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Customer LoginsFord's improved new product cadence pays off
While the growth of the Japanese new vehicle makes in the U.S. is commonly attributed to their perceived superior quality, another core reason for their success has been their shorter product life cycles. Honda and Toyota typically have re-designed their models every five years, six at the most. In contrast, the domestics have let models languish far longer, which has necessitated incentives that have depressed residuals.
In the past couple of years, though, the Ford make has improved its product cadence (pace of replacing models) to the point where it is competitive with that of its Asian rivals. By the time the 2012 model year ends, Ford will have replaced, or significantly upgraded, every one of its cars within the most recent three years (it has also just replaced the Explorer with an all-new model bearing the same name). Not in recent memory has a major domestic OEM executed such a complete overhaul of its car portfolio in so short a time period.
Not coincidentally, during the past year Ford's retail and total registration gains have outpaced those of its rivals. From February 2010 through January 2011, Ford's retail registrations climbed 21.3%, more than twice the gain of the industry, twice the gain of Chevrolet, and almost 10 times the improvement of struggling Toyota (in Toyota's defense, it has maintained its number one ranking in retail registrations despite its recall crisis, besting Ford by over 170,000 units). Looking at total registrations, Ford has climbed 20.9% over the same time period, more than Chevrolet's 16.6% gain, much more than Toyota's 1% improvement and almost double the industry's 11.5% rise. Also, Ford ranks number one in total registrations, more than 140,000 units ahead of runner-up Chevrolet. During the year-earlier time period, Ford had trailed Toyota by more than 100,000 units.
Going forward, Ford will be in an enviable position as well, at least relative to its domestic competitors. In its North American operations, Ford can direct all its product development efforts at just two makes, while GM needs to address four brands and Chrysler now markets five makes (soon to be six when Alfa arrives). It is noteworthy that Ford's current make structure in this country is identical to that of its Japanese rivals, though Toyota technically has two and a half makes because of Scion.
Posted by Tom Libby, PolkInsight Advisor, Polk (04.11.2011)