The automaker just posted record losses — $12.7 billion, or $6.79 per share for the ‘06 calendar year, with fourth quarter ‘06 red ink amounting to a staggering $5.8 billion.
This is devastating news; well beyond the worst predictions of industry analysts. Ford’s new CEO says he has a plan to return the company to profitability by 2009, but that will be a tall order, chiefly because so much depends on a die that’s already been cast — in the form of several new/heavily updated models, including three new Lincolns (MKZ, MKX and Navigator) as well as several new Fords (Edge, Fusion; a revamped Explorer SUV, etc.).
The company’s future hinges on how well (or not) these models do. It’s true there are others in the pipeline — but they won’t be here until at least late 2007/early 2008 — at the soonest. It’s doubtful Ford can afford to bleed another year-plus. And it will take time for any new 2008/2009 models Ford has coming to make much of a dent in either the marketplace or the company’s bottom line.
So the future hangs on what Ford’s got right now — or will have, in the near-term future.
It’s a dicey situation.
The biggest open wound is Lincoln-Mercury. Like GM’s Buick and Oldsmobile divisions, Mercury was created decades ago as a “stepping stone” between working man Fords and top-of-the-line Lincolns. This made sound sense when American car companies dominated the U.S. market — and buyers loyally worked their way up the ladder, staying within the Ford Family of Fine Cars. But today, Mercury seems glaringly superfluous. Like Oldsmobile, there is a great history there. But also like Oldsmobile, what exists today is not like what once existed — and it’s very debatable whether Ford should (or even can afford) to maintain three full-line divisions. Especially when every single current Mercury model is an obviously tarted-up Ford — with little to recommend it beyond a higher price tag and a few trim gewgaws.
As for Lincoln, Ford (like GM) needs to have a luxury line to remain a major player in the business. Cadillac turned it around; so Lincoln can, too. But it will be tough going; and one can only marvel in stunned stupefaction at the way Lincoln simply gave away the high-end SUV market it once owned as a virtual fief — by allowing the once-dominant Navigator to slide into third-tierdom — and at the way it just gave up on the potentially excellent rear-drive LS sport sedan. This one could have been a BMW contender, had it been developed rather than left to languish, unchanged and unimproved.
Now Lincoln finds itself having to rebuild from the ground up — and everything’s riding on the new MKZ entry-level sedan, MKX crossover and all-new Navigator SUV. All three are nice enough vehicles; but is “nice enough” good enough?
The MKZ’s an obviously rebadged Ford (and built on a front-wheel-drive chassis in a market that has gone dramatically back to rear-drive). It feels sluggish and heavy compared with class-leaders in this segment, such as the BMW 3-Series.
The Navigator — once the king of the hill in its segment (indeed, the original Navigator created the segment) comes to market packing a weak (in comparison to what’s available) 300 horsepower V-8. Its chief rival, the Cadillac Escalade, offers 100 more.
And the MKX crossover is a solid effort — with interesting features like an oversized “panorama” sunroof — but comes to market in the wake of literally half a dozen or more similar vehicles from other automakers, many of which (such as the Lexus RX and Acura MDX) are better established or (as in the case of Audi and Mazda) better-regarded as brands.
Just getting people into the showrooms will be quite the challenge.
And Ford itself?
The Mustang is a huge hit — all by itself, carrying the reputation of Ford on its retro-muscular shoulders. But the current design is already two years old — and there’s only so much a specialty vehicle with an inherently limited potential buyer pool can do, bottom line-wise. What’s needed is a mass-market success story — something along the lines of what the original Taurus accomplished for Ford back in the mid-1980s.
But there is nothing like that in Ford’s current lineup. Or more precisely, nothing in Ford’s current lineup that seems to be drawing in customers like the original Taurus did. The Five Hundred and Freestyle sedan/wagon were supposed to do the trick, but that hasn’t panned out (sales of the Five Hundred in the last quarter of 2006 were down 22 percent; the Freestyle free-fell 23.6 percent).
Brand-new/just launched vehicles like the new Edge crossover (also sold as the MKX in Lincoln trim) and Fusion (which does triple duty as the basis for the Mercury Milan and Lincoln MKZ) are not “bad” in terms of their design, driving characteristics, features or price. But are they exceptional? Stand outs? Do they have sufficient gravitational pull to attract would-be Toyota/Honda/Nissan customers — reversing the trend of the past 20-plus years?
That is the heart of the matter.
What happens with Lincoln’s latest offerings will give us a clue as to the likely outcome. If the new Navigator, MKZ and MKX aren’t able to rehab the division — or at least bring it back into contention — it’s not a good bet the less adorned versions of the same vehicles will do much better as Fords.
Or for Ford.
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