Fleet News

Geneva Motor Show: Balancing act for Ford's new boss

THE new senior management team at Ford is looking to redress the balance between its fleet and retail sales.

Paul Thomas, the new managing director of Ford of Britain, wants to see the company maintain its fleet sales at their current level and increase its retail sales.

'There are some sectors of the fleet market that are very attractive and others that are high cost areas that we have walked away from in the last few years,' he said.

Thomas added that Ford will still do some daily rental business, although its volumes will decline slightly, despite the opportunity to increase its penetration. 'We want to protect our residual values, which is good for us, our customers and our dealers,' he said.

To control its used car stock and raise its residual values, the company's used car programme Ford Direct has recently opened a supersite selling more than 100 used cars (all RAC inspected, with three-year warranty, and protected by a 30-day money back guarantee), and sales in January and February are running ahead of target.

In terms of new car sales, Ford is subtly moving away from a blanket volume approach to the UK market, planning to sustain and increase its 'sector' sales despite selling fewer individual models.

In the supermini sector, for example, Ford anticipates that the combined sales of the new Fiesta and Fusion, along with the Ka and StreetKa, will outstrip the former sales (and market dominance) of the old Fiesta.

Importantly, the major restructuring programme Ford has undertaken across its European manufacturing operation, will allow production flexibility so it can produce any range of cars on the same platform to meet demand, rather than force the market. It is also committed to a major product offensive, promising 45 new products in five years - a move that has already reduced the average age of its product line-up from 5.4 years to 2.9 years.

These new vehicles appear under Ford's fresh brand value strap line of 'Designed for living, engineered to last,' with the Focus achieving a welcome early endorsement from the German TuV reliability ranking where it secured first place for one to three year-old cars.

Roger Putnam, the new chairman of Ford of Britain who only took up the post on March 1, believes the manufacturer is in the unusual position of having products that are better than its brand perception - the inverse of other companies where brand values are higher than product quality. For example, car buyers would rarely select Ford ahead of German makes in terms of reliability, despite the TuV success of the Focus.

Likewise, Ford is rarely considered a premier league diesel player, despite the Focus being the UK's best-selling diesel model. But the advent of common rail TDCi engines will see the company promote its diesels as the UK fleet sector prepares for the new emissions-based company car tax system. Company car tax is going to see a move to more emission- friendly vehicles, and we are very well placed because of the introduction of TDCi,' said Thomas.

'I think the fleet market will alter - the diesel content is going to rise and there may be some erosion as customers go for cash alternatives or personal leasing, but whatever happens we are in good shape.'

His goals are clear for his December 2002 end of year report: 'Sustain our fleet share, increase our retail share, strengthen our customer satisfaction in sales and servicing, have a profitable dealer body, continue to develop our brand and to be profitable.'

Ford dealers have not had the easiest time in recent years, despite a relatively buoyant 2001, but the company has learned from its joint ventures with Pendragon (now disbanded), Polar and Lindsay about the pressures faced by its network, and remains committed to its dealers in the light of potential block exemption reforms.

Supermarkets have toyed with selling new cars, but they realise they are dependent on the infrastructure that exists,' said Putnam. 'They recognise that if they weaken the aftersales infrastructure they are on a one-way street to nowhere.'

With Ford having stripped out costs with lean and flexible manufacturing, e-enablement, and shorter product development times, distribution remains the only significant area for cost reduction, but Putnam confirmed that the 'current distribution system is the most effective, if not the most efficient. We have to make it work'.

Making it work, is arguably the behind the scenes mantra for the whole of Ford of Europe. Few argue that the company has the best model range in its history, and having stripped out $1 billion in cost reductions, profits should be on the horizon.

These will come more readily if the company can move from a 'push' sales model to a 'pull' model where buyers, particularly retail customers, find the car they need and want among a burgeoning product line-up.

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