Killing Itself Softly With Its Products: Ford’s Record-Breaking 2006 Losses

Ford announced earnings and it’s about as pretty as an Explorer in a rollover. Thanks to a $5.8 billion loss in the fourth quarter, the company performed a swan-dive down to its worst performance ever: $12.7 billion in losses.

Some of the losses were entirely the responsibility of corporate accountants, who simply did their jobs of applying different tricks for tax reasons. Mostly, however, the blame is on the company for being run worse the British Leyland in the 1970s and delivering products people don’t want. The company’s sales were down eight percent overall in 2006…and that doesn’t include the number of vehicles shipped to dealers, only to sit on the lots.

Want proof that Ford’s cars aren’t selling? Take a guess and see if you can name its top five products in order of sales.

    The answer:

  • F-Series Trucks (796,039 — down 11.7 percent)
  • Econoline/Club Wagon (180,457 – up .5 percent)
  • Explorer (179,229 – down 25.3 percent)
  • Focus (177,006 – down 4.2 percent)
  • Taurus (174,803 – down 11.2 percent.)

Maybe it’s just me, but I find it a combination of funny and scary that the Taurus is in the top five, especially since they really haven’t marketed it in years, and one really has to buy it via fleet sales. In fact, fleet sales seem to be the only thing keeping money coming in, because F-Series, Econoline and Taurus are largely fleet-sale based.

Comparing Taurus to Ford’s other midsize sedan, the Fusion, is embarrassing. Fusion sold 142,502 in its first full year of production. Ford spent a fortune on advertising and marketing the Fusion, and it fell 30,000 units short of the Taurus, which ended production early this year for good. And if you’re one of those people who believe the Five Hundred has been successful, think again. Ford only sold 84,218 units to dealers (down 22 percent) and most of them are still on lots with huge factory incentives in place to move them.

Bright spots in the sales figures? Don’t say Mustang! Just because you like that retro look doesn’t mean it has been a good business strategy. Like I’ve said all along, it was a big mistake to go retro with a mass-market product intended for standard coupe-buying demographics. Here are the statistics to back this up.

The following are Mustang production/sales over the years. The newest ‘Stang debuted as a 2005. The previous generation went 1999-2004, which was a mild restyle of the ’94-’98. The ’87-’93 and ’79-’86 were the initial Fox body Mustangs, with the popular 5.0 GT cars. 1975 shows the sales of the unloved low-power Mustang II, 1969 includes the Boss 302 era, and 1966 was the second year of initial production.

  • 2006 166,530
  • 2005 160,975
  • 2004 129,858
  • 2003 140,350
  • 2002 138,356
  • 2001 169,198
  • 2000 173,676
  • 1999 166,915
  • 1998 144,732
  • 1997 108,334
  • 1996 126,483
  • 1995 185,986
  • 1994 123,198
  • 1993 114,228
  • 1992 79,280
  • 1991 98,737
  • 1990 128,189
  • 1989 209,769
  • 1988 211,225
  • 1987 159,145
  • 1986 224,410
  • 1985 156,410
  • 1984 141,480
  • 1983 120,873
  • 1982 130,418
  • 1981 182,552
  • 1980 271,322
  • 1979 369,936
  • 1975 188,575
  • 1969 300,682
  • 1966 607,568

It is evident that the retro-Mustang has done nothing to grab a larger share of the coupe market, which has dramatically increased in size from ten years ago, when most other coupe-makers made the decision to scale-back or leave the market entirely. Of course, competition has increased since then, too.

So the only single bright spot seems to be the F-Series trucks, which isn’t shining so hotly now that a new Chevy Silverado and Toyota Tundra are in production, and widely considered by reviewers to be better.

Expect tougher times at Ford in 2007, because there’s no end in sight for its “P problem”: people producing poor products.

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One Response to Killing Itself Softly With Its Products: Ford’s Record-Breaking 2006 Losses

  1. In Chicago they announced that they’d figured out the answer to their problems: “more cars people want.” Genius.

    So I think we can count on a bright future for Ford, now that they’ve figured this out.

    My blog entry about Fields’ Chicago speech:

    http://www.truedelta.com/blog/?p=29

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