Market Insight: Ford marks its Territory

THE continued viability of the Australian car manufacturing industry, and Ford’s place in it, has remained the centre of attention this week as the Blue Oval announced further job and production cuts due to worsening sales of its struggling Falcon large sedan.

But there was also a striking sliver of light in the form of the Territory SUV, which has lessened the impact of the latest cutbacks after making a remarkable turnaround since the SZ series – with an appealing new look and, crucially, a diesel engine – was launched in April last year, exactly seven years after the vehicle first rolled out of the Broadmeadows assembly plant.

In the first half of 2012, Territory sales rose 52.5 per cent to 7695 units, surpassing even Falcon (6846, down 24.6 per cent) to become the top-selling Australian-built Ford and renewing its status as one of the biggest-selling SUVs in this country.

Ford Australia’s internal figures show that diesel variants accounted for 72 per cent of Territory sales in the first half of this year, with 5515 sales YTD – mostly from the entry TX grade but with the high-series Titanium running a close second.

Over the same period, Toyota has recovered Prado sales this year by an even greater margin (up 53.5 per cent, to a market-leading 9320 sales) and other SUVs have returned to form.

With last year’s natural disasters in Japan and Thailand, Ford’s rejuvenated Territory claimed the title of Australia’s biggest-selling SUV in 2011 with 13,866 sales (up 20 per cent on 2010) – a position it had not held since 2006, when it was easily the best-selling SUV in the land with 18,364 new registrations.

From top: Ford Territory, Toyota Kluger, Toyota Prado, Holden Captiva 7, Jeep Grand Cherokee.

A year earlier, which was the model’s first full calendar year on sale, the total was more than 23,000, with a 33.5 per cent share of its segment.

While figures like these might never be repeated, Territory’s recent sales performance demonstrates how comebacks can be achieved, and how relatively minor improvements to an established vehicle can make a massive difference to perception in the marketplace.

The case with Falcon is more difficult, for while a sales recovery of sorts is not out of the question, widespread buyer defection from both the nameplate and the size of car in general looks to be irrecoverable given the apathetic response to important initiatives such as the FG Series II facelift and fuel-saving four-cylinder and new LPG-powered six-cylinder engines.

And at the same time, Australian consumers have also shown no sign of abandoning their affection for SUVs, with total SUV sales up 33.4 per cent YTD and medium SUVs under $70,000 (now classified ‘large’ by VFACTS) up 33.6 per cent.

Despite its strong position, Territory’s fate looks to be inextricably linked with Falcon sedan and ute, with their Australian-specific architecture nearing its use-by date as the Ford Motor Co moves to common platforms worldwide under its ‘One Ford’ policy.

The US auto giant is still to reveal its intentions for Australian production of Falcon and derivatives (including Territory) beyond 2016, but the ongoing decline of Falcon and no suggestion at this stage that it will switch to building models in more popular segments – as was previously planned with the Focus small car, only to be cancelled – leaves little room for optimism.

Whatever happens in terms of local production, Ford will ensure it is well represented in the key fast-growing SUV segments – even more so than now – and, as a case in point, has another mid-size SUV in development based on the locally designed and engineered Ranger utility, which is currently built in Thailand.

This model’s emergence will see the Blue Oval emulate Toyota – which sells the Kluger and Prado in the same segment – with a two-pronged attack using Territory (at least until 2016) and the harder-core Ranger-based wagon that is known as ‘Everest’ and expected on sale here in 2013.

Holden is following the same path with the current Captiva 7 and the all-new Colorado 7 wagon (sold as the Chevrolet Trailblazer overseas) due early next year.

Not since Territory’s early, heady days in 2005 and 2006 has Ford outsold both Prado and Kluger combined in the segment.

Indeed, after its initial surge, Territory sales were consistently down, its 18,000-plus result in 2006 still representing a 21.7 per cent decline, then falling 5.8 per cent in 2007 (to 17,290), 25.5 per cent in 2008 (to 12,882) and 15.5 per cent in 2009 (to 10,884) as it dropped to fourth place behind Prado, Kluger and Captiva.

Territory took back third place in 2010 with 11,558 sales, marking a 6.2 per cent rise, though it was still neck-and-neck with Captiva before the game-changing SZ series came along in the first half of 2011.

Based on the current running rate, Ford should again crack the 18,000 mark in 2012 with Territory, which would be a monumental achievement in a segment that has become increasingly competitive with improved models such as the strong-selling Jeep Grand Cherokee and, from this month, an upgraded Captiva.

A new Hyundai Santa Fe and Kia Sorento are also coming this year, and Nissan has big aspirations for its redesigned Pathfinder due in 2013.

As well as Colorado 7, a related Isuzu Ute mid-size wagon is also planned in what is shaping up as a major turf war between the rugged newcomers – including Ford’s Ranger-based SUV – and the established Prado, Mitsubishi’s Pajero and Challenger, and others.

And we must wait and see what becomes of Territory when it reaches the end of the line – in its current form, at least – in just over four years.