cost of gas is below its high of nearly $4 a gallon.

“We’re known to most people as a trucks and Mustang company,” said Matt Van Dyke, Ford’s American director of marketing communications. “How do we begin to tell the story that we’re in the car business in earnest?”

The bigger challenge may be drawing consumers into showrooms. “The question is what people are going to respond to,” said Mr. Farley. “And we think it is fuel economy.”

Both the hybrid and conventionally powered Fusion models are ranked best in fuel economy in their respective segments, according to federal statistics.

Ads for the hybrid promote not only that it delivers 41 miles a gallon, but that it can travel 700 miles on a single tank of gas.

While they do not talk about it much publicly, Ford officials also think that every car introduction this year will further separate their company from the troubles enveloping G.M. and Chrysler.

Ford is tracking how consumers perceive the company because it has not taken government money, but has declined to share that data.

The magazine Consumer Reports recently gave Ford’s reputation a lift when it recommended more of its models to prospective buyers than vehicles from G.M. or Chrysler.

G.M. and Chrysler have received $17.4 billion combined in bailout loans, and are asking Washington for an additional $21.6 billion.

Analysts think the relentless coverage of their loan requests is taking a toll on G.M. and Chrysler — and consequently helping Ford.

“G.M. and Chrysler are in the media every day, and every story invariably cites the ‘B’ words — bankruptcy and bailout,” Mr. Phillippi said. “It has to be helping Ford.”

Source: New York Times

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