Ford May Have Hit Bottom in '06

Recovery Plan Couldn't Stem Losses, but After Worst Financial Year, New Products May Help Improve Image

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Ford Motor Co. is playing catch-up in an unforgiving market.

The automaker has been on a long revitalization road with an initial plan unveiled by Chairman Bill Ford in early 2002.

Assessing the Automakers

When was the last time the auto business was this cutthroat? It's tough out there on the car lots, many of which are choked with acres of sheet metal. This Special Report is devoted to a group of experts' unvarnished appraisals of how six top carmakers are doing, along with a look at two up-and-comers.

Ford Score

The competition:

The U.S. market in 2006 delivered a sucker punch to Ford, which relied on U.S. profits from big pickups and sport utility vehicles while gas prices jumped. The automaker had to spend more on incentives, trim production and cut employees. The 103-year-old company suffered its worst financial year globally; its North American auto operations contributed a pretax loss of $6.1 billion vs. a $1.5 billion loss in 2005.

Coming in last
Advertising Age's panel of auto experts gave Ford an overall grade of C- for the year, the lowest among the six carmakers graded for this Special Report. However, Ford probably hit bottom in 2006 and is seeing some upticks, notes Jeremy Anwyl, president of

The company has some strong new products, especially Ford Division's Edge crossover SUV and Fusion sedan, though Mr. Anwyl isn't sure how well the brand's Five Hundred sedan will fare after it's rechristened with the familiar Taurus name in a few months.

Ford Division, the company's volume-selling unit, has strength in the Mustang and F-150 pickup and needs to build on that sort of image for the rest of its lineup, Mr. Anwyl says. He predicts it will take a few years for Ford to bounce back. He says Ford's biggest hurdle isn't product but perceptions.

Ford Motor scored a D in buzz, the lowest grade in any category among the carmakers.

"Ford needs to be less reactive and more proactive" in its PR, says Todd Turner, president of Car Concepts. "It's almost like Ford is letting everyone else tell their story. The marketer needs to create its own image."

Mr. Anwyl suggests closer bonds between Ford's PR and advertising staffs to help shift public sentiments.

Promising signs
A Ford spokesman, who declined to allow an executive to be interviewed for this report, provided four pages of positive data about the automaker's products.

Some 40% of early Ford Edge buyers were non-Ford owners, giving the SUV-looking crossover a high conquest rate, the spokesman says. The Mustang was the U.S.'s best-selling convertible last year, with 49,000 new registrations. It outsold the No. 2 Toyota Camry Solara by a 2-to-1 margin. "Make no mistake about it, the flywheel is turning at Ford," the spokesman says.
Chairman Bill Ford
Chairman Bill Ford

Mr. Turner says "people are overly pessimistic" about Ford's product pipeline, which "isn't as screwed up as everybody thinks." He expects some resiliency in the second half of 2007 with new-model launches.

Ads up, sales down
Ford Motor spent $1.7 billion in measured media last year, up 8.5% from 2005, according to TNS Media Intelligence. Ford Motor's U.S. unit sales slid 8% in 2006 to 2.9 million. The descent has continued in 2007, with sales down 13.2% through March vs. a year ago, to 642,960.

The automaker's advertising got mixed reviews; three experts say Ford brand's "Bold Moves" blitz had weak TV executions that weren't bold at all.

Mr. Turner says he wants the automaker to take more risks in advertising, though he credits the marketer for its event-laden Fusion launch. He likes the "Fusion Challenge" comparison ads from JWT- Team Detroit, which tout a Car & Driver consumer driving event that ranked the Fusion's all-wheel-drive V-6 version ahead of the V-6 Honda Accord and Toyota Camry. Even the Consumer Reports editors liked the Fusion over the Camry and Accord, and made Fusion a "recommended buy."

Charlie Hughes, president of Brand Rules and former Land Rover North America CEO, says the carmaker's priority should be to grow the Ford brand. He recommends Ford sell Land Rover and shutter Lincoln Mercury. "Ford [Division] is the one brand that has been the cash cow, and it must continue to be the cash cow," Mr. Hughes says. "Anything that detracts from that is a mistake."

Next: Honda

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Jeremy Anwel


Charlie Hughes



Todd Turner

Car mavens sharpen their pencils
The automakers' grades are based on individual assessments offered by automotive analysts Jeremy Anwyl, president of; Wes Brown, partner at consultant Iceology; Charlie Hughes, president of Brand Rules; Doug Scott, senior VP at GfK Automotive; Art Spinella, president of CNW Marketing Research; and Todd Turner, president of Car Concepts.

The grades refer to the automotive marketers' 2006 performance. The advertising/communications category includes the effectiveness of traditional, measured-media advertising as well as nontraditional marketing, with particular emphasis on the use of new media. Actual-sales grades are based on percentage change in 2006 vs. 2005, but they also take into account the particular challenges each carmaker faces.
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