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Automotive Industry

Focus on the Consumer

Automotive Industries, April, 2000 by Dale Jewett

Jac Nasser is making sure Ford employees don't forget that car buyers are the ultimate boss.

FORD MOTOR COMPANY OVERALL GRADE A-

Does Ford chief executive Jac Nasser ever sleep? One might begin to wonder looking back over the past year.

Nasser launched his era at the helm of Ford with the purchase of Volvo Cars in January 1999, scooped up disenfranchised executives from DaimlerChrysler and BMW AG, then in March swooped down and gobbled up Land Rover, as BMW freed itself from the millstone of Rover around its neck.

In a business climate that is still figuring out the World Wide Web, Nasser is already moving at 56 kbps and looking to go even faster. It fits with his drive to get Ford employees to stop thinking they work at a car company and start thinking like a consumer.

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The Internet won't cure everything, though. The bulk of Ford's success in the United States is tied to hot-selling trucks. If that market sustains a big hit, so does Ford. Trouble looms in Europe, too, where new models haven't taken off, and market share and profits are falling.

Nonetheless, Ford has definitely kicked it up a notch in driving to connect with consumers and react faster. It earns an overall grade of A-.

Quality: Only the Ford and Mercury brands had scores below the industry average of 167 problems per 100. The overall score improved 11 points from the previous year. That earns an A.

Profit per Unit: Despite a $452 million loss in South America, healthy profits in North America helped Ford increase profit per unit by $150 per vehicle last year. That also rates an A.

Market Share: In the United States Ford held steady, courtesy of Volvo, even as GM's GMT800 pickups came on strong and the Taurus and Escort faced changeovers. Give Ford a B. Global share dropped slightly on recession in South America and troubles in Europe, a situation that would have been worse without the addition of Volvo. The grade here drops to a B.

Return on Sales: By cutting another $1 billion from its costs, Ford maintained its return on sales at 4.5% despite losses in Europe and South America. Ford remains close to its 5% goal, and gets an A.

Productivity: Even though it took on Volvo's operations, Ford maintained productivity levels nearly equal to the previous year -- both with and without including Visteon. That earns Ford an A again.

Management: Nasser demonstrated he has absolutely no fear in going outside Ford to get what he thinks are the best people for the job. He blindsided the competition by landing Wolfgang Reitzle to run the Premier Auto Group. He recruited Brian Kelly from General Electric to be his e-commerce guru, a move that paid dividends quickly.

The Land Rover purchase could be an entree to later being the preferred buyer for the rest of BMW. Meanwhile, Nasser moved aggressively to push Ford into other areas of the vehicle lifecycle, such as buying the Kwik-Fit repair chain in England.

Ford got out in front of rival GM by being the first to announce creation of an Internet trading exchange for suppliers to cut costs and, ultimately, provide instantaneous feedback throughout the entire business chain on what customers want.

Nasser unraveled predecessor Alex Trotman's Ford 2000 strategy by pushing decision-making responsibilities back down to regional groups, closer to consumers. He shook up Ford's management ranks by instituting an evaluation system that puts managers into one of three groups, with the third group at risk of losing their jobs. Nobody at Ford stands still for very long. That merits an A.

Engineering: The Focus is Ford's latest shot at using its global resources to engineer common vehicles for different markets, and it may be its best attempt yet. A good relationship with suppliers also helps Ford control costs. We give them a B+.

Design: The European-flavored Focus is quite a departure from the Escort, but is being well received. The Lincoln KS and Jaguar S-Type are also turning heads. A less-radical redesign for the Taurus can only help. Truck design is strong. But the funky Mercury Cougar seems to have burned out quickly and among recent concepts only the Jaguar F-Type seems to have struck a chord with consumers. In general neither Ford nor Mercury have any cars that get your heart pumping. Focus and LS help raise the grade to B-.

Manufacturing: Ford has held steady. But" there's a major renaissance coming here," says Ron Harbour. "The gains till now have been accomplished with plants that are not very lean. They can go from good to very good to unbelievable." Until then, the grade remains a B+.

Marketing/Branding: To Ford's credit, it has been able to fold the Jaguar and Volvo brands into the family without making consumers think they're buying a glorified Ford. In fact, even with its acquisitions Ford doesn't have much of an overlap with its brands. The weak spot is Mercury. The automaker scored well with a brand campaign featuring singing star Charlotte Church. But in the retail revolution, Ford's Auto Collection program hit some serious bumps with some dealer groupings falling apart. That keeps the grade at a B+.

Automotive Industry

Focus on the Consumer

Automotive Industries, April, 2000 by Dale Jewett

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