Just three years ago, 70 percent of new Ford Motor Company vehicles sold in the U.S. were trucks and traditional SUVs. The rest were cars. Now, the split is nearly 50-50 as Ford rides a major consumer shift to crossover vehicles (CUVs), along with the popularity of its midsize cars.
"(Crossovers are) one of the biggest and fast growing segments in the market," said John Casesa, managing partner, Casesa Shapiro Group. "There is an offensive reason to be (in that segment) because of the growth, but there's also a defensive reason. If you don't have competitive crossovers, you are going to take a lot of market share risk."
Crossovers, largely built on car-based architectures, offer much the same utility as truck-based SUVs, but generally are more fuel efficient. CUVs have grown from 500,000 in 2000, to 2.4 million in 2006, surpassing both full-size pickups and SUVs in annual sales. And the number of CUV models has nearly tripled during the same period.
Ford predicts CUV sales to reach at least 3 million units a year by the end of the decade, challenging small cars as the industry's largest segment.
To that end, strong sales of the Ford Edge and Lincoln MKX crossovers, as well as the Ford Fusion, Mercury Milan and Lincoln MKZ midsize cars, are critical to bolstering Ford's U.S. retail share, which lost one point in each of the last six years. So far, the new products are delivering.
"Since June of last year, the company's retail share has remained at a fairly constant level -- around 13 percent," said Cisco Codina, group vice president, Ford North America Marketing, Sales and Service. "One of our objectives for 2007 is to stabilize share. We are on track to do that."
The new Edge crossover, after only three months on the market, is outperforming the Fusion, which has grown sales each month since its introduction and received numerous accolades. In fact, sales levels and transaction prices of the Edge are comparable to -- and in some cases better than -- those of established competitors with well-deserved reputations, says George Pipas, manager of Ford's U.S. Sales Analysis.
Edge's conquest rate, its effectiveness at capturing competitors' customers, is 41 percent, a figure Codina calls "very high." Meanwhile, Lincoln's MKX is outselling the Acura RDX and both Infinity FX models.
Altogether, first quarter sales of Ford, Lincoln and Mercury crossovers climbed 29 percent, the largest increase of any major automaker in the nation's fastest-growing segment.
With Edge, MKX, a new Ford Escape and Mercury Mariner, the new Taurus X coming later this year and the new Ford Flex scheduled to hit dealerships in the summer of 2008, the company will have six crossover vehicles among its Ford, Lincoln and Mercury brands.
Casesa calls the new Edge and Lincoln MKX "very competitive crossovers." And he is very optimistic about the Flex.
"I think the Flex will be an extremely effective entry and probably with greater market potential than Edge because of the spacious interior packaging and the third-row seat," explained Casesa.
Consumer demand for the Fusion, Milan and MKZ continues to grow in their second full year of production. Fusion sales were up 33 percent through the first quarter of 2007, while Milan sales climbed 34 percent. MKZ also experienced a sales increase. Fusion's conquest rate has been running in the mid-40 percent range. Furthermore, Fusion and Milan both posted best-ever sales months in March.
"Often, when you see a new product get off to a good start in its first year, it begins to sputter in the second year," said Pipas. "Fusion, Milan and Zephyr are in their second year, and we still haven't found their ceilings."
Ford's car lineup with be further strengthened this year when the new Ford Taurus and Mercury Sable debut this summer and the redesigned Ford Focus hits the market this fall.
"This is the best product lineup I've had to work with in years. We still have challenges, but we're seeing light at the end of the tunnel," said Codina. "We're introducing new products that consumers are excited to buy."