FORD is really “Shifting into Gear!”

Recently, Ford Motor Company has a announced they are putting a greater focus on their SUV and crossover cars to prepare for the future. You might ask, why? Well according to forecasts by IHS Automotive, one in five cars sold around the world annually in 2018 will be either a SUV or crossover. There is about 14 million vehicles sold world wide annually and a specific model taking up 20% of an entire market is a very large number.

Now after reading this article, I almost felt like I was ready the weekly courier, and analyzing the market conditions report from our simulation. Its really remarkable how this article pertains to the methods and leanings of the game we played in class.

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Ford’s SUV and crossover sales were up 37%, which also outpaced the industry increase of 17%. This is exactly what we tracked in the statistics segment of the segment analysis. Ford is clearly putting a focus on a specific segment of the market, or in our game “product type.” The amount of models of SUVs and crossovers has risen from 180 to 370 from 2000 to the current day. This market is becoming very competitive and in the simulation we would have to go into R&D and tweak our product to become better and have an edge. We would also encounter situations where we would have to buy more capacity in our plant to account for higher demand. Ford is doing exactly this. The article states, “…Where it is spending $700 million to expand.” Ford has announced it will continue producing their crossover product, The “Edge”, and expand its production capacity by spending $700 million dollars in Oakville, Ontario where the car is produced. Ford ships this model to over 60 countries, which obviously can be concluded the demand is very high. This scenario right here is exactly like the decisions we had to make within the simulation, adjusting capacity to meet demand and forecasts, along with the segment demand fluctuations.

Just to show exactly how intense this increase in market demand for these SUV’s and midsized crossover is, utility cars sales grew 10% and crossover sales grew 16% last year totaling about 2.2 million units…but that’s just in North America! In 2000 1.8 million units of utility vehicles were sold outside North America, today that number is now 10 million!

Obviously the future of the automotive industry is leaning in a specific direction. I think it is very interesting to see how Ford Motor Company is planning all of this now, and how closely this scenario relates to our simulation. How do you think this market preference for SUV’s and crossovers will affect the industry as a whole? Do you think this will create entry points for new automotive companies? What do you think will happen to all the inventory of the less preferred sedan and cope model type of cars?

Article Source: http://www.usatoday.com/story/money/cars/2014/02/16/ford-world-suv-shift-from-cars/5497343/

-Evan Meador

5 thoughts on “FORD is really “Shifting into Gear!”

  1. Thank you for a great article. In my point of view the center on what Ford are trying to establish is relationship building. In today’s world there are a variety of companies that offer both goods and services. Hence, it is often overlapping and companies are trained in both to offer proper goods as well as adequate services in which Ford are trying to establish worldwide. I would like to add to this article is whenever a successful company like Ford would like to develop the marketing of services strategy they would have taken into consideration key factors, which are becoming acquainted with the special characteristics of services and their strategy implications. Second, key concepts associated with providing quality services. Third, obstacles in the past impeded and still continue to impede development services marketing.

  2. I believe that ford just realized that the more options of technology implementation in the SUVS and crossovers, the more demand they will receive.

    adding to that, the European cars are becoming much expensive in the service and spare parts which I believe this will be an opportunity for Ford for an increase in their demand.
    adding to that, Europeans cars value after sale and use drops dramatically due for the reason above.

    Japanese are getting expensive either due for strong reputation and the value remains after sale and use.

    I have a ford mustang and I really love their service and packages and even their customer service. as they provide a lot of varieties and options for services.

    I believe this is time for FORD to shine after the improvements of technology in their cars.

  3. Great article, the SUV and crossovers rising demand should have a positive impact on the whole sector. More demand means more jobs, more products and more revenue. It would encourage a lot of new automative companies to try and enter the market but it will be difficult to compete within the same price range because their brand isn’t as developed as the big car manufacturers such as ford. The sedan cars will always have a market though, as we know it all depends on consumer tastes and that could hang over time.

  4. Its essential for every company to proactively estimate demand and position itself accordingly. Ford is no different. They are betting on SUV and Crossover demand Although, the trend might be such in their home market, one has to ask, is it the same internationally. If we look at some of the international car manufacturers like BMW and VW, they are also expanding capacity. However, they are expanding international capacity into international markets. Chief amongst those market is China.

    However, in China, big cars don’t sell. BMW had to redesign their mid-sized 5 series sedan into a long wheel version as the 7 series don’t sell in China. Which bet will be more successful, only time will tell.

  5. It seems that Ford’s homework paid off since the drop in gas prices recently, SUV and truck sales have risen. By jumping ahead of its competition by creating plants to manufacturer SUV and crossovers it will be able to meet market demand. This article shows the importance of forecasting and the benefits of a good forecast.

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