Ford’s Edge blunts sales decline
DETROIT: Is the Edge giving Ford the edge it was hoping for?
At the very least, the new crossover vehicle, or small sports utility vehicle, is keeping sales at Ford Motor from dropping even more than they already are this year, at a time when the company is pulling back on unprofitable sales to rental-car companies.
Ford is meeting the expectations it set for the Edge when the vehicle went on sale in December. But the Edge is not generating the revenue of the big sport utility vehicles that once fueled Ford profits, and it is not drawing the new customers that the company will need to bounce back from its worst loss in history - $12.7 billion last year.
Ford has pulled out all the stops to promote the Edge, with television ads directed by the playwright David Mamet in its latest attempt to get attention for the vehicle.
Yet there are already lease deals available for the Edge, and some Ford insiders are concerned that its U.S. price, which starts at $25,995, is too high to sustain current sales levels once the vehicles novelty wears off - further proof that in the ultracompetitive car market, automakers have only a brief window to make a splash.
Since arriving at U.S. dealerships in December, the Edge has been one of the few bright spots for Ford. On Tuesday, when automakers reported sales for April, Ford said its overall sales in April fell 7 percent on a selling-day adjusted basis, a distinction made because a year ago, there were two more selling days in April. Without the Edge and two other new crossovers in its lineup, Fords decline last month would have been 12 percent, the worst among major automakers.
Ford has sold 33,600 Edges so far this year, on pace for its goal of selling 100,000 Edges in all of 2007. But the companys chief sales analyst, George Pipas, said many of those had been bought by people who already owned Fords.
“The products that are most traded in are other Ford products,” Pipas said. “Its retaining Ford buyers” who owned big sports utility vehicles who “are moving into another category.”
Ford needs vehicles that can keep its customers from defecting to other brands, particularly as high gasoline prices lead consumers to seek more fuel-efficient vehicles. But the Edge alone can do little to help Ford reach its goal of earning a profit in North America by 2009.
“Crossovers are not the cash cows that the Ford Explorers and Expeditions were,” said Ron Pinelli, president of the Autodata, an auto industry research company in New Jersey.
“Theres just not enough volume there for Ford to make up for what theyve lost,” Pinelli said. “Even if the Edge is doing incredibly well, the profit contribution isnt going to be terrific, and there arent going to be enough of them to move the scale from the loss side to the profit side.”
The Edge was not enough to stop Fords market share from falling to 17 percent from 18 percent a year ago, according to Autodata. The decline was the largest among all major automakers. GMs market share slipped to 23 percent from 23.5 percent, while the Chrysler Group had a rare increase, to 14.4 percent from 13.1 percent. Toyota leads all automakers in worldwide sales.
Meanwhile, Japanese automakers had an uncharacteristically weak month, with Honda sales down 1.6 percent and Nissans down 11.2 percent. Toyota posted a 3.7 percent sales increase, its lowest year-over-year gain since August 2004. Although Ford came in slightly ahead of it for the month, Toyota has sold nearly 5,000 more vehicles than Ford so far this year.
Yet there are signs of some bumps in the road for Toyota, like an inventory that has grown 30 percent in the last year. Many of those unsold vehicles may be the new Tundra pickups. Toyota has sold about 43,000 Tundras since the truck went on sale in February, well below the pace needed to reach its goal of selling 200,000 this year.
But because the Tundra makes more money for Toyota than the Edge does for Ford, the Edge cannot necessarily be called the more successful of the two.
Still, Ford and its dealers say they are thrilled with the Edge.
Pipas said it was competing well against crossover models from Toyota, Honda and Nissan. “The sales levels, really coming from having no brand recognition, are kind of in the same sandbox as three really great products that have established themselves over the course of several years,” Pipas said. “I dont know if I thought we could get there that soon.”
