Marton Pettendy•21 Aug 2013

NEWS

Falcon may not survive until 2016

Four-cylinder Mondeo to become Ford Australia's largest passenger model post-Falcon

Ford’s mid-size Mondeo four-cylinder (pictured) will become the Blue Oval’s largest passenger model available in Australia when the homegrown Falcon is retired in 2016 – or sooner if its sales continue to plunge.

Speaking at Ford’s ‘Go Further’ future product unveiling in Sydney last week, Ford Motor Company Chief Operating Officer Mark Fields said his company was committed to releasing the facelifted 2014 ‘FH’ Falcon, which was previewed again last week, but has been delayed until the final quarter of next year.

Fields admitted that Falcon production may cease earlier than October 2016 – the cut-off date nominated by Ford when it announced the closure of its two Victorian manufacturing plants on May 23 – if the “business environment” continues to deteriorate.

“Right now we’re moving forward with the next freshening of the vehicle,” he said. “We’ll continue to look at the industry, we’ll continue to look at the segment and go from there. We have a plan right now to continue with the product through to 2016 and we’ll continue to monitor the business environment, but that is our plan.

“Our plan is to follow through on the update. We’ll always continue to look at the business environment, but our plan remains the same right now.

“You could imagine the business conditions – there’s lots of different ones – but right now our plan based on the business conditions that exist right now is to follow through on that.”

Falcon sedan sales slipped to a low of just 594 in July and remain at historical lows, with only 5664 sold so far this year – down 27 per cent on the same period last year, following sales declines of 25 per cent in 2012 and 36.5 per cent in 2011.

Fields would not nominate a sales threshold that could trigger an early cessation of Falcon production, but said market pressures including the federal government’s changes to Fringe Benefits Tax rules continue to impact Falcon sales, forcing Ford to schedule a further 12 days without production this year.

“We’ll continue to the look at the environment – see what’s going on in the industry, see how consumer trends are acting – but right now, based on the current things that we see, we’re following through on that and we’ll just continue to monitor the environment, including things like the FBT.

“Clearly we’ve have taken an impact from it – that’s why we’re having the 12 down days – and clearly it’s going to impact the market in a negative way, not a positive way. Over the next month or two it will probably just take people out of the market.

“Every week we get together and look at the business environment. As you know the business environment changes a lot. Look at what’s happened to the D-segment here. Forget about the last three years – look at the last 12 months in terms of what’s happened.

“It (large cars) is still a segment. It’s not as big as it used to be. It’s still a piece of the industry here, it’s an important part of the fleet market and we’re dedicated. We’ve been working on the update for a while now and we’ll introduce it to the marketplace and at the same time we’re filling out our range, so where ever the customers go ... we’ll have an answer for them.

“That’s been the whole approach around the world with the One Ford plan – give customers choice, marry that to a manufacturing strategy that can adjust to the marketplace and move on from there.

“For Falcon fans our other message is ‘hey listen, it’s an important product for us, the segment is smaller than it used to be, but we’re continuing to invest in it for one more cycle and for those customers that are interested in that kind of vehicle I think we have a really good car’.”

Asked if Ford was prepared to lose money on the Falcon facelift, Fields said: “As you know from our public financials we’ve lost money here in Australia for the last five or six years, so clearly we want to make sure we’re contributing money from every product line and every element of the business.

“We have a plan right now to continue with the product through to 2016 and we’ll continue to monitor the business environment, but that is our plan.”

When asked if it was the first new or updated model Ford has ever launched after announcing the model line will be discontinued, Fields said: “From our perspective we've probably not had this before.

“But you’ve got to look at the question and back up to what does it mean to the whole business ... (Australian customers) are going to have a lot more choices when they step into a showroom than they’ve ever had before – as opposed to just ‘we’re the Falcon company in a segment that’s shrinking’.

“What our dealers are seeing here is we’re bringing the full family of vehicles here. We can do this, we’ve done it in other parts of the world and I’m convinced we’ll do it here.”

Separately, a Ford source confirmed to motoring.com.au that, whenever it is discontinued, the Falcon will not be replaced by an imported model in Ford Australia’s model line-up.

Ford of America’s next-generation Taurus had been widely tipped to represent the Blue Oval in the declining large car segment here, but the news confirms Toyota’s Camry-based Aurion and Holden’s Commodore – if it continues beyond 2016 – will remain the only locally made large sedans on sale here.

In contrast, Australia’s booming SUV sector will see the Territory replaced by an imported model likely to be the North America’s next-generation Explorer, which will again be based on the front/all-wheel drive Taurus platform.

Fields said Ford had yet to decide if the Territory would nameplate would continue on its successor, but reiterated comments made at the same event by global Ford boss Alan Mulally to the effect that the new model would be a seven-seat crossover like the Territory.

“That large SUV segment is important here,” he said. “It’s growing and we’re going to continue to have a presence in it here.”

Fields confirmed the Territory replacement would be in addition to the rugged, Australian-designed Everest seven-seat SUV, which is based on the Ranger ute’s T6 platform and made its world debut in concept form last week.

“Obviously when you step back and look at the platforms we have, we’ll have a solution for that [Territory, too].

“I won’t get into specific products, but when you look at the success of the Territory and the ingredients for that, we’re going to make sure that what we do in that segment will build on that.”

Asked why Ford chose Australia to reveal the Everest concept, the debut of which was fast-tracked by up to 12 months, Fields said:

“Why not? One, when you look at the SUV segment here, it’s growing. When you look at that large seven-seat segment, it’s growing. When you look at the expertise where we’re designing that, it’s right here, so this makes it a perfect opportunity for us to put an exclamation point on why Australia matters in the One Ford world.”

While the Territory replacement will join a growing range of SUVs from Ford in Australia – including the Kuga, the pint-size EcoSport due here in December and the Everest in 2015, the absence of a Falcon replacement will leave the Mondeo as Ford Australia’s largest passenger car.

A switch in production from Belgium to Spain has again delayed the new Mondeo’s arrival here until the second half of 2014, and Ford’s new mid-sizer appears likely to remain a four-cylinder only model.

“We’ll have to ask the team’s viewpoint on that because we do see demand in some parts of the world for six cylinders in that platform, whether it’s a [US-market] Fusion or a Mondeo,” said Fields.

“But right now what consumers are telling us generally around the world is that they want better fuel efficiency. They want the power of a V6 but they want the fuel efficiency of a four-cylinder and that’s where the EcoBoost engine comes into play. The demand for EcoBoost engines in the US has gone way beyond expectations.

“We have lots of engines we could put in there but it all comes down to scale – what’s the demand around the world.

“We’re seeing very clearly what customers want. They want smaller vehicles, they want efficiency, they want technology and they want more interior space in their vehicles and we’re responding to that.”

Fields said the Go Further event was not a pre-emptive strike in an attempt to prevent sales sagging in the wake of the factory closure announcement, but a move to demonstrate Ford’s commitment to Australia.

“This is not coming down because ‘oh my gosh, our share is down and we’ve talked about the closure of the facility and we need to come down and buck up the team’,” he said.

“This has been part of our global plan wherever we have implemented our One Ford plan. We have a point of view on the business requirements. We have a plan to show the management dedication to following through on that and showing that we’re going to lead from the front not the rear. So that’s really why we’re here – it’s part of our transformation in Australia.

“Here in Australia we are still going to be a very significant OEM (original equipment manufacturer). Part of us talking about this today is to show a commitment, not only from an engineering and design and investment standpoint, but from a market standpoint – bringing all these products from around the world to Australian consumers.”

Ford also used last week’s showbiz-style event – held at the Fox Studios Sydney and attended by 1000 dealers, customers, media and VIPs – to announce the availability of its next-generation Mustang in Australia and restated its commitment to product development in Australia, where it claims it is the biggest automotive investor
.

“When you look at our work state ... there’s plenty of talent here and there’s plenty of work to go round,” said Fields. “We’ve invested almost $2 billion in R&D in six years. We have a great test track here – probably the best in the Ford world.”

However, the Falcon was missing from an image showing Ford’s future model line-up, drawing criticism that Ford has turned its back on 88 years of manufacturing in Australia.

“That model range as you move towards 2015 and 2016 is what the range will look like – it’s no disrespect to Falcon,” said Fields.

“We take a lot of care and we understand it’s always a tough decision when we decide to close a facility. We’re talking about people who’ve given their careers, have put their kids through school because of Ford.

“And our approach has been to be as transparent as possible during this whole process, so they knew the reasons why. Importantly, as we go through this process, like we’ve done in other parts of the world, we treat them with respect and fairness so when it comes time for those workers to move onto their next chapter they’re still a fan of Ford.

“We’ve had lots of internal communications which externally you don’t see, but we’ve gone to great pains to ensure that from the top management down they understand why we’re taking these decisions.

“I think overall the message that we’re trying to tell today as we go forward is we’re working towards the future and that doesn’t mean dissing [disrespecting] the past.

“The Falcon’s been a great nameplate for us for decades and we have to be proud of that but also proud that we’re looking towards the future. The refreshed cars will be coming out next year. We’ve got to be proud of our past but we’ve also got to be proud of our future.”

What’s coming from Ford:

Fiesta ST hot hatch, facelift – September

EcoSport mini-crossover – December

Transit Custom and Cargo vans – Early 2014

Falcon facelift – Late 2014

Territory update – Late 2014

Mondeo mid-size hatch/wagon – Second half 2014

Everest large SUV – Second half 2015

Mustang muscle car – Late 2015 or early 2016

Territory replacement – Late 2016

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