Did Ford bail on sedans for lack of Mazda help?

[wag123]

Originally Posted By: AirgunSavant
Wonder how they will survive $4 plus gas with no choices?

Exactly!
In the summer of 2008 when gas prices went above $4/gal, the car manufacturers literally couldn't give away their SUVs/crossovers/pickups. People who needed vehicles were ONLY purchasing economical small/compact/mid-sized cars, the vehicles that Ford is discontinuing. People who tried to sell their full sized SUVs/pickups couldn't, and many dealers wouldn't even accept them as trade-ins. Some people were walking away from them and letting them repo, adding to the manufacturer's losses. In the fall of 2008, GM permanently closed two of their three Suburban/Escalade/Tahoe assembly plants (leaving only their Arlington assembly plant to produce them) citing that the full sized SUV market would never again support their previous production level. Gas prices above $4/gal WILL come again, it is not a matter of IF but WHEN. Ford can NOT ramp-up the production and delivery of economical cars fast enough when this happens, and they will suffer (maybe fatally) as a result.
The second (and equally important) problem with Ford's decision involves brand loyalty. Young people just starting out their working careers and familys can't afford $35k and up SUVs, even $25k used ones, so they generally start out with economical and inexpensive small/compact/mid sized cars, used and new. A large percentage of these owners will stick with a brand when they can afford to move up. If it wasn't for this fact, Chrysler would already be out-of-business. Ford is throwing away their future in pursuit of current profits!
Also, when it comes to profit margins (which is what this is all about), GM and Toyota actually make the 10% profit margin on THEIR cars that Ford is seeking, why can't Ford?

 

[PimTac]

The fastest growing segment in vehicle sales is crossovers. These are not the 3 ton SUVs that are being referred to here to bolster the argument. We are talking about 1.5-2 ton car based awd vehicles. Crossovers for the most part are getting very good fuel mileage.

 

[KrisZ]

Originally Posted By: PimTac
The fastest growing segment in vehicle sales is crossovers. These are not the 3 ton SUVs that are being referred to here to bolster the argument. We are talking about 1.5-2 ton car based awd vehicles. Crossovers for the most part are getting very good fuel mileage.



And to bolster the argument that modern SUVs and CUVs are getting good fuel economy, which they sure are, a little inconvenient fact is omitted that an equivalent sedan or hatchback still beats the crossover in fuel economy. The fuel economy in all segments went up, but the gap is still there.

People are stretching their budgets more and more to get into these new crossovers, the loan terms and transaction prices are at all time high, so when the gas prices shoot up, a repeat from 2008 is almost guaranteed.

 

[wag123]

Originally Posted By: KrisZ
Originally Posted By: PimTac
The fastest growing segment in vehicle sales is crossovers. These are not the 3 ton SUVs that are being referred to here to bolster the argument. We are talking about 1.5-2 ton car based awd vehicles. Crossovers for the most part are getting very good fuel mileage.



And to bolster the argument that modern SUVs and CUVs are getting good fuel economy, which they sure are, a little inconvenient fact is omitted that an equivalent sedan or hatchback still beats the crossover in fuel economy. The fuel economy in all segments went up, but the gap is still there.

People are stretching their budgets more and more to get into these new crossovers, the loan terms and transaction prices are at all time high, so when the gas prices shoot up, a repeat from 2008 is almost guaranteed.

Well said.
Even most hybrid crossovers can't match the gas mileage of many current 4cyl mid-sized cars.
Adding to this, the purchase price of crossovers is higher, both new and used (even smaller ones), and so is the overall affordability factor for lower-middle working class buyers, particularly when gas prices skyrocket. Keep in mind, when gas prices skyrocket, the prices of EVERYTHING go up, so being able to afford putting gas in their vehicle is just the "tip of the iceberg" for consumers.

 

[willbur]

Greetings All-
Interesting topic and comments-

I can add the following article to the discussion...

https://www.msn.com/en-us/finance/compan...dans/ar-AAwHSHJ

 

[AZjeff]

Yeah, no styling dogs in '63...


Respectfully, comparing an icon of automotive style to a homely little category filler clone isn't much of an argument.

Maybe compare the Rivera to the best not-SUV GM has to offer today...

 

[PimTac]

Originally Posted By: KrisZ
Originally Posted By: PimTac
The fastest growing segment in vehicle sales is crossovers. These are not the 3 ton SUVs that are being referred to here to bolster the argument. We are talking about 1.5-2 ton car based awd vehicles. Crossovers for the most part are getting very good fuel mileage.



And to bolster the argument that modern SUVs and CUVs are getting good fuel economy, which they sure are, a little inconvenient fact is omitted that an equivalent sedan or hatchback still beats the crossover in fuel economy. The fuel economy in all segments went up, but the gap is still there.

People are stretching their budgets more and more to get into these new crossovers, the loan terms and transaction prices are at all time high, so when the gas prices shoot up, a repeat from 2008 is almost guaranteed.



It would make no sense to trade in my 30 mpg crossover for a 35+mpg sedan financially. There are other ways to cut down on fuel costs.

 

[AZjeff]

Same here, in 40k miles on the RAV we're just over 30 MPG lifetime average. It's paid for and wife likes it.

If we were looking at sedans the Malibu holds it's own in the looks department with anything in class IMO:

 

[HouseTiger]

Originally Posted By: spasm3

IMHO - the BEST looking vehicle Buick ever built !!!

 

[4WD]

Those were nice … buddy had one …

They need to go bold again:

 

[Trav]

That IMO is good looking car with nice and clean body lines unlike the Malibu which is just a cookie cutter appliance with a few sheet metal bulges not as an accent but to compensate for blah style that looks like it was penned by a second stringer.

 

[artificialist]

What can you expect when car buyers have more confidence in Toyota and Honda?

 

[fdcg27]

Originally Posted By: artificialist
What can you expect when car buyers have more confidence in Toyota and Honda?


This is a legacy that just won't go away.
It lives on from the decades when Honda and Toyota built FWD cars that were full of surprise and delight while Ford and GM built dismal little things that were neither stylish, useful, reliable, durable nor even especially economical in use.
Ford and GM build some very good mid-sized cars these days, but they can only shift them by offering deals that undercut Accord and Camry pricing and margins are further reduced by the fact that Accords and Camrys can be had for well below sticker, since both are produced in huge volume by plan.
This may not be fair and it may not be right, but it's just the way things are.

 

[PimTac]

Originally Posted By: fdcg27
Originally Posted By: artificialist
What can you expect when car buyers have more confidence in Toyota and Honda?


This is a legacy that just won't go away.
It lives on from the decades when Honda and Toyota built FWD cars that were full of surprise and delight while Ford and GM built dismal little things that were neither stylish, useful, reliable, durable nor even especially economical in use.
Ford and GM build some very good mid-sized cars these days, but they can only shift them by offering deals that undercut Accord and Camry pricing and margins are further reduced by the fact that Accords and Camrys can be had for well below sticker, since both are produced in huge volume by plan.
This may not be fair and it may not be right, but it's just the way things are.




Good point. I for one experienced the junk that the Big 3 put out in the 70’s and 80’s during the malaise period. Workers didn’t care, management turned their backs. That experience pushed me to Japanese brands which in turn gave me excellent reliability and minimal visits to the shops.

 

[KrisZ]

Originally Posted By: PimTac

It would make no sense to trade in my 30 mpg crossover for a 35+mpg sedan financially. There are other ways to cut down on fuel costs.


There are sedans and wagons that are fully capable of 40mpg+ like VW golf wagon or Mazda 6. There is member here that his Mazda 6 lifetime mpg is about 37 or something like that. I agree with you however that a switch to even a 40mpg vehicle wold not make financial sense, unless the commute was really long and the current vehicle almost ready to be retired. If the vehicle is fairly new and especially if it's not yet paid off, it makes absolutely no sense in switching, unless in some very rare circumstances.

But that's not the point. The point is that people that were ditching their SUVs, oftentimes not even paid off, back in 2008-2010 time period for overpriced used small econoboxes, taking a huge depreciation hit and paying very high interests rates, as nobody was lending money for cheap anymore, weren't doing it rationally to actually save money. They just couldn't get over the psychological barrier of the cost of a single fill up.

That psychological barrier exists in most people's minds. Most people's idea of fuel economy is how much it costs to fill up. It has merit of course, as thirstier vehicles usually have bigger gas tanks, however no logical person, that wants to save money, will base their purchase on the cost of a single fill up. The sad truth is that most people did and it will happen again.

 

[emg]

Originally Posted By: KrisZ
And to bolster the argument that modern SUVs and CUVs are getting good fuel economy, which they sure are, a little inconvenient fact is omitted that an equivalent sedan or hatchback still beats the crossover in fuel economy.


But largely irrelevant, because of the declining returns of increasing mpg. Going from 10 to 20mpg is huge. Going from 20 to 30 is significant. Going from 30 to 40 is, well, OK. Going from 40 to 50 is barely noticeable.

No rational person is going to dump a nearly-new CUV that averages 30mpg to buy a sedan that averages 40mpg, unless they drive a heck of a lot of miles. If you can afford the capital loss of selling that CUV and buying another car, you can easily afford the higher fuel consumption.

And since most CUVs are based on sedans, they're going to get similar fuel economy around town; it's highway driving where the lousy aerodynamics hit the fuel economy. As I've mentioned before, our three-year-old Forester gets the same or better mpg around town as our nine-year-old Civic. Even with AWD and a bigger engine, the Forester can do as well as an economy car of the previous generation.

 

[Silverado12]

Originally Posted By: KrisZ
Originally Posted By: PimTac

It would make no sense to trade in my 30 mpg crossover for a 35+mpg sedan financially. There are other ways to cut down on fuel costs.


There are sedans and wagons that are fully capable of 40mpg+ like VW golf wagon or Mazda 6. There is member here that his Mazda 6 lifetime mpg is about 37 or something like that. I agree with you however that a switch to even a 40mpg vehicle wold not make financial sense, unless the commute was really long and the current vehicle almost ready to be retired. If the vehicle is fairly new and especially if it's not yet paid off, it makes absolutely no sense in switching, unless in some very rare circumstances.

But that's not the point. The point is that people that were ditching their SUVs, oftentimes not even paid off, back in 2008-2010 time period for overpriced used small econoboxes, taking a huge depreciation hit and paying very high interests rates, as nobody was lending money for cheap anymore, weren't doing it rationally to actually save money. They just couldn't get over the psychological barrier of the cost of a single fill up.

That psychological barrier exists in most people's minds. Most people's idea of fuel economy is how much it costs to fill up. It has merit of course, as thirstier vehicles usually have bigger gas tanks, however no logical person, that wants to save money, will base their purchase on the cost of a single fill up. The sad truth is that most people did and it will happen again.


I remember when a $100 bill wouldn't fill up my old Dodge truck with the 34 gallon tank, although I could run it almost all month until I needed to fill it again.

 

[itguy08]

Originally Posted By: fdcg27

I think that Ford and GM are betting on a market that has peaked and that the move away from cars places both companies in a position where they'll have great difficulty in surviving the next recession. Don't think so? Look how hard the last one was for both concerns. Fashions do change and these two concerns will be left ill-equipped to deal with any rapid changes in the new vehicle marketplace.


There's a HUGE difference in driving a vehicle that may get 10MPG on a good day (old school SUV) and today's CUV that gets 25-30 MPG. The average driver would save little to trade in a working CUV that gets 25MPG for a sedan that gets, say 35MPG, even at $5/gallon for gas.

The CUV market is white hot today and BRAND NEW Camrys are getting over $2k in rebates to break even on sales. Accord is all new, award winning, and down on sales 20%. Over at Mazda the CX5 CUV is up over 75%, Subaru who sells pretty much only CUV's is having record sales. Who would not chase that market. And since CUVs are based on cars, should people go back to sedans it's relatively easy to get that out the door.

Quote:
WRT a "class leading" hybrid system, I think we all know who makes those and it isn't Ford.


Really? Everyone says Ford's Hybrid system is right up there with Toyota. They both lead the class.

Quote:
I also used wiki as a source and if you try a broader search I think you'll be surprised at just how many of the engines found in current Fords are Mazda designs.


I'm curious at your search.

Everyone needs to set aside their love for the sedan or econobox and see the data - the market for them is shrinking FAST. Better to get out of that market and let your cometitor take the bath on losing money or breaking even. Every automaker is now getting into the CUV game. VW introduced a slew of new models, Porsche makes CUVs, BMW, Mercedes do as well. Lamborghini has one, Ferarri is getting one, etc.

 

[wag123]

Originally Posted By: itguy08

Quote:
I also used wiki as a source and if you try a broader search I think you'll be surprised at just how many of the engines found in current Fords are Mazda designs.


I'm curious at your search.

This is actually a true statement.
In the early 2000's Ford saw the coming financial crisis in the auto industry and (among other things) they looked at their worldwide production of 2L 4cyl engines (between themselves and their other auto manufacturer holdings). At the time, they were manufacturing four completely different 2L 4cyl engines worldwide with zero compatible major components between them. They instructed their engineers and bean counters to pick the best one so they could standardize production around the world to one specific design. Mazda's engine was the one they decided on. The design was also up and down scaled in size from 1.6L to 2.5L to cover a broad range of applications.

 

[wag123]

Originally Posted By: PimTac
It would make no sense to trade in my 30 mpg crossover for a 35+mpg sedan financially. There are other ways to cut down on fuel costs.

This obviously wouldn't make economic sense, even when gas prices go sky high.
The problem with Ford's plan is this... when someone is just entering the market for a vehicle or replacing a vehicle that has little or no resale value (worn-out, totaled, etc, in other words, no trade-in of any real value is involved), when gas prices get very high again, the kind of vehicles that will sell the best are the inexpensive economical small/compact/mid-sized cars (maximum gas mileage at the lowest purchase price) just like they did in 2008, and Ford won't have anything to sell these people when they stop manufacturing them. The long term ramification of this is the brand loyalty that another manufacturer would gain at Ford's cost.