It's become a daily occurrence in the comment section between General Motors (NYSE: GM ) and Ford (NYSE: F ) enthusiasts to argue whether the EcoBoost is merely talk and hype from marketing, or a legitimate upgrade in engine technology. If the engine has anything to say about it – and it does – Ford enthusiasts look to be correct after a recent announcement.
Two in a row
Ford's 1.0-liter EcoBoost won its second straight "International Engine of the Year" award. It took home the award in style too, receiving the highest score in the award's 15-year history. Not too shabby for a three-cylinder, 1.0-liter engine.
If you're drawing a blank regarding the turbo-charged, direct-injection, three-cylinder engine, you're not alone; it's not selling in the U.S. yet. Right now in Europe it's available in the Fiesta, B-MAX, Focus, C-MAX and soon to be in the Mondeo and EcoSport.
Soon it will be available in India and China in the EcoSport, and later this year here in the U.S. with the Fiesta. With the engine becoming available in more and more models, Ford will double the production of the engine starting later this summer.
Ford's tiny EcoBoost engine wasn't satisfied with just the "International Engine of the Year" award either. It's won at least three other awards, including a "Breakthrough Award" from Popular Mechanics magazine.
"With a technology as mature as the internal combustion engine, it's very rare to achieve a true breakthrough, but that is exactly what the team accomplished with this engine," said Joe Bakaj, Ford vice president, global powertrain, said in a statement. "You have to drive it to believe a small three-cylinder engine can deliver such performance and fuel economy."
Why it matters
This development matters to investors for a few reasons. For one, fuel efficiency sells, and it remains one of the most important factors to consumers when purchasing vehicles. In the past that meant vehicles would be sacrificing some performance, but that isn't the case with the turbo-charged EcoBoost engines. Here's a snippet from Ford's press release.
"Who'd have believed it? A 1.0-litre engine that has it all, powerful, fuel efficient, clean and lightweight," said Peter Lyon, U.K. juror and freelance journalist. "This is a masterpiece."
It also matters to investors because the more publicity and credibility this brand of engine gets, the better for Ford's other popular vehicles. America's best-selling vehicle, Ford's F-Series, also has EcoBoost options, yet some consumers remain skeptical of that engine in a full-size pickup. That's beginning to change with constant awards and publicity from other EcoBoost engines.
When it comes to being successful in the automotive industry, it's all about flexibility and popular designs. Ford can now offer many different engine sizes and options for fuel efficiency, as well as brute power – like the engine in my GT Mustang. Don't ask me about my gas mileage, because that wasn't important to me; I wanted power and an iconic American muscle car.
The most important thing for a Ford investor to consider is growing top-line revenues. Ford's already running extremely efficiently with margins in the U.S. at 11%, compared to General Motors at 6.2%. Ford sells millions of fewer vehicles than GM globally, and to make up market share it needs to be flexible in matching different engines with different vehicles to suit consumer tastes in many countries.
It can use these small EcoBoost engines to gain ground in China, and as premium options to help make itself profitable again in Europe. Back home in the U.S., it can still sell its gas-guzzling Mustangs to people like me, or full-size, full-power trucks to the people that need a truck as a tool. The point is, Ford has the entire market covered now, and its eye on future trends, which should help it grow revenues. That's what you want to see from a company your invested in – it's clear Ford gets it, and that's great news for investors.
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