Ford's Banking on 2 Global Vehicles

At the end of this year, Ford (NYSE: F  ) plans to have 85% of its global sales coming from just nine core platforms. Creating economies of scale was one of the main reasons Ford was able to return to profitability only a year after General Motors (NYSE: GM  ) and Chrysler declared bankruptcy. Trimming the number of platforms it uses has enabled Ford to juice its operating margin to a strong 11% in the United States.

When you own stock in companies like Ford and GM, you need to know the products and numbers down to the finest detail. It's important to understand where the vehicles have had past success and how the company plans to improve their positioning for increased sales going forward. Here's a look at two vehicles that will be key to increasing Ford's market share globally and reaching its goal of achieving that 85% figure.

Fiesta and Focus
According to data from Polk, Ford's Focus was 2012's No. 1 selling nameplate -- topping more than a million sales globally. As Jim Farley, Ford's executive vice president of global marketing, put it:

Focus and Fiesta represent the culmination of our One Ford global product strategy. ... Our global products are resonating with consumers – especially in the best-selling, most competitive segments -- with their unique combination of fuel efficiency, high quality, rich content and fun-to-drive personalities. Through One Ford, we're able to bring economies of scale and fantastic value to customers all around the world.

In March, the Focus helped deliver a record-breaking sales month and quarter in China. That's an important development, as Ford trails rival General Motors significantly there. Sales of the Focus more than doubled in March, up 148%. The numbers were even better for the quarter -- up 156%.

Fiesta, in the future
The Fiesta is proof that Ford is now producing smaller, valuable, and more fuel-efficient vehicles to compete with imports. Its success will be important for Ford to take market share in segments long dominated by Toyota and Honda.

What's even more important is the long-term vision Ford has with this vehicle. Auto buyers are very loyal to brands, and securing the next generation will be important to continuing growing sales. The Fiesta is aimed at attracting a younger consumer -- millennials in particular, a generation that represents almost 80 million consumers, with an estimated purchasing power of $170 billion. That makes it the largest generation since the baby boomers, and much larger than Generation X's 48 million.

In 2009, Ford took on a unique and groundbreaking marketing campaign with the Fiesta, when it recruited consumers to drive a Fiesta for a full year. Their experiences were logged, and Ford used this information to create valuable marketing content for social-media outlets, targeting millennials who are use those online tools to share content about their daily lives.

It turned out to be a great move, and the content created more buzz than expected. Dealerships took more than 132,000 inquiries, 83% of which came from consumers who had never owned a Ford. On top of that, 30% were under 25. Ford is clearly way ahead in attracting the younger generation, and that will bode well for future company sales and profits. 

Bottom line
Ford receives just about all of its profits from North America, led by the highly profitable F-Series. As we progress through this decade, the Focus and Fiesta will lead global sales to make Ford profitable in emerging markets. It's locking down younger consumers in the U.S. and planning to double its market share in China. I expect great things to continue from Ford, as a consumer and as an investor.

Worried about Ford?
If you're concerned that Ford's turnaround has run its course, relax -- there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place -- click here to get started now.


Read/Post Comments (10) | Recommend This Article (5)

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  • Report this Comment On April 28, 2013, at 11:36 AM, bobinaurora wrote:

    "The Fiesta is proof that Ford is now producing smaller, valuable, and more fuel-efficient vehicles to compete with imports." The Ford Fiesta IS an import! It's imported from MEXICO. The only sub-compact car made in the USA is the Chevrolet Sonic.

  • Report this Comment On April 28, 2013, at 11:42 AM, deekaman wrote:

    I drive a 2009 Fusion and a 2012 Focus. Bought both as "previously enjoyed" low mileage vehicles; the Fusion in 2011 and the Focus in 2012. Love them both. They are comfortable, reliable, responsive and overall fun to drive. I've been a MOPAR guy my entire adult life (I'm 57). I used to make fun of the Focus. My wife is the daughter of a GM retiree and has always been a GM gal. We are both completely sold on Ford.

  • Report this Comment On April 28, 2013, at 11:52 AM, rowlandsville wrote:

    I bought Ford stock when it was almost at rock bottom because I knew it would go up. My only regret is that I didn't invest 10 or 20K. I didn't have the courage of my convictions.

    I thought the Ranger was dead, at least in the U.S. I see it as one of the platforms listed above.

  • Report this Comment On April 28, 2013, at 12:06 PM, emailnodata wrote:

    I've never agreed with those who said it was bad to bail out GM and Chrysler; whether the process was flawed is beyond me.

    I've been getting educated on the 1940's...and have come to realize that the American and British soldiers did not defeat the Germans. The Germans were defeated by American production, Russian production, and mass numbers of Russian soldiers.

    The Germans had the best equipment, by far. They had the best troops and field officers, by far. What they could not overcome is the absolute massiveness of Russian and American airplanes, tanks, trucks, and everything else logistical.

    The upshot?? We need to maintain a core of basic production skills in this country, no matter if we have to subsidize it at times. To do less is to become a target, not a champion.

  • Report this Comment On April 28, 2013, at 12:27 PM, TMFTwoCoins wrote:

    @rowlandsville

    The Ranger is dead in the U.S. only. It's still sold in over 180 countries and has enough volume to remain one of the global platforms. Silly that it's not available here, no?

    @emailnodata

    Very interesting perspective.

  • Report this Comment On April 28, 2013, at 2:22 PM, imDanielle2 wrote:

    Ford Fiesta is NOT American made.. 100% from Mexico!

  • Report this Comment On April 28, 2013, at 3:37 PM, Irishkarl wrote:

    At least the production of the Fiesta in Mexico will keep some Mexicans in Mexico rather than flooding us further here in California.

  • Report this Comment On April 28, 2013, at 4:17 PM, emjayay wrote:

    The current Ranger is apparently bigger than the previous one. They probably don't even sell the F-150 in most of those other coutries. Ford has made a marketing decision apparently because of the closeness in size and price of the two trucks. What they probably could use is a truck a little smaller and lighter than the previous Ranger.

  • Report this Comment On April 28, 2013, at 4:20 PM, emjayay wrote:

    Yes, improving the Mexican economy with VW and Ford plants is not entirely a bad idea, for us as well as Mexicans. The sooner Mexico gets closer to not remaining a third world country just across the border the better. They have of course a long way to go in terms of corruption, violence, a small rich elite owning and controlling everything, etc.

  • Report this Comment On April 28, 2013, at 7:49 PM, stockwatcher0153 wrote:

    If they could only make a diesel version of the Ranger in the U.S....stupid Chicken Tax!

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