News - Ford - Fairlane
Ford axes Fairlane
No sales, no exports, no hope for Ford's once-dominant Fairlane and LTD
10 May 2007
FORD Australia has announced it will stop building the long-wheelbase Fairlane after almost 40 years of local production.
The company will cease manufacturing the Fairlane and LTD at some point in the next year and the two models will not be replaced as part of the new 'Orion' Falcon range due to arrive in the second quarter of 2008.
Ford Australia president Tom Gorman made the announcement in Melbourne this morning, just as workers at Ford’s Victorian plants were told of the decision.
Mr Gorman said it simply did not make sense to develop an Orion-based long-wheelbase model given the poor sales of the Fairlane/LTD and the lack of an export program for the vehicle.
“It is a difficult decision for us emotionally because of all the history of the vehicle and I am sure, beginning tomorrow, we will get the letters from the customers and so forth, but I also think it represents that we are realistic in facing up to the changes in the marketplace,” Gorman said.
“The market dynamics have shifted so radically in the last three or four years that I think to try and hang onto something for nostalgia, if you will, is dangerous business behaviour.” Mr Gorman said Ford Australia had “virtually invented” the locally-produced long-wheelbase luxury segment when it started building the Fairlane here in February 1967, but said there simply was not enough demand to justify the investment needed to develop a new model.
A trip down memory Fairlane: (from top) GoAutoNews, April 26, 2006, 1996 NF, 1988 NA, 1973 PS LTD, 1973 ZG and 1968 ZB (bottom).
“If you look at what is happening to the segment, it is a much, much smaller segment (now),” Mr Gorman said.
“If you look at all the competition in that segment, for us to really put a world-class vehicle in the marketplace was going to require a significant investment, and to recover that investment we obviously need to be able to be confident that we could get more volume.” He pointed to the new Holden WM Statesman and Caprice as an example of what would be needed to develop a new Fairlane/LTD product.
“We have obviously done a lot of analysis and I guess the best thing that I would point you to is that Holden has said that their long-wheelbase investment was $190 million to $200 million. That’s what it takes to make a competitive vehicle and any competitor would have to spend the same to put a product that is going to compete in the segment,” he said.
Mr Gorman said Holden was able to sustain investment in the Statesman and Caprice because exports of those vehicles far exceeded local sales.
Mr Gorman said he felt the Statesman and Caprice would have met a similar fate to the Fairlane/LTD if they were not part of an export program.
Combined sales of the Fairlane and LTD ran nearly as high as 10,000 a year in the 1970s and early 1980s, but sales eased in the 1990s and stood at 4807 in 1999.
Demand continued to crumble and Ford sold a combined total of just 1158 of its two long-wheelbase models last year. Many of those sales were made to rental fleets, further reducing the return on the cars.
Mr Gorman said falling import duties and changing tastes meant the early success of the Fairlane and LTD was not able to be sustained.
“Back then there was a 57 per cent sales tariff and the only way you could sell a car was if you built it (locally). The world has changed radically and the market is now wide open,” he said.
Mr Gorman admitted that spending more on 2003 BA-based long-wheelbase models might have generated some more sales, but said the investment required simply did not match the likely return. He added that Ford Australia made the right decision to invest more in the BA Falcon and the Territory SUV.
“It’s easy to sit where you sit and say, 'Well, you just under-invested (in Fairlane/LTD)', but the answer is that you have got to have a business equation that goes with it and, even if we dominated the segment, the volume is still very small,” Mr Gorman said.
“When you do capital allocation in our business, you have to put the capital where you have the best return.
“The investment that we made it Territory has made an outstanding return for us versus investing in a long-wheelbase where you might do 200 to 250 a month. We do five or six times that with Territory and we are building a brand into a growth segment with a lot of growth oppourtunities.
“I think we allocated our capital in the right direction.” Ford Australia said it would continue to build a small amount of Fairlane/LTD models as required to fulfill fleet commitments and had not locked in a date for production to end.
“It depends on demand. It may be this year, but honestly we don’t have a date confirmed on this,” Mr Gorman said.
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