Can the 2010 Taurus save Ford Motor Company - again part 2

July 11, 9:56 AMFord ExaminerMike Karagozian

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2010 Taurus SHO

Will history repeat itself?
Continued from Part 1:  Fast forward to 2009 and once again, Ford Motor Company is on the ropes with cost and cash flow problems and needing a hit product.  The situation is grim.  Even before the current recession hit, Ford was in trouble.  Ford hasn’t posted a profit since 2005 and losses to date are $30 billion and counting. No one is predicting a return to profitability before 2011. Could Taurus save Ford Motor Company in 2010 like it did in 1986 and make Ford’s current CEO Allan Mulally the hero of Detroit and Bill Ford, Jr. a hero for having the prescience to step aside and hire Mulally?

One of the first actions Allan Mulally took when he arrived at Ford from Boeing was to revive the Taurus name, which had been abandoned when Taurus production ceased.  Mulally correctly saw the tremendous value and residual good will in the Taurus brand.

A hit product by itself won’t be enough.
In 2000, Taurus sales totaled approximately 382,000 and Sable sales totaled 103,000. The American auto market of today, however, is much different compared to 1986, and sales figures from 2000 seem like a distant memory. When the original Taurus was launched in 1986, domestic auto manufacturers had about 73 percent of the U.S. market.

Today, there are more brands, more models and more manufacturers competing for a slice of the American auto market than there were in 1986. Auto industry analysts like J.D. Power predict total industry sales of 10 million or less, down dramatically from 2007 when sales were 16 million units.  All these factors make the odds of a “hit” product selling in sufficient numbers to turn around the fortunes of Ford – or any car company – a lot longer.   It would be wildly optimistic to expect the 2010 Taurus sales numbers would match those of the year 2000.  What about Ford's improved quality?

World-class quality no longer a "wow factor"
Ford’s products and quality are world-class. The problem facing Ford (in addition to the recession, the credit crisis, wildly fluctuating gasoline prices and excessive government regulations) is that all manufacturers – foreign and domestic – now make very good products. In marketing terms, world-class quality was a “wow factor” – something that differentiated a company's product from the competition.  Not any more. A manufacturer must have world-class quality just to be a player in today’s market.

"Wow factor" life cycle
It is very difficult for a manufacturer to maintain a unique competitive edge for more than a couple years.  Product features go from “wow factor” to “doing what is expected” rather quickly. Here’s a real-world example: In 1989, Nissan launched their upscale Infiniti line of vehicles. The Infiniti flagship was the Q-45. "Wow factors” on the Q-45 were a driver’s side airbag, in-dash CD player, anti-lock brakes and a roadside assistance program. By the time the last wave of Infiniti dealerships opened their doors, cars like the Chevrolet Cavalier had a driver’s side airbag, a CD player, anti-lock brakes and a roadside assistance program. Today, Ford’s hands-free SYNC system is a “wow factor,” but it won't be for long.  Tail fins were once “wow factors,” but within a few years everyone had them.  Even Mercedes Benz had tail fins (little ones).

Detroit Lions have an undefeated season but the stands are empty
Think of the Detroit Lions playing an undefeated season but the grandstands are empty.  That's what the auto market is like right now:  great products but people aren't coming into showrooms.  Taurus has the looks, quality and features to be a winner, but  it may not matter how good the Taurus is. The number of buyers willing to finance or lease a $25,000 - $31,000 vehicle ($39K for the SHO) hinges on the economy - a factor entirely out of Ford's control.  How well Taurus fares in the marketplace will hinge on how many new car intenders feel confident enough to sign a lease agreement or a finance contract --  even if they have a $4,500 Cash for Clunkers voucher to help with their down payment.

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