How Ford Botched Its Explorer Relaunch

in 2019 Ford began rolling out a newly designed version of its prized Ford Explorer one of the best selling sport utilities of all time and a vehicle widely considered a cash cow for the automaker and then the whole thing went horribly wrong now the Explorer is trailing rivals and sales and Ford as reassuring investors it expects future launches to go more smoothly it all comes at a time when Ford is trying to prove to investors it has a strong vision for its future and the ability to execute it and the products Ford is set to launch in the next two several quarters are widely believed to be extremely important as brands increasingly rely on SUVs and trucks and competition in those segments grows stiff the Ford Explorer is one of the most popular and significant sport utility vehicles in history released in 1994 the 1991 model year the Explorer was meant to be the successor to the Ford Bronco to a smaller version of the automakers full-size Bronco sport utility vehicle while it could venture off pavement Ford packaged the Explorer for how people really families intended to actually use it it was easy to get in and out of at a comfortable rear seat and a well-appointed interior from the beginning the Explorer was available in several trim levels including an upscale Eddie Bauer edition it was an immediate success the vehicle sold 250,000 units in its first full year on sale in 1991 in terms of volume the Explorer became Ford's flagship SUV during the first SUV boom of the 1990s it also far outpaced competitors even senior ones such as the Jeep Grand Cherokee and Chevrolet Blazer in 1992 Jeep sold 120 8960 Grand Cherokees in the US Chevy sold 147 thousand seven hundred forty two Blazers but Ford sold three hundred six thousand six hundred eighty one explorers later there was even a pickup version the explorer sport trac 2 debuted for the 2001 model year and continued until 2010 the Sport Trac was an early take on now popular four-door pickup trucks with suv-like interiors and ride quality throughout its history the Explorer became a kind of blueprint for trends that were later adopted by the industry as SUVs became more popular early versions of the Explorer were rear-wheel drive and built on truck platforms but the Explorer evolved as consumers increasingly sought SUVs as replacements for the family minivan and station wagon rather than off-road capable workhorses in 2011 Ford released an Explorer that was built on a unibody platform a platform design at the time used most often for passenger cars up to that point Ford had built the Explorer like a truck the vehicle body was bolted onto a ladder like frame making the Explorer a unibody based vehicle improved the ride quality as well as fuel efficiency but it also meant the Explorer would be front-wheel drive in its base model it was a highly unusual move for a sport utility vehicle at the time but many other SUVs have since adopted the unibody design approach consumers didn't have a need to take these things off road as much really they were using them in the city and the suburbs and similarly a demand for greater fuel economy due to rising fuel prices at the time meant that consumers really were more than willing to trade tough truck capability for a better fuel economy as well as a drive experience that was much more like a passenger car as opposed to roughen up a truck there were some low points in the explorers history very low points the vehicle became embroiled in one of the worst scandals in Fords history reports started surfacing in the late 1990s that the Firestone tires on Ford Explorers were failing in high temperatures the crisis resulted in more than 270 deaths and 800 injuries in the United States alone it prompted congressional investigations millions of dollars in settlements and legal costs and forced several executives to resign still explorers have sold in six-figure volumes annually throughout most of the vehicles history certainly the Explorer nameplate did get tarnished at that time now you know it's almost 20 years later and what forgotten about that so I don't think most people are thinking about rollovers and tire blowouts when they think of Explorer now which I think goes to show the strength of the Explorer nameplate I mean when people think about family SUVs Explorer is still first things that comes to mind in the consumers mind Ford redesigned the Explorer for the 2020 model year its sixth generation of the SUV in its first major redesign in eight years at the time the Explorer was the top-selling midsize SUV in the United States the redesigned 2020 Explorer was going to be a rear-wheel drive vehicle in its base model with unibody construction a combination of elements found in previous generations the rear-wheel drive would give the SUV better towing capability and arguably better handling while keeping the ride quality and some of the other advantages of a car like unibody vehicle Ford added a hybrid version for the first time with a design that stuck the battery in the vehicles chassis there were premium trim levels to Ford said it was the broadest Explorer lineup yet a souped up version came with the automaker's ST badge a label Ford gives to cars and trucks with high performance capabilities high performance SUVs have become more common as the auto market overall increasingly favors trucks and utilities over sedans and sport coupes Ford also used the redesigned Explorer platform for two other models one was the Lincoln aviator Ford has been revamping these sometimes successful and sometimes struggling Lincoln brand since at least 2015 when it released a concept version of its famous Lincoln Continental sedan that turned heads in the industry after that the luxury Lincoln brand found tremendous success with a redesigned version of its navigator full-size SUV The Aviator is a key vehicle in Lincoln's latest attempt at a revival product perspective that aviator is really really impressed I mean it is a true first-class luxury SUV it demonstrates a level of commitment by foreword to the Lincoln brand in a way that I haven't seen in decades really the product is really really well done so that makes these early launch issues all that much more unfortunate because it's a it's a vehicle that carries a lot of promise it's a vehicle that Lincoln is depending on very very heavily to really turn that brand around the other vehicle built on the new Explorer platform was a version of the sport utility meant for law enforcement called the police interceptor Ford spent 1 billion dollars retooling its plant in Chicago Illinois for the new Explorer calling it one of the most complex renovations in the company's history almost all of the workstations in the factory had to be changed for the new model Ford had said at the time this place has been completely freed back it took a month to clear out everything and replace it with a brand new production line problems already started to pop up early in the vehicles rollout the company had to issue a recall on explorers and aviators in August and another on explorers in October news reports also surfaced of customers having problems with aviators and explorers the company resorted to sending vehicles from the Chicago Factory to its Flat Rock Michigan plant for further work at the time Ford said this type of work was not out of the ordinary opinions on how well Ford launches go in general can sometimes vary depending on what someone is measuring consumer reports which has its own metrics for measuring reliability has said Ford like other American automakers has sometimes had trouble with newly launched vehicles so vehicle launches are super important because if you get the problems right before you go to lunch you're not firefighting it's much harder to get those problems fixed when those vehicles are out in in society super important and some automakers do launches better than others so automakers such as Toyota teams seem to do very very good and really the reason is is that a lot of those total launches are quite conservative they're not changing everything problem is with automakers such as for they tend to go out with a new platform new infotainment system new powertrains and do a lot at the same time that's very hard for any automaker to get all those things right [Music] Explorer sales fell 48 percent in the third quarter of 2019 compared with the same quarter in the year previous that is bad news given that the Explorer is something of a cash cow for Ford this resulted in a very great challenging launch for the Explorer which was very important for Ford because the Explorer is a core nameplate for the brand it's a very crucially important vehicle for Ford and because so many because the next generation of parents Newman Colonials you know entering the money Henry the new vehicle market and now having families the market is right for this next generation of family wires to get into three row SUVs and unfortunately this challenging launch situation delayed for getting these vehicles into market place as quickly as they wanted to it showed in the company's third quarter earnings ford acknowledged the trouble implementing its plans at the factory on a call with investors in October but referred to the trouble as a unique situation and simply put with the new with the product going from front to rear wheel drive architecture all-new assembly line all new body shop all those things at once we took on too much and we shouldn't have it's RF and so part of the lessons learned is obviously go back to you know how we manage these launches and in sequence them in a way that gives the team with Jim to be successful the company won't reveal what kinds of margins it gets on the vehicle but the Explorer is one of Ford's highest volume products SUVs tend to be more profitable products than sedans overall customers have so far seemed to be willing to pay higher prices for SUVs and crossovers than they have been for similarly sized passenger cars in addition the wide range of trim levels available on the Explorer also give for the chance to charge a range of prices for different features higher trim versions of the vehicles tend to be quite profitable for the automaker it's worth noting that half of all Explorer sales in the third quarter were st and platinum Ford told CNBC in January 2020 that the Explorer ST was beating sales expectations comprising 21% of retail sales the automaker also said about 90% of Aviator sales in the fourth quarter of 2019 refers to highest trim levels reserved and black label things did improve in the fourth quarter sales were still down fourteen point six percent with the fourth quarter of 2018 but that was a pretty dramatic rebound from the dismal performance in the third Ford told CNBC December was the Explorers strongest month for retail sales since the vehicle launched in June it was the best month for Aviator as well in the Theater is quickly becoming the best-selling vehicle in the Lincoln portfolio based on December sales results but in the end Ford lost its leading position in the midsize SUV segment that's an interesting thing about Ford it's kind of like two sides of the coin now while four it does make a lot of changes it makes their vehicles quite desirable in fact Ford has some of the best suspension tuning on the market these are cars that drive very well these are cars that are flying these cars that ride very well handle very well but making all these changes again that impact reliability in it we've had problems on a lot of our new Fords even our fleet vehicles we don't do reliability from the vehicles that we purchase but we're no different we see these problems to the botched launch comes at a time when many investors feel as though Ford is still very much in the midst of a turnaround the automaker's results for the fourth quarter of 2019 missed Wall Street expectations and its full-year guidance for 2020 also disappointed investors some industry analysts have complained of a lack of transparency around Ford's plans for its future including its cost-cutting measures and its attempts to turn around its struggling international businesses particularly in China Ford is also investing heavily in ambitious projects with no obvious immediate payout such as autonomous vehicle technology a bit more near in the future the troubled launch raises some questions about launches scheduled over the next few years there is the expected launch of the Mach II for its first fully electric vehicle and its bid to compete with rising electric car juggernaut Tesla the Mach II is a totally new type of vehicle for the 100 year old automaker the automaker told CNBC its recent launch of the escape compact SUV has been flawless and it expects the Mach II launch to be the same Ford is also planning to launch more SUVs and trucks which are segments where Ford concentrates most of its energy arguably competes most effectively and say Industry Analysts pulls most of its profit the blue oval is planning to release a new version of its f-series the best-selling lineups of pickup trucks of any size in the US and some would say Ford's most important brand by fall Ford has ambitious plans for the f-series as well including a hybrid version and eventually a fully electric one in addition the much-hyped ford bronco is scheduled to be released in the spring of 2020 Ford has been teasing the truck since at least 2017 in February Ford unexpectedly said that its president for automotive Joe Hendricks would retire Hendricks had frequently been named as one of the top two or three potential successors to CEO Jim Hackett manufacturing and operations were among Hendricks responsibilities and some in the industry blamed the botched launch for the sudden announcement the botched launch comes at a time when some observers are warning of larger industry headwinds since the US economy recovered from the 2008 financial crisis and ensuing recession automakers have increasingly stuffed their portfolios with trucks and sport utility vehicles in response to growing demand from consumers but some industry analysts note the new car market is getting crowded and these vehicles are becoming expensive in an environment like this automakers cannot afford to stumble

Channel: CNBC

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Keywords: CNBC, business, news, finance stock, stock market, news channel, news station, breaking news, us news, world news, cable, cable news, finance news, money, money tips, financial news, Stock market news, stocks, top gear, motortrend channel, chrisfix, doug demuro, carwow, scotty kilmer, ford explorer

Id: Le2jwfu6110

Length: 15min 40sec (940 seconds)

Published: Thu Feb 13 2020