Ford (NYSE:F) said on Thursday that it will add four new SUV models to its global lineup over the next four years.
What Ford said: Here's the carefully parsed key sentence from Ford's announcement: "Ford will add four new nameplates to its global SUV lineup in the next four years in segments in which the company does not currently compete."
Ford's U.S. sales chief, Mark LaNeve, added some background. "As members of the 80-million-strong millennial age group enter their prime child-rearing years, a leading indicator of more SUV sales, nearly 80 million aging baby boomers continue to prefer their SUVs," said LaNeve in a statement. "It's a demographic double whammy and it all points to one thing – more SUVs for the foreseeable future."
Simply put, the company is targeting two separate groups of consumers: Young families and older empty nesters. With gas prices low, and sales of SUVs soaring (at the expense of sedan sales), it makes sense for Ford to move to expand its SUV offerings.
But LaNeve argued that cheap gas isn't the whole story. "Some SUVs now rival the fuel efficiency of V6-powered midsize sedans from only a few years ago," he said. "And as baby boomers grew up with much less capable, much less efficient vehicles, they tend to appreciate the efficiency of Ford's newest SUVs."
What's Ford really planning?
So what are these four new SUVs likely to be? That key sentence in Ford's statement is carefully parsed. "New nameplates" indicates that we're not counting, for instance, the all-new versions of the Escape or Explorer that are likely to show up between now and 2020. And we're not just renaming one, because it's "segments in which the company does not currently compete."
Here's what I think Ford is planning over the next few years that might fill those four slots.
A new small crossover SUV to rival Chevy's Trax
First and foremost, Ford's U.S. lineup could really use an SUV one size smaller than the Escape. General Motors (NYSE:GM) is doing well with the small Chevy Trax (and its upscale sibling, the Buick Encore), while Honda (NYSE:HMC) is finding a market for the similarly sized HR-V, new last year.
Ford has a subcompact crossover SUV called the EcoSport, which it offers in Europe, China, and emerging markets like India and Brazil. The EcoSport is based on the Fiesta's architecture, and it was originally designed as a low-cost product for markets like India. Ford offers it in Europe, but it's rough-and-ready emerging-market roots have made it a slow seller against more refined offerings like Opel's popular Mokka (a near-twin of the Buick Encore).
It has been believed for a while that an overhauled version of the EcoSport would eventually come to the U.S. (I asked CEO Mark Fields about it a while back, and he said it was very possible but wouldn't confirm any future plans.) It seems very likely that Ford will revamp and rename the EcoSport for the U.S. sometime soon -- and it could add that revamped-and-renamed model to its "global" lineup.
It also seems likely to me that the revamped EcoSport will spawn an upscale Lincoln model built on the same architecture, a plush luxury crossover one size down from the current Lincoln MKC. Such a vehicle might be especially popular in China, where Lincoln is looking for future growth. But that wouldn't necessarily count as one of four new "Ford" nameplates.
A couple of off-roaders to rival Jeep
Ford's Michigan Assembly Plant currently builds the Focus and C-Max, but probably not for much longer. Multiple sources have reported that Ford plans to move production of those two models elsewhere, and that it will begin building a Ranger midsize pickup, and a new vehicle called the Bronco at that plant in 2018.
The current Ranger, which isn't sold in the U.S., gets high praise from off-road enthusiasts in places like Australia. Clearly, a new U.S.-market Ranger would be marketed as a "lifestyle" truck with good off-road chops, in competition with GM's Chevy Colorado and Toyota's (NYSE:TM) Tacoma. The Ranger isn't an SUV, but its architecture would be the perfect base for a brawny SUV -- or maybe two.
The Bronco could well be a four- or five-passenger SUV built on the same frame, perhaps even with a soft top to give Fiat Chrysler's (NYSE:FCAU) hot-selling Jeep Wrangler some direct competition. It could also be a version of the Ford Everest, a Ranger-based SUV that Ford sells in Australia and Asia.
In fact, it's possible that Ford will introduce all three: A new Ranger, a brawny Jeep-like Bronco, and a bigger three-row Everest that might rival Jeep's Grand Cherokee, or its upcoming big Grand Wagoneer.
Given the market trends in recent years, it would make all the sense in the world for Ford to design that new hybrid as a small-but-roomy crossover SUV aimed at... young families and aging baby boomers. Such a product could obviously share parts and engineering with one of Ford's existing sedans or SUVs, and could thus share an assembly line with related Ford models. It might be a replacement for the C-Max hybrid, a European design that hasn't sold all that well in the U.S.
Ford has already announced that it will spend $4.5 billion on 13 new "electrified vehicles" between now and 2020. One of those could easily be a dedicated hybrid crossover model to challenge the Prius. (In fact, that might account for two of those 13, if the new model comes in conventional-hybrid and plug-in versions.)
Are those the four new Ford SUVs?
We don't know for sure, and we won't until Ford tips its hand. But if Ford is targeting market segments where it doesn't currently offer a "global" product, those are the ones that seem most likely given what else we know about Ford's plans for the next few years.
What's in this for investors? Simply put, with the U.S. new-car market likely at a plateau, CEO Mark Fields is looking for ways to find growth -- and adding new models in new market segments is a sensible strategy under those conditions, particularly if those new models use existing architectures from Ford's global product line, as they almost certainly will.