Fleet News

Face-to-face: Ford executives

WITH a challenging year ahead, two of the executives vital to Ford's success give their view on key issues the company will face over the next 12 months.

Challenging times lie ahead for Ford's new fleet chief. Despite the company producing the best-selling fleet car last year (the Focus), as well as the two best-selling diesel cars in the fleet market (Focus and Mondeo), Ford lost the top spot for total fleet sales in 2003 to arch rival Vauxhall.

Kevin Griffin took over the reins as director of fleet operations from Mike Wear on October 1 and it was apparent at the time that 2003 was going to finish as a tough year.

In the end, Vauxhall took pole position as the best-selling manufacturer in the fleet sales charts, knocking Ford off the top spot for the first time, although most manufacturers, including the two rivals, argue that profit is more important than position in the sales charts, despite the prestige it carries.

Full-year sales figures from the Society of Motor Manufacturers and Traders (SMMT) show Vauxhall supplied 221,806 cars to fleets during 2003, up 3.5%, compared with Ford's 213,947 units, down 3.3%.

The nearest rival to the two giants was Renault, with 94,260 fleet sales, followed by Peugeot on 82,652, Volkswagen on 80,705 and Nissan on 50,184.

Further set-backs came when Ford launched a new liquefied petroleum gas (LPG)-converted Focus in August 2003, just as the Treasury announced it was planning to reduce fuel duty discounts on alternative fuels.

Griffin insisted the Focus LPG is not dead yet, although sales of a few hundred have not met expectations, and he added that there is a role for it in the right fleets.

He said: 'Our LPG sales in the commercial vehicle market are still strong, and there are opportunities for supplying certain customers with cars for some members of staff.
'For some of our customers who run van fleets and perhaps have bunkered supplies of LPG, the Focus could still be an attractive vehicle.'

Despite the sales blip, the Focus was the best-selling fleet car overall, and the second best-selling fleet diesel, only beaten by the Mondeo, while the Focus also topped the petrol fleet sales charts.

So Griffin is confident that 2004 could be brighter, particularly with new models in the pipeline.

He said: 'There is no specific target other than to reach about 200,000 units and a market share of about 20%.'

The new Focus C-MAX mini-MPV arrived at the end of 2003, giving Ford access to new customers and participating in an area of the market from which it had previously been absent, and Ford should reap the benefit of a full year's sales in 2004.

Meanwhile, the all-new Focus in on the horizon and is due to arrive in the autumn, while the diesel Mondeo range is set to expand with a new sporty TDCi model. Using the existing 2.0-litre TDCi engine, power has been upgraded to 150bhp and the car will be offered as a sporty alternative to other high-output diesels in its class.

Griffin added: 'This is a perfect example of Ford listening to what customers want. There was demand for a more powerful version of the diesel Mondeo and we acted to bring one to market.'

Ford is also working to shore-up residual values in the volume sectors which have seen serious declines over the past three years.

For example, a typical high-volume upper-medium saloon is now expected to be worth about 26% of its new price after three years/60,000 miles, according to figures from CAP Motor Research.

A key tactic is to continue managing rental volume effectively, controlling the disposal process to ensure the market is not flooded with similar models at one time.

'We have to supply the rental market to a certain extent, because it is expected of us,' said Griffin. 'But all-out rental cars come back to us and are sold on through the dealer network and we try to ensure values are maximised.'

Although Ford has focused successfully on quality improvements over the past couple of years, Griffin said the premium sector of the market will be left to the members of Ford's Premier Automotive Group, such as Volvo, Land Rover and Jaguar.

He says Ford has no ambition to be anything other than a mainstream manufacturer, with his keywords being 'affordable and desirable'.

Life and times

Joined Ford in 1977 in personal import/export sales before progressing through zone manager positions in fleet and retail sales. In 1993 he moved to Ford of Europe as manager of sales planning and programming and later as manager of rental operations, rental distribution and remarketing.

In 2000 appointed district manager for Scotland and Northern Ireland.

Going back to basics in a bid for profitability

FORD is going back to basics in the international battle to get its finances into the black.

In an interview with Fleet News, the international operations executive vice-president David Thursfield said a new process already introduced in North America had identified in-car entertainment as a significant area for cost improvements.

The initiative is just one of dozens achieved by team value management (TVM), a process invented to pinpoint areas of waste in the production of vehicles and the thousands of components used in them. The in-car entertainment rationalisation is a good example, according to Thursfield.

He said: 'Instead of using 150 different units, we're now basing our systems on just 10. This is the rationale that has saved us millions in the past 12 months.

'We're sitting with teams of people every month to discuss various aspects of non-production spending and we're constantly talking to suppliers about taking out the cost gap. This is a far-reaching process and 2003 was our best year so far in terms of reducing costs. TVM will go on for some years, but ultimately, I want to put it out of business.

'Because our product development teams now know to the penny what we should be paying for a given design, we're now in a better position.'

Even basic changes such as roof racks can wipe millions of pounds from costs, Thursfield revealed. A simple change of metal, from alloy to steel, cut the cost of making roof racks by 50%.

Thursfield added: 'This is a logical and collaborative process we're using with our parts suppliers to find out where money is being wasted. The team came up with a 10% saving on the roof rack for the Focus by reducing the amount of aluminium used. But when I found that our rack was designed to carry 30% more weight that those used on competitors' cars, we reduced the limit to 75kg and found we could make the identical product for a lot less cost.'

The cost-effective approach runs all the way up to car production, most recently with the C1 project – the next generation Focus platform.

He said: 'The C1 project is a good example of how we're also getting smarter at rolling at least half the cost of developing new products into the vehicles that will come in the following cycle.

C1 has brought us a high degree of commonality, but the Volvo that uses the platform remains a Volvo, and the Mazda based on it remains a Mazda. Smart operators rarely launch a vehicle that is entirely new because it makes sense to keep using existing manufacturing processes. We're on the cusp of never again launching an all-new product – unless it happens to be something we've never done before.'

According to Thursfield, production capacity is now better utilised and Ford of Europe's improved 'revenue schedule' will allow it, and the Jaguar, Land-Rover and Aston Martin plants, to become net contributors to the parent company over the next two years.

He said: 'The Focus C-MAX is a better revenue proposition for us and the next Focus will be an outstanding machine. We're bringing the Galaxy to Genk plant in Belgium next year and are now able to gain the benefits from flexible manufacturing. We expect a significant improvement in our performance during this year.'

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