It seems to me that Ford (NYSE:F) has decided to take a slightly different direction with its new Ford Escape.
Ford's new Escape comes equipped with an EcoBoost engine which makes it the most fuel efficient small SUV with an automatic transmission currently on the market. This is a breakthrough for the company and puts it slightly ahead of the game. Toyota (NYSE:TM) and Honda (NYSE:HMC) also have cars on the market that boast fuel efficiency, but the Ford Escape boasts 2 mpg advantage over the Honda CR-V and 5 mpg advantage over the Toyota RAV4. It also gets 5 mpg more than its predecessor, and has better highway fuel economy than the current Escape hybrid. This gives it the title of most fuel efficient SUV currently available.
This automobile is well in line with Ford's drive to produce smaller and more fuel efficient cars with more powerful engines going forward. In addition, the car has more than enough room to seat an average sized family. So, buyers get a slightly smaller, more fuel efficient and more powerful car that does not compromise much on space. All of this sounds like good news for automotive buyers and Ford, looking to sell more Escape models.
Ford is, however, experiencing some difficulties at its Victoria plant in Australia, where a substantial number of workers have been told to not come in for the next few days. The number of workers is in the region of 1800, and the reason for the stoppage is simply that the factory has run out of parts. The employees will only receive 50% of their wages during this time. Basically, one of Ford's main suppliers in the area, CMI Industrial was locked out of its premises by its landlord due to a rental disagreement. Consequently, the company was unable to access the parts Ford needs to continue production in the area. The strange news does not bode well for Ford, though the hope is that it won't affect the company's worldwide production too much.
Luckily, it appears that these workers may be able to return earlier than planned, as CMI just granted access back to its plant. The situation should resolve itself soon. The legal battle regarding the unpaid rent and money owed to Ford by CMI is still ongoing, but workers should soon be able to start working again. However the backlash of the downtime, as well as the possible outcomes of possible lawsuits, could have negative influences on Ford stock.
Ford's new Falcon may be the answer to the problems the company is experiencing in the Australian market. The company hopes that this will snap it out of the downward spiral and put it back in the game. The main attraction of the car is that it is big enough to quite comfortably carry a family, and is thus listed as a family car, while at the same time having the fuel efficiency that you would expect from a tiny Korean import. On top of that, it is not terribly priced in comparison to other cars that fall into the same category. The new falcon also carries an EcoBoost engine and is, consequently, known as the Falcon EcoBoost.
Ford denies accusations that this may be too little too late and states that "the timing is right. There are people who want four-cylinder cars and this provides us with an advantage". Whether or not this is the case will be seen, but it does mean that Ford is working toward new strategies of growth. It deserves a sharp eye on its movement.
When we take a look at some of Ford's competitors, we see that General Motors (NYSE:GM) for example, has not been in the news for car production, but rather for executive pay. GM paid its CEO $9 million last year. The company claims that, should the government put a cap on the amount of money that CEOs can earn, this will hinder its competitive edge in the market. Although this is a notable amount of money, it must also be noted that Ford's CEO received even more. Since the U.S. government's auto bailout, the mainstream media has fixated on CEO pay. This has led many to wonder if the companies are using resources properly.
Some automobile companies are boosting their profits by branching off a bit from its main function. BMW (BAMXY.PK), for example, has recently developed a new online racing game and car community where fans can demonstrate driving skills online. The game is highly realistic according to reports from players and the company expects it to sell well. While not increasing auto sales any, the game at least establishes BMW's name with new-age technology and the "branding" strategy may well work for the German auto giant.
For the 6th year running, Toyota was listed as one of the top fifty companies for diversity. The listing bodes well and goes far in proving that Toyota makes its profits not just on automobile sales. It's for this reason that Toyota has been able to keep so stable despite the falling worldwide automobile sales in the last few years. It is interesting to note that Ford itself is nowhere to be seen on the list for this year.
Nissan (OTCPK:NSANY) plans to rework its Cima Luxury Brand. In doing so, the company hopes that some of its old customers will come back. Nissan has lost customers to companies such as Mercedes and BMW, as well as to Toyota's upscale Lexus brand and consequently hopes to recover from these losses by reworking the Cima. The Cima itself is not expected to sell well, though.
Ford is certainly changing, as its competitors also look for new ways to profit in the industry. Ford seems to be taking on more progressive strategies than we're used to seeing from Detroit brands. However, the strategies seem sound and promote the possibility of healthy growth in the next few years. The sales of the new Ford Escape will be a very good early indication of how Ford's new strategies will work for its stock and shareholders.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.