Ford prepares Falcon for challenging times

FORD Australia is not sounding a battle cry just yet but is battening down for the arrival of the new VE Commodore and Toyota Aurion.

Both newcomers arrive in the latter half of the year and Ford Australia president Tom Gorman recognises they will present a serious challenge to the BF Falcon.

Although the Mitsubishi 380 is part of the large-car quartet vying for a diminishing segment, Mr Gorman believes the biggest fear is Holden, followed closely by Toyota.

“Both are very formidable competitors,” he said. In Holden’s case, the Commodore represents “a huge portion of their business and (VE) is a very big launch for them and what they’re trying to do is arrest decline that they’ve seen in absolute volume terms and continue to build energy in the segment,” he said.

“I don’t know specifically what they’re going to do but whatever they’re going to do we anticipate that they will do it well and we anticipate that they will spend a lot of money communicating it.

“So to start with I guess they worry me most, because they’re first up.” The VE Commodore is due to arrive around August/September, with the Aurion soon after.

Mr Gorman conceded that the large-car segment had not traditionally been a Toyota strongpoint but Ford was wary of the new Aurion and Toyota’s marketing power.

“I have a great deal of respect for Conomos and his team and they don’t normally lose at things repeatedly,” he said. “There are some product issues I’m not as clear on with the Toyota offering as we might be on where VE is going to come. That will become clearer over time.

“It’s going to be a very interesting year … It’s going to create a lot of excitement in the segment that’s a good thing for us, but having two fresh competitors is obviously going to make our job a little more exciting and challenging.”

Mr Gorman also believes there is life in the stagnating large-car segment, despite sliding sales as buyers desert the segment for more fuel-efficient vehicles and lifestyle 4WDs.

“The product cycle is getting refreshed and renewed and that’s going to create renewed interest in the whole value story in the segment. I do see a future in the large-car segment,” he said.

“As I’ve said before, it’s not going to be 30 per cent of the industry. What’s important is that in total volume size is it large enough to think we have a business proposition going forward?“At the moment, I would say that yes it is. Our call for this year is that we do see the large-car market coming down further on a percentage basis, but we’re in the range of seeing 140,000 to 150,000 total large vehicles consumed by Australian consumers in 2006 and if we get our fair share of that I think we have a business equation.”

LEFT: Toyota Aurion and Holden Commodore (below).

However, Ford has cycled back production at its Broadmeadows plant, in line with future demand, joining Mitsubishi in adjusting output. Holden axed its third shift in Adelaide last year, in part because of falling demand for the Commodore.

Ford’s run-rate will go from 520 vehicles a day down to about 450 a day, a 13 per cent reduction.

“It allows us to produce in line with where we see demand coming in the future,” Mr Gorman said. “And it also takes quite a bit of overtime out of our system so it allows us to be that much more efficient.” However, Mr Gorman remains optimistic, even despite negative external factors on the segment such as fuel prices, exchange rates and actions from non-traditional rivals.

“Honda is a very visible one, aggressively price cutting in the market place to drive volume,” he said. Mr Gorman said Honda’s ability to source from Thailand under the FTA was a huge positive for the brand.

Long service leave
MUCH of the spin may well be focused on the outstanding success of the Territorybut Ford Australia acknowledges the performance of its long-wheelbase cars continues to be a worry.

Despite this, president Tom Gorman remains committed to the big limos, eventhough last year just 1839 Fairlanes and LTDs were sold against 3573 HoldenStatesmans and Caprices.

“I think the segment dynamics continue to be very, very challenging there,” he said. “We took an action to freshen our long-wheelbase products with Fairlane MkII.

“We still think we’ve definitely taken the right action.

“We continue to satisfy around 200 customers a month in the long-wheelbasemarket but that is a more challenging market going forward.”

Mr Gorman conceded that there was not a lot of volume for any of the major players in the long-wheelbase market.

“We continue to evaluate what the future for that segment might look like,” he said.

“We haven’t taken any really firm decisions yet, but we’re continuing to look at it.

“Clearly at those volumes it makes the future quite a challenge for us.”

Mr Gorman said that despite the issues facing the long-wheelbase segment it wasstill an important customer segment for Ford “and it’s still a profitable segment for us”.

He is also aware that Ford does not have a competitor in the growing medium-car segment but remains cool on the idea of launching the Mondeo locally.

“We study things all the time to see what segments we would want to be in,” he said.

“But it has to meet customer needs. You also have to support it from a marketing and dealer standpoint.

“And you have to do it with enough critical mass that you can get your dealer body behind it.”