Last post on Dec 04, 2013 at 5:55 AM
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Ford Fusion, Lincoln MKZ, Mercury Milan, Automotive News
#499 of 508 Re: Flat Rock [berri]
Nov 27, 2013 (7:14 pm)
Hermosillo put out 300K vehicles for the last 7 years on 3 shifts. That's pretty high. Remember they also exported Fusions to Latin and South America, not just the U.S. and Canada.
You don't beat Camry and Accord in sales just by having a great vehicle. You need a steady stream of repeat buyers - multiple repeat buyers - to build up volume over time. That's what Accord and Camry did. 33% of Camry buyers are repeat buyers. Ford is only around 19% as this is only the second generation of Fusion whereas Camry is on its 4th or 5th generation. You have to build up that base of repeat buyers in addition to new buyers.
Based on sales the first 9 months of the year, it appears that buyers are willing to pay higher prices for the new Fusion. $4K more than Camry by comparison. It wasn't until the competition added incentives that Fusion lost sales, which apparently means the competition was overpricing their vehicles, not Ford. Or they were overproducing. Either way that doesn't reflect negatively on Ford. A lot of people buy on price and they buy cheap. Ford doesn't want that business. They want higher ATPs and so far they're getting it even if it means reduced volumes temporarily. This incentive war won't continue.
#500 of 508 Re: Flat Rock [akirby]
Nov 27, 2013 (7:23 pm)
I agree that holiday season is a good time to lay off workers, IF they have decided to go that route (to ensure similar ATPs). But depending on how long it lasts, is Ford's build design disgruntled-workers-proof? For any prospectively hopeful Ford purchasers, one can only hope. During that time, it also allows buyers to shop and read the 'press'.
I'm gonna stick with the arrogance word..but hey..if it makes you feel better..there have been times I have accused Honda of exactly the same thing. It's just that, in the end, I did vote my confidence level on Honda. Ford failed me and I swore to them if they turned their back on me in a cut-and-dried case of injustice that I would never forget it. And I haven't.
#501 of 508 Re: Flat Rock [crkyolfrt]
by Stever@Edmunds HOST
Nov 27, 2013 (7:35 pm)
Ford also has to contend with currency manipulation, so there's another incentive Honda and Toyota have that Ford doesn't enjoy. (Bloomberg)
#502 of 508 Re: Flat Rock [Stever@Edmunds]
Nov 27, 2013 (7:53 pm)
I continue to be impressed with your ability to put your hands on pertinent links, Steve...spur of the moment even, most times..
Some pretty passionate comments posted at the bottom of that one too..
Obviously having taken it seriously.
#503 of 508 Re: Flat Rock [akirby]
Nov 27, 2013 (8:12 pm)
Margin vs., volume is a tough issue to balance in real life. Too much or little of either one impacts finances. Plant utilization is another tough variable. You don't want to overproduce due to inventory carrying costs. While you can use layoffs to cut direct expenses, lack of production can lead to unabsorbed overhead since the fixed costs don't go away. Meanwhile frequent or extended layoffs can also have some impact as workers get rusty or po'd. I think they are adding Mustang to that plant, but if they can't operate it close to capacity routinely it will become a drag on profits offsetting some of the gain from higher selling margins. Lower volume can also raise the price for parts and materials from vendors. I guess the Fusion answer will play out over time as it's newness wears off. A good looking new model will almost always bring a better price (at least initially), but a good looking vehicle can also ironically get old looking quicker than a more conservative model sometimes. I think Hyundai is experiencing that with the Sonata.
#504 of 508 Re: Flat Rock [berri]
Nov 27, 2013 (9:11 pm)
They're only temporarily stopping production. They do this all the time for various reasons. They're not laying anybody off.
Mustang has always been at Flat Rock, and they're going to add the new Taurus and MKS within the next year or two. No problem keeping the plant busy.
#505 of 508 Re: Flat Rock [akirby]
by Stever@Edmunds HOST
Nov 28, 2013 (6:03 am)
Ford just added the Fusion line at Flat Rock this August (two shifts). Hermosillo couldn't keep up with demand. Now the supply has grown from ~65 days to ~88. Rumor is that the Fusion line will be idled for a whole month sometime next quarter.
You have to wonder if the fall in sales last July was due to lack of vehicles or maybe something else was happening besides Camry incentives and the falling yen.
Or maybe it's just a bit of oversupply and we (well, not Akirby) are over-reacting:
"With a second factory -- in Flat Rock, Mich. -- online producing Ford Fusions, sales of Ford's hot mid-sized sedan soared 71 percent in October, pacing Ford Motor Co. to a 14 percent monthly sales increase.
"The Fusion broke an October retail record in every one of our five markets nationally," said John Felice, Ford vice president of U.S. marketing, sales and service."
Ford kicks up Fusion production, shares Mustang factory (USA Today)
Ford to Idle Fusion Production at Flat Rock Plant for One Week (Motor Trend)
Hot Fusion paces Ford sales (Automotive News)
#506 of 508 Re: Flat Rock [Stever@Edmunds]
Nov 28, 2013 (10:40 am)
They're just taking steps to prevent over-supply. I'm sure Camry incentives are taking some sales but that's all temporary. Hermosillo is still going full tilt as far as I know just like it was earlier this year. Note that this is what Honda has always done - only make as many as you can sell at a healthy price without big incentives. I think toyota is desperate to keep the sales lead even if it means lower profits. Sounds just like GM and Ford a decade ago.
#507 of 508 Re: Flat Rock [akirby]
by Stever@Edmunds HOST
Nov 28, 2013 (10:47 am)
It was just a year ago that the Chinese were boycotting Honda and Toyota over a territorial dispute.
Now, a year later, there's a spat over an "air defense" zone between China and both Japan and South Korea (and the US). Sounds like the issue is dissipating but if it heats up, that could hurt the Japanese automakers.
How that would affect Ford, I don't know.
#508 of 508 2015 mustang leaked
Dec 04, 2013 (5:55 am)
Nicely updated and more svelte but still unmistakably mustang....
Base engine - 2.3L ecoboost 300 hp/300 lb ft