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Ford Pins Its Hopes on New Crossover

Company Ignores Critical Quality, Customer Loyalty Issues

By Joe Benton
ConsumerAffairs.com

October 20, 2006

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The executives at Ford Motor Co. are betting a big part of the company's future on the "crossover" being the next big trend for consumers. In Ford's case, the crossover is called the Edge.

Ford is counting on crossover profits replacing SUV profits. Executives hope that sales of the new vehicle will slow the decline in Ford's fortunes and change attitudes about the company as consumers look for more efficient alternatives to gas-gulping SUVs and Ford's troubled line of trucks.

The crossover offers the high ride and roomy cabin of an SUV with the handling and fuel mileage of a passenger car. Automakers expect crossover vehicles will get a lift as baby boomers approach retirement age.

Automotive marketers are trying to brand crossovers as flexible, useful vehicles. Crossovers come in a variety of shapes that can make the vehicles difficult to brand as a group but "Crossover" is beginning to resonate with consumers even while industry insiders debate the validity of the word.

The debate among Ford marketers is over. They plan to capitalize on the emerging crossover market with a vehicle they hope is loaded with all the features consumers want.

At first glance, the potential crossover market looks to be very big. This year alone sales for crossovers could climb as high as 2.4 million units, making the market larger than the traditional SUV segment for the first time.

Industry analysts suggest car-based crossovers could become the largest segment of the U.S. market with three million crossovers sold each model year by the end of the decade.

The Ford Edge crossover hits showrooms in November. The Edge is quite simply Ford's most important product of the year and a critical test of Ford's latest turnaround strategy.

The five-passenger Edge, which shares a platform with the Ford Fusion, carries a V-6 engine with a 6-speed automatic transmission and estimated highway mileage of 25 mpg.

While Ford will launch the Edge and Lincoln MKX crossovers without cash rebates, the company will offer subsidized financing as low as 1.9 percent for 36 months, 2.9 percent for 48 months and 3.9 percent for 60 months.

The base price of the Edge is $25,995, including shipping. The base price for the MKX is $34,795, including shipping.

Quality Problems

Times are troubled at Ford, all right. The company was hit hard by the backlash against SUVs generated by sky high gasoline prices.

But the trouble at Ford is not just because of high gasoline prices and low Ford SUV gasoline mileage. Ford is in trouble because of major flaws in a core Ford product -- its trucks.

Nowhere in the Ford mantra do executives talk about tough Ford trucks blowing a spark plug right out of the aluminum engine head. Neither do they say much about Ford SUVs large and small catching due to a faulty and dangerous cruise control unit installed under the hood of nearly 4 million trucks.

The National Highway Traffic Safety Administration ordered Ford to recall 3.8 million Ford F-150 pickup trucks as well as the Ford Expedition, Lincoln Navigator and Ford Bronco SUVs from the 1994 to 2002 model year August 6.

The recall was the fourth largest recall in Ford's history.

Ford marketers were not deterred. The intense competition between Ford, General Motors and the new big boy in town, Toyota, lit up the Texas State Fair recently as they all ballyhooed their big trucks to prospective pickup buyers in the Lone Star State.

Ford truck quality is still a tough question though, despite repeated plans from senior management to turn the company around.

As an increasing number of Ford truck owners experience a "spit spark plug” as one Texan described the problem, Ford dealers continue to give them the stiff arm.

It happened to Brodie of Lubbock, Texas. When her 1999 Ford Expedition a spark plug, she wasn't surprised.

"My sister-in-law's Expedition did the same thing about 6 months prior," she said. "The mechanic told me that he could not remember how many Fords that he has had to repair with this same problem."

Brodie and her sister-in-law aren't alone. For years, consumers have complained about their trucks blowing spark plugs out of the aluminum cylinder head, leaving a hole in the head and rendering the vehicle useless, often on the side of the road, until repaired.

In an amazing display of corporate hubris, Ford has never admitted that there is a problem and dealers many times tell their customers facing a $3,000 repair bill that they have never seen anything like the blown plug before.

"I have been a loyal Ford customer for over thirty years," said Paul of Coppell, Texas. "I purchased my 1999 Expedition with 41k miles and had no problems with it until the Triton V-8 started to spit out spark plugs."

Ford executives won't acknowledge poor Ford quality -- and the company's unwillingness to stand behind its products -- as a reason for the company's steady decline. As Ford's market share continues to slide, they suggest the company will bottom out at a 14 percent market share, down from 16 percent currently and a high during the heyday of the SUV of 25 percent.

Will It Work?

So will Ford win the crossover bet? Will the Edge become the Explorer of the crossover generation, a volume leader and trend setter? At stake are Ford's sliding fortunes between now and 2009, when the automaker predicts its North American operations will be profitable again.

The consumer market seems to be ready for the Ford gamble. Consumers are dumping SUVs like the Ford Explorer in large numbers. Through September, SUV sales fell 11.8 per cent to 1.8 million. At the same time, consumers bought 1.6 million crossovers, a 5.2 percent increase over the previous year.

Ford is not alone in placing a big crossover bet. The Toyota Highlander is the leader in the midsize crossover segment, with 35 percent of the sales in the U.S. GM is now marketing the Cadillac SRX as a crossover.

In his first companywide e-mail, new Ford CEO, Alan R. Mulally called on Ford employees to work together and avoid dissent from both outside and inside the company.

"As demoralizing as a slide down may be, the ride back up is infinitely more exhilarating," Mulally wrote. "Everyone loves a comeback story. Let's work together to write the best one ever."

So the same Ford Motor Company that rode the SUV boom of the 1990s into the dismal SUV sales environment of post-Katrina gasoline prices is now primping to change its image from the big SUV maker to a smaller automaker focused on smaller vehicles.

Ford is counting on the Edge to provide the first miles of the ride back to the top, even as loyal Ford consumers continue to repair unreliable Ford trucks with blown spark plugs while the company cynically looks the other way, refusing to help them.

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