"New frugality." This is the concept Ford wants to hear shouted from Dearborn. The market is asking for fuel-efficient vehicles and Ford believes that its new line of I4 engines will satisfy customers' needs. A new I4 was introduced for the Ford Escape featuring more hp, more mileage (an additional 4 to 5 mpg), and higher efficiencies with technologies such as 6-speed auto transmissions and electronic power steering.
Sales of I4 engines make up 22 percent of Ford's current sales. Four cylinder and V6 engines each made up around 50 pecent of the midsize sedan mix in 2003, but this has shifted to favor four cylinder engines by 76 percent in 2008, according to J.D. Power & Associates. Another change for Ford is that three plants will switch from large SUVs to compact cars production beginning in December.
Ford believes that this trend in the market comes not only from the current economic crisis, but also from the younger generation. With Millennials and babyboomers eyeing smaller cars, Ford has high hopes for the B and C segmet - think the Fiesta and the Focus. Up to 6 million C segment and a similar number of B segment cars could be sold in 2012. Full press release after the jump.
[Source: Ford]
PRESS RELEASE:
FORD INCREASES FUEL ECONOMY AND PERFORMANCE OF I-4 MODELS AS 'NEW FRUGALITY' SWEEPS NATION
DEARBORN, Oct. 29, 2008 – In a time marked by economic turmoil and a resurgent interest in frugality, Ford Motor Company is well positioned to meet car buyers' desires to save money without sacrificing comfort and performance. In addition to an unparalleled period of powertrain investment, Ford is balancing production to meet increasing demand for its fuel-efficient four-cylinder engine powered vehicles.
Ford Focus, Fusion and Escape, as well as Mercury Milan and Mariner are powered by I-4 engines, which are winning raves in the marketplace. As of September, year-over-year retail sales of Ford's four-cylinder models were up 22 percent.
Consumer demand for fuel efficient small cars and models equipped with optional, 4-cylinder engines is driving the company's long-term production plans. The company introduced an all-new 4-cylinder engine on the 2009 Ford Escape this summer, and will offer it on several other upcoming models, as well. Ford also plans to introduce its new EcoBoost engine technology next year, increase hybrid production, and convert three existing truck and SUV plants for small car production beginning in December.
"We are seeing a dramatic shift in our capacity and utilization of our capacity," says Barb Samardzich, Ford vice president of Powertrain Engineering. "Thanks to some great work by the manufacturing, as well as purchasing teams, we were able to readjust the capacity of our four cylinder engine mix in our various plants and meet customer demand."
The decision to develop a new four cylinder engine three years ago was driven by customer research that indicated their want for improved fuel economy with no trade-offs in performance, said Joe Pierucchi, Ford's advanced product strategy manager. He added that the decision also led to the development of Ford's EcoBoost engine technology.
Ford's long-term strategy reflects an industry-wide trend The four cylinder to V-6 engine mix for midsize sedans gradually shifted from a near even split in 2003 to favor four cylinder engines by 76 percent in 2008, according to J.D. Power & Associates,. Consumer demand for the 4-cylinder engine versions of midsize models jumped most significantly during the past summer due to rapidly rising gas prices.
"Over the next five to ten years we expect the demand for vehicles powered by four cylinder engines will grow as many automakers will be introducing new small cars," says George Pipas, Ford's chief sales analyst.
In the driver's seat
Driving small car growth in the U.S. market are the Millennials, a group of young people aged 13 to 28 years that stands 1.7 billion strong worldwide. Every day, 11,000 Millennials in the U.S. come of driving age. When it's time to buy their first car, nearly half of them shop the small-car segment. This group will grow from representing 19 percent of the driving public in 2004 to amassing 28 percent in 2010.
"Millennials will be the defining group of customers in the future, driving all types of consumer trends," said Jim Farley, Ford's group vice president, Marketing and Communications.
Car buyers of all ages are turning to more fuel efficient vehicles, not only for their fuel efficiency, but also for their relatively low cost of ownership during troubled economic times, says Sheryl Connelly, Ford global trends manager.
"Increased demand for small cars reflects a new 'take only what you need' attitude," Connelly says. "Although some American households and businesses will continue to need larger vehicles, many people are downsizing and cutting back in all areas of their lives."
Vehicle downsizing is a clear example of "The New Frugality," BusinessWeek reported in its Oct. 20 cover story. The magazine also notes that consumer borrowing contracted in August for the first time since 1991, and speculates that the current quarter could mark the first fall in personal consumption in 17 years.
The downsizing trend is driven, in part, by 75 million Baby Boomers who buy a disproportionately large number of vehicles in the U.S., and thereby dictate industry trends, Connelly says. When Boomers were raising families during the 1980's and 1990's, they drove larger vehicles such as mini-vans and SUVs. As empty nesters, Boomers' are downsizing to smaller vehicles.
Rightsizing capacity, increasing fuel economy and performance
In the next five years, Ford will build more than 1 million vehicles a year worldwide off its global B-car platform and nearly 2 million units worldwide off its global C-car platform. Ford expects the C segment, where the Focus competes, to grow more than 20 percent to 6 million units in North America and 25 million worldwide by 2012, and expects similar strong growth in the B-segment, where the Fiesta competes.
Ford plans to double capacity of 4-cylinder engines to more than 1 million units by 2011 in North America. In addition to supporting small car production, the move also will raise Ford's I-4 installation rate for Fusion to be more in line with the industry average of approximately 80 percent, and it will increase the I-4 installations for Escape to more than 50 percent.
In addition to increasing I4 capacity to match industry demand, Ford is aggressively applying new technologies to improve demand of its 4-cylinder models., Ford has improved the performance and quietness of the 2010 Fusion through the use of advanced engine technologies, a 6-speed transmission, and vehicle systems technologies such as electronic power steering, while stepping to the head of the C/D segment on fuel economy.
"We improved Fusion's horsepower from 160 to 175, which is significantly better than Camry," says J.D. Shanahan, Ford Fusion chief engineer, adding that 0-60 acceleration improved by 1.1 seconds. "We've also raised fuel economy by 4 to 5 mpg depending on model, which is better than Camry and Accord. Fusion also has a higher quality rating as well based on the most recent J.D. Powers Quality Survey."
Ford's 4-cylinder EcoBoost engines, which debut in 2010 in both North America and Europe, also will deliver both fuel efficiency and increased performance capability. Ford will offer EcoBoost on more than 80 percent of its North American lineup by the end of 2012.
"Ford is investing most where consumer growth is taking place. By the end of 2010, nearly all of our North American engines will be upgraded or replaced," says Derrick Kuzak, Ford group vice president of Global Product Development. "With every new product, we expect to be the best or among the best for fuel economy, aided by one of the most extensive powertrain upgrades ever for Ford."
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