Ford (NYSE:F) has a history of responding when its back is against a wall. Every time critics have thought the Blue Oval was down and out, a fresh design and groundbreaking vehicle was designed, saving the company from its demise. After the war effort it was the Thunderbird that revived Ford factories. In the '70s it was the iconic muscle car that won over the hearts of America -- the Mustang. In the '90s, which would be Ford's best and most profitable decade ever, it was large SUVs that brought home the big bucks. Those were the glory days for the Ford Explorer, but that trend would quickly disappear as gas prices elevated. Most large SUVs wouldn't live into the mid 2000s, but the Ford Explorer is bucking trends and soaring back to popularity. Here's why it's important for consumers and investors alike.
The Explorer topped 400,000 in annual sales for years -- something only Ford's F-Series has accomplished over the past decade. It then took a long tumble before beginning its climb back to relevance over the past three years.
It's on pace to sell roughly 190,000, and if the economy and the seasonally adjusted annual rate continue to improve, it could top 200,000 this year -- something it hasn't done since 2005. Its sales are up 11.2% for June and 25.9% for the entire year, compared with last year's figures. So what is it about the Explorer that's driving its recent success?
SUVs were forced to adapt to remain a viable ride in the 2000s, giving birth to a smaller, more fuel-efficient vehicle. The Ford Explorer is especially flexible with its engine options. If you opt for the standard 3.5-liter V6, it features a decent 20 combined mpg while pushing out an impressive 290 horsepower. That gives it the ability to tow up to 5,000 pounds. For those aiming for better fuel efficiency rather than towing capacity, you can opt for the 2.0-liter EcoBoost engine, which still pushes out about 240 horsepower and 270 pound feet of torque.
In addition to the flexible engines, here are a few options you can expect to have with the 2014 Explorer.
- AdvanceTrac with Roll Stability Control.
- Tire pressure monitoring system.
- SOS post-crash alert system.
- Keypad entry system.
- Active park assist.
- Power liftgate and rear view camera.
- Navigation system and MyFord touch infotainment system.
The Explorer's interior doesn't disappoint with its modern and sleek appearance, especially when considering its starting price tag of just under $30,000, according to Edmunds.com.
Materials used are a huge point of emphasis for automakers, because the worst thing is to have consumers that immediately see and feel an interior of poor quality and cheap materials. You won't have that problem with the 2014 Explorer, and its dashboard adds to the luxurious and modern feel.
One of the drawbacks for Ford's vehicles has been its MyFord touch infotainment system, which is still very new technology and will improve over the years ahead. But you'll enjoy this large SUV if you're looking for a decently roomy, modern, and versatile ride. The exterior is less boxy and more fluid than its previous versions, which has helped attract new buyers. It gets better gas mileage than its predecessor and is much more comfortable. However, if you want a more nimble and quick ride, you might look toward Ford's Escape.
Overall, the 2014 Explorer rides nicely and will compete very well. Ford expects the SUV to continue its uptick in sales in the years ahead. Here's why that's hugely important for Ford and its investors.
SUV's are again one of the most popular and fastest-growing segments in the U.S., as well as China. Being prepared to ride this growth with a vehicle that has had previous brand success will be very profitable for Ford. Moreover, SUVs will typically bring in a higher transaction price and fatter margins than standard cars -- especially as Ford continues to add premium technology options. This will be huge going forward, as Ford's full-size pickups bring in as much as 60% of its profits and Ford will focus on lessening its dependence on any one segment.
Looking at the U.S. SAAR numbers, we can see the gradual improvement in sales -- expect the Explorer to increase its market share, sales numbers, and profits to Ford as the decade progresses. Before when Ford's back was against the wall, a new vehicle would be designed to revive life back into the company. This time it's a little different, it won't be just one vehicle -- but many. Ford's Explorer looks to join forces with the Fusion, Focus, F-Series, and Escape to help return Ford to the top of the food chain -- a welcome development for Ford investors.
Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.