Live

Watch CBSN Live

Why Ford Is Betting on the Revamped Focus

Ford's launch of its guzzling F series pickup trucks in the midst of the 2008 gas spikes was about as bad as it gets in terms of timing. But now -- with similar price shocks at the pumps â€"- the resurgent automaker has caught the zeitgeist just right. The big worldwide rollout is on for the all-new Focus, which is reaching dealers this week with a useful 40 mpg on the highway and no price increase. It starts at $16,270.
Until now, a small car with small profits
The Focus is a venerable brand name, and the company has sold 2.4 million of them since 1999. It's been a steady seller, but never a profit center, especially in Ford's home market. In Europe, the Focus has long been a core Ford product aimed at the center of the market. In the U.S., small cars have traditionally been niche sellers, but now according to IHS Automotive the category is likely to triple from just over 500,000 U.S. sales in 2010 to 1.4 million by 2015.

At the height of the SUV craze in the early 1990s, Ford was making an average of $8,000 on every one of them, compared to $3,000 if it was lucky on small cars. And so management's attention wandered away. But that approach caught the automaker flat-footed with a imbalanced product line when gas prices spiked three years ago. With the all-new Focus, Ford is out to prove that it can both build a good small car (a major stumbling block for the Big Three) and make money doing it.

The key, Ford says, is that it's building the car on a new worldwide compact car platform with minimal differences in the 122 markets where the car will be sold. All the cars will have the same direct injection, four-cylinder engines, for instance, and that leverages massive economies of scale from suppliers.

According to Paul Anderson, Ford small car marketing manager, in an interview:

The Focus was designed from day one to be a global car, which is something we've never done before. There are huge economies of scale as we spread the volume around the world, which lower our costs to the point where we can make money on the Focus. We were also able to incorporate technologies into the car we would never have been able to afford if it wasn't a worldwide platform.
Ford didn't take government bailout money, but it is using $5.9 billion in Department of Energy loans to modernize plants in five states, including the $550 million refurbishment of the Michigan Assembly Plant that will build the Focus. The makeover greatly increased the Wayne, Michigan plant's flexibility in making a variety of models -- which is a big advantage with up and down gas prices and the resulting swings in buying habits. Working lean is great, but working flexible really fits with the times.

There are 10 variations on the Focus, only one of which, the wagon, failed to make the cut for the U.S. lineup. Wagons are in free-fall as a body style in the U.S., though they're still popular in other markets. In addition to the gasoline-burning Focus, the Wayne plant (which is 58 years old) will also produce on the same production lines the electric version of the car (later this year), as well as the C-MAX utility vehicle, which grafts a new body on the Focus platform.

Even the old one is selling
Sometime next year the plant will also churn out the hybrid and plug-in hybrid versions of the C-MAX. Ford claims that Wayne is the first plant in the world able to build gas, hybrid, electric and plug-in hybrid vehicles on the same assembly line (though the Leaf will be built on the same Tennessee production line as other Nissans).

A good omen for the new Focus is that the outgoing version actually saw a 42 percent sales increase in the first two months of 2011 -- largely because of demand driven by higher gas prices. It's pretty unusual for lame-duck models to see a boost as they head for the history books.

Pushing for quality
Ford was the top U.S. automaker in J.D. Power's 2010 initial quality rankings, and the company is pushing hard to ensure that the new Focus succeeds. Ford is pulling cars off the line for 30-mile road tests, some of them on the company's Dearborn test tracks. Ford told dealers it wants a "flawless launch," and company line managers are taking that far past the usual empty rhetoric about quality being job one.

Here's the view from the plant floor, courtesy of Michigan TV:


Related:

Photo: Ford
View CBS News In
CBS News App Open
Chrome Safari Continue
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.