Large cars in 2012 and beyond

[Road_Warrior]

I was going to post this in the Holden thread but it had become a bit large and de-railed so perhaps it is worthy of its own thread.

http://www.goauto.com.au/mellor/mell...257986007EA3EE

Dawn of new year brings future of Australian car manufacturing into question – again

16 January 2012

By TERRY MARTIN

TO HEAR Holden chairman and managing director Mike Devereux last week describe the local large-car market as “niche” underscores just how far Australian buyers have moved away from the segment underpinning this country’s car manufacturing industry.

It was a big word for the boss of a company that, up until last year, had produced the biggest-selling vehicle in Australia for 15 years running, with Commodore’s fall to the Mazda3 marking the first time in memory that an imported car had ever topped the sales charts.

Mr Devereux’s statement, and his point that Holden was more interested in building cars in mass-selling segments than niche, also demonstrates, for the first time, a resignation from the people running this industry that their future beyond this decade – or from around 2017, as the case may be – lies in vehicles other than large.

A failure to make the shift will likely leave no option but closure – an outcome no-one in the industry and few in political circles want to see happen to what is a key manufacturing sector, a vital part of our economy and a massive source of employment.

Holden has the Cruze small car program up and running and the potential to build other vehicles from the same platform, covering the losses stemming from its large cars and creating some cause for optimism.

While Holden’s large-car exports have shrunk, Commodore sales were down 11.6 per cent last year to just 40,617 units. Ten years ago, in 2002, Holden sold 88,478 Commodores.

Unsurprisingly, the future of a uniquely Australian-designed and manufactured Commodore beyond the next 2014 VF Commodore is now uncertain, although talks in Detroit last week between GM top brass, federal manufacturing minister Kim Carr and South Australian premier Jay Weatherill were positive.

For Ford, which abandoned its plan to build the Focus small car in Australia, the announcement last week of a further $103m guarantees nothing more than Falcon and Territory continuing until at least the end of 2016 – production that would have occurred regardless.

At the highest levels, the Ford Motor Co has confirmed only that it will continue to sell large cars in Australia beyond that timeframe. But build?

Ford has ruled out Australia as an export base for the company. It will move Falcon to a new global platform in around four years’ time, meaning the ute and Territory will also have to move, but there is no commitment to continued manufacturing here. Not yet, anyway.

GoAuto believes a new mass-market model is on the table for discussion, which if given the go-ahead would keep Ford Australia’s Broadmeadows assembly plant in business. But there is no confirmation from Blue Oval management at this stage – just a twinkling in the eye.

Falcon sales fell to their lowest point on record last year, down 36.5 per cent to just 18,741 new registrations. Back in 1996, when Ford was overall market leader – and the passenger car market leader for the 15th year in a row – the company racked up 77,835 Falcon sales in Australia.

Falcon and Commodore together accounted for 25 per cent of the new-vehicle market in 1996. Last year, their combined strength was 5.9 per cent.

Even with Camry and Cruze in the mix, locally manufactured cars made up only 14 per cent of last year’s new-vehicle market, with Falcon, Commodore and Aurion combined – a collective 68,273 units – accounting for 6.8 per cent.

The total large-car market made up just 7.7 per cent of total industry sales, with the mainstream segment of cars under $70,000 down 21.7 per cent for the year.

Although buoyed by the launch of its new-generation mid-sized Camry in recent weeks, and its hybrid and Aurion derivatives following this year, Toyota Australia has also encountered a severe erosion of its export business, increasing competition for contracts from other Toyota subsidiaries, potentially damaging industrial unrest, slow domestic Aurion sales – down 24.2 per cent last year, to 8915 units – and has had a tougher time of things with Camry, which was down 23.4 per cent last year to 19,169 units.

There was, of course, a devastating Japanese natural disaster last year that restricted parts supply to the Australian factory, but it is worth noting that 2011 was the first time in a decade that local Camry sales had slipped below 20,000.

As GoAuto has exclusively reported, Toyota Australia is still working on a plan to build another model at its Altona plant in Melbourne, which would greatly improve its long-term outlook as a manufacturer.

As is the case with Ford and Holden, Toyota’s future relies on competitiveness in at least one mass-market segment and, above all, high-level government funding.

Despite proactive talks and public displays of confidence from Senator Carr, the political will for continued taxpayer support – on both sides of politics – at current (eroded) levels, let alone an increase, is lukewarm.

Without it, all indications from the local manufacturers and their parent companies are that Australia will have a very different automotive landscape – well before the turn of the decade.

This comment is interesting:

GoAuto believes a new mass-market model is on the table for discussion, which if given the go-ahead would keep Ford Australia’s Broadmeadows assembly plant in business. But there is no confirmation from Blue Oval management at this stage – just a twinkling in the eye.

Could this be local production of CD4 based cars?

[Brazen]

I can see a CD4 sedan, wagon and SUV on the cards.

[Polyal]

OK from my POV even if the commy and falcon where to be selling like they used to the current way in which they are not utilised throughout the world is ust not viable when you look at the cars they compete against. That and the boundaries of competition are now pretty blurred.

GM atleast gave the VE a crack, and for whatever reasons that really hasnt seem to work well for them so I dont know what their excuse is.

But every time an update is need, or a major face lift comes along its big dollars and our market just cant supply the turnover on its own IMO.

Whatever the solution is I hope the job losses are kept to a minimum.

Can someone define CD4? C - focus, D - mondeo, 4 - ?

If so whats wrong with the current E size?

[Mr Hardware]

A well written article. Be careful when googling CD4 however, it has something to do with AIDS.

[Road_Warrior]

Originally Posted by Brazen

I can see a CD4 sedan, wagon and SUV on the cards.

Yep, CD4 (call it a Mondeo or Fusion, whichever you prefer) sedan, hatch, wagon and the SUV Ford Edge. Ford Australia would be quite a busy manufacturing outfit with all that product.

[Brazen]

Are any mid to large Fords made in the Asia Pacific region? Like Mondeo?

[jpd80]

Originally Posted by Brazen

Are any mid to large Fords made in the Asia Pacific region? Like Mondeo?

No, but I think Thailand is eyeing the prospect...

FoA needs to man up and get it here regardless of what they do with next Falcon.

[Road_Warrior]

Originally Posted by jpd80

No, but I think Thailand is eyeing the prospect...

FoA needs to man up and get it here regardless of what they do with next Falcon.

OK, if that is the case then FoA need to mount a compelling and watertight argument for making it here. Let's face it, regional RHD consumption for CD4 cars isnt going to be earth shattering, and the volume could be easily accommodated by the capacity of the Broadmeadows assembly plant.

Far better to leave the Thai plants for the high volume stuff.

[Polyal]

Isnt the point of going to a global platform for high volume? What is Broadies max capacity?

[jpd80]

Originally Posted by Polyal

Isnt the point of going to a global platform for high volume? What is Broadies max capacity?

No it's to save spending $700 million when somewhere else in Ford has already done it..

By Joe Hinrichs' own words,"up until five months ago, that wasn't the plan..."

If FoA did a RWD Fusion, the yanks would have a bloody orgasm, it's just what they want..

[Road_Warrior]

Originally Posted by Polyal

Isnt the point of going to a global platform for high volume? What is Broadies max capacity?

Max capacity is 120,000 units per annum however I don't know if that is single or double shifts or 24/7 etc.

The volume isn't where the savings are leveraged on a global platform, the savings come from reductions in R&D costs and tooling expenses, common suppliers for parts and using corporate driveline parts.

The savings outlined above can then become exponential when the product is a sold globally instead of relegated to one region or country (like the Falcon is in Australia) - the development costs are amortised much faster and are usually less (per unit) to begin with. This is where volume comes into it.

It's a win, squared.

[jpd80]

Originally Posted by Road_Warrior

Max capacity is 120,000 units per annum however I don't know if that is single or double shifts or 24/7 etc.

The volume isn't where the savings are leveraged on a global platform, the savings come from reductions in R&D costs and tooling expenses, common suppliers for parts and using corporate driveline parts.

The savings outlined above can then become exponential when the product is a sold globally instead of relegated to one region or country (like the Falcon is in Australia) - the development costs are amortised much faster and are usually less (per unit) to begin with. This is where volume comes into it.

It's a win, squared.

Annnnd, the car gets regularly updated with cool stuff and new bodies without going cap in hand to the government...

....Unles you are scammers like Toyota...

[Polyal]

So we keep manufacturing jobs but lessen the R&D positions?

Im still struggling with the idea of FoA making a car here thats made elsewhere in different forms. Still think full size sedan is the way to go tied in with something else globally. Do Ford have anything to match say Merc E class or BMW 5?

Id love to know what the sales (trends) of large sedans are globally. Our market is unique (I usually hate people saying that but in this case its true), not many other places I can think of that have two locally developed cars pretty much for local only consumption in the same segment. So they have both found it hard to compete lately and all of the sudden large sedans are dead? Dont know about that.

[vztrt]

Originally Posted by Polyal

What is Broadies max capacity?

It was 550 a day for a model mix of terri, ute, wagon and sedan in one shift. Different models produce different times in manufacture of it depends. But the Broadmedows plant is old now and cannot compete with the efficiency of these new plants that are getting built. That's not to say the plant isn't efficient as the engineers have done good stuff with it.

[jpd80]

Originally Posted by Polyal

So we keep manufacturing jobs but lessen the R&D positions?

Im still struggling with the idea of FoA making a car here thats made elsewhere in different forms. Still think full size sedan is the way to go tied in with something else globally. Do Ford have anything to match say Merc E class or BMW 5?

Id love to know what the sales (trends) of large sedans are globally. Our market is unique (I usually hate people saying that but in this case its true), not many other places I can think of that have two locally developed cars pretty much for local only consumption in the same segment. So they have both found it hard to compete lately and all of the sudden large sedans are dead? Dont know about that.

I would love for FoA to get Mondeo and for the
next Falcon to be a close cousins as either:

1) a FWD/AWD V6 development on the Mondeo/Fusion

or and preferably,
2) a brand new RWD platform sharing with Mustang.

[Polyal]

I must say I will be happy with whatever they get if it keeps the ball rolling.

But the I dont get the logic with the modeo/fusion, I mean we have a crack at Holden for not making money off the cruze, what would Ford do any different?

Would FoA really take a lead on a car that is primarily for EU and US.

If you share with say a Linclon platform, or the mustang as you say would you then get away with not having the pressure of high volume/small profit? Maybe..dont know...I couldnt imagine us ever export in big numbers, not compared to the other Ford factories in Asia.

Could we get knock down kits for chassis and drivetrain from a GRWD and just finish off the interior and styling here?

[Nikked]

Its all a bit dramatic, the first time the commodore gets knocked of its perch and its the end of large aussie cars?

yeesh!

[Road_Warrior]

Originally Posted by Polyal

So we keep manufacturing jobs but lessen the R&D positions?

Im still struggling with the idea of FoA making a car here thats made elsewhere in different forms. Still think full size sedan is the way to go tied in with something else globally. Do Ford have anything to match say Merc E class or BMW 5?

Id love to know what the sales (trends) of large sedans are globally. Our market is unique (I usually hate people saying that but in this case its true), not many other places I can think of that have two locally developed cars pretty much for local only consumption in the same segment. So they have both found it hard to compete lately and all of the sudden large sedans are dead? Dont know about that.

No, we don't lessen the R&D positions, because Australia is the R&D hub of Ford Asia-Pacific Africa and will continue to do stuff like the Figo, Ikon etc and share development of more significant projects with other R&D offices (and unless I am mistaken there are only two other locations - Colonge and Detroit that can do that).

A compelling argument can be made each way - that is, for CD4 or next gen Falcon/RWD large car. But whichever one is chosen, it has to be nutted out properly without any of the usual half-arsed Ford Australia shenanigans like Territory ball joints and be able to plug into the global supply of tech, otherwise it will fail in the face of imported competitors that have all that stuff.

I think you will find that global sales of volume selling large cars have declined. Joe Hinrichs alluded last week to the fact that the Taurus in North America has been suffering from the same malaise as the Falcon, and that car is far more techy than the Falcon and has a range of fuel efficient engines available. even the Mustang at its current sales levels is unsustainable in the long term and the brass at HQ know it. Our market aint unique anymore; we are now more aligned with global markets than ever because of the sheer level of choice from imports, it is bringing the realities of a global economy and global consumerism home to your garage.

The Falcon and others like it are niche products, and the only way it can survive is with economies of scale and volume, this invariably means piggy-backing onto another platform/project (likely) or having a global RWD platform (unlikely IMO). Ways of getting the economies of scale is tapping into the global corporate parts supply chain, using corporate powertrain components, and sharing the expensive modules (front and rear suspension, HVAC) with another vehicle. Its worth noting that this is already underway with the FGII and SZ Territory - corporate engines have been or are being introduced (2.7TCDi, Ecoboost), a corporate 6 speed is now in the Territory and coming to the Falcon, both the Terri and the Falcon now use wiring harnesses and ECUs from Ford's global parts supply and there are a bunch of other unglamorous parts that we never really see that are now being sourced from the corporate supply chain.

Don't forget, Mondeo/Fusion are larger cars, with a higher price point, competing in a segment that is nowhere near as competitive as the C-car segment Cruze, Focus, Mazda 3 et al are in. You're looking at 20 competitors in the C segment, with, what, 5-6 in the C/D (Mondeo) segment? Not to mention the fact that Ford could leverage the variants off the platform by introducing an SUV which spreads out your costs. So its a different scenario to Holden with the Cruze.

[Polyal]

Originally Posted by Road_Warrior

No, we don't lessen the R&D positions, because Australia is the R&D hub of Ford Asia-Pacific Africa and will continue to do stuff like the Figo, Ikon etc and share development of more significant projects with other R&D offices (and unless I am mistaken there are only two other locations - Colonge and Detroit that can do that).

A compelling argument can be made each way - that is, for CD4 or next gen Falcon/RWD large car. But whichever one is chosen, it has to be nutted out properly without any of the usual half-arsed Ford Australia shenanigans like Territory ball joints and be able to plug into the global supply of tech, otherwise it will fail in the face of imported competitors that have all that stuff.

I think you will find that global sales of volume selling large cars have declined. Joe Hinrichs alluded last week to the fact that the Taurus in North America has been suffering from the same malaise as the Falcon, and that car is far more techy than the Falcon and has a range of fuel efficient engines available. even the Mustang at its current sales levels is unsustainable in the long term and the brass at HQ know it. Our market aint unique anymore; we are now more aligned with global markets than ever because of the sheer level of choice from imports, it is bringing the realities of a global economy and global consumerism home to your garage.

The Falcon and others like it are niche products, and the only way it can survive is with economies of scale and volume, this invariably means piggy-backing onto another platform/project (likely) or having a global RWD platform (unlikely IMO). Ways of getting the economies of scale is tapping into the global corporate parts supply chain, using corporate powertrain components, and sharing the expensive modules (front and rear suspension, HVAC) with another vehicle. Its worth noting that this is already underway with the FGII and SZ Territory - corporate engines have been or are being introduced (2.7TCDi, Ecoboost), a corporate 6 speed is now in the Territory and coming to the Falcon, both the Terri and the Falcon now use wiring harnesses and ECUs from Ford's global parts supply and there are a bunch of other unglamorous parts that we never really see that are now being sourced from the corporate supply chain.

Don't forget, Mondeo/Fusion are larger cars, with a higher price point, competing in a segment that is nowhere near as competitive as the C-car segment Cruze, Focus, Mazda 3 et al are in. You're looking at 20 competitors in the C segment, with, what, 5-6 in the C/D (Mondeo) segment? Not to mention the fact that Ford could leverage the variants off the platform by introducing an SUV which spreads out your costs. So its a different scenario to Holden with the Cruze.

I can see your point but still find it hard to believe that its the best way to go about it.

I should have clarified, the Oz market is very much like any other globalised country, what I meant was the segment that Falcon and Holden have traditionally had is eroded by these larger global competitors that are technically in different segments. That and the fact they dont get the money for tech like others hurts them, especially when gimmicks really do help sales.

While this decision should not rest on this point alone, the FWD/AWD thing would make life very difficult for any V8 to be installed. AWD also adds weight for a segment that really doesnt benefit from AWD anyway.

FoA are much better than any other part of the global Ford world at making RWD cars, I dont know why you would throw that away to make yet another Fusion/Mondeo. I would be playing to their strengths.

I guess we can see just from our outsider opinions that its no wonder the decision is taking a while to nut out...lots of options.

[jpd80]

Originally Posted by Polyal

I must say I will be happy with whatever they get if it keeps the ball rolling.

But the I dont get the logic with the modeo/fusion, I mean we have a crack at Holden for not making money off the cruze, what would Ford do any different?

RRP for Mondeo starts at over $28,000 and tops at $47,000 for Titanium. Now, I know that Ford wouldn't
make 4,000 Mondeo a month but if they could squeeze 1200=1800/mth that would be excellent.

Would FoA really take a lead on a car that is primarily for EU and US.

They were considering FoA as lead engineers on next large car project regardless of whether FWD or RWD.

If you share with say a Linclon platform, or the mustang as you say would you then get away with not having the pressure of high volume/small profit? Maybe..dont know...I couldnt imagine us ever export in big numbers, not compared to the other Ford factories in Asia.

Could we get knock down kits for chassis and drivetrain from a GRWD and just finish off the interior and styling here?

The higher the asking price, the better the profit per car but the fewer the sales,
it's a tricky balancing act, getting the vehicle mix right is important and next CD4 SUV
may well be a replacement for Territory as far as a soft roader, while Everest Vs Prado

So an alternative CD4 plan might be:
- Mondeo I-4 EB and TDCI
- V6 AWD version by FoA = new Falcon
- CS4 SUV to replace Ford Edge in USA and global markets

If they chose another large RWD car, it will have to share wit Mustang and other vehicles
EUCD/CD4 electricals and switch gear, doors and frames will again be EUCD or CD4,
IRS design might even be shared with AWD Fusion.. Territory II at a squeeze?

[FPV]

http://www.goauto.com.au/mellor/mell...25797F007F4439

The above article acknowledges Ford's need to have a large car. There should definately be a large car Falcon, it makes no sense to downsize and basically rebadge the Mondeo.

In terms of the SUV market, will Territory have a future? Regardless of how much overlap there is between the C/D/E segments, there should be a market for an SUV that is above the Edge size, which is the equivilent of the Mondeo class for SUVs (e.g. Mazda CX-7). Ford US addresses this with the Explorer, so I think that market will also require a vehicle like the Territory.

[naddis01]

Originally Posted by jpd80

RRP for Mondeo starts at over $28,000 and tops at $47,000 for Titanium. Now, I know that Ford wouldn't
make 4,000 Mondeo a month but if they could squeeze 1200=1800/mth that would be excellent.

For Ford to get anywhere near those sales figures for Mondeo they would have to chase Camry fleet sales which I would assume would not sell in the $28-47k price range.

[jpd80]

Originally Posted by naddis01

For Ford to get anywhere near those sales figures for Mondeo they would have to chase Camry fleet sales which I would assume would not sell in the $28-47k price range.

Not necessarily,
If mondeo was built locally, it would compete with Camry for Govco orders, would that be so bad?

At the present moment,Mondeos are still restricted supply and due to our unique ADR wiring,
so our production order goes to the end of the queue with up to orders four months wait
Ordering is a pain and depending on stock, buyers may or may not have to wait....

To say it's hurting sales is an understatement...

[Polyal]

Originally Posted by FPV

http://www.goauto.com.au/mellor/mell...25797F007F4439

The above article acknowledges Ford's need to have a large car. There should definately be a large car Falcon, it makes no sense to downsize and basically rebadge the Mondeo.

In terms of the SUV market, will Territory have a future? Regardless of how much overlap there is between the C/D/E segments, there should be a market for an SUV that is above the Edge size, which is the equivilent of the Mondeo class for SUVs (e.g. Mazda CX-7). Ford US addresses this with the Explorer, so I think that market will also require a vehicle like the Territory.

Yeah thats what I think...the Tez can be replaced with the Explorer and the Kuga at the same time..lets face it, no one really buys a tez because of its off road ability.

[Bossxr8]

Originally Posted by Road_Warrior

Its worth noting that this is already underway with the FGII and SZ Territory - corporate engines have been or are being introduced (2.7TCDi, Ecoboost), a corporate 6 speed is now in the Territory and coming to the Falcon, both the Terri and the Falcon now use wiring harnesses and ECUs from Ford's global parts supply and there are a bunch of other unglamorous parts that we never really see that are now being sourced from the corporate supply chain.

I've noticed that 6 speed auto Falcons have tiny Jaguar markings on the wiring plugs that connect engine to transmission.

[Joe5619]

Originally Posted by jpd80

ADR wiring,

What is this??

[jpd80]

Originally Posted by Joe5619

What is this??

You didn't know?
Our ARDs require changes to the ECE wiring and since this is different we go to the end of the list in European plants,
New Zealand gladly accepts ECE wiring and is far less constrained with deliveries.

See, if FoA had local manufacturing of Mondeo, they could better meet the needs of interested buyers,
imagine ordering ahead four months and getting the product mix wrong, dealers would have kittens
but that's exactly what happened with LV Focus launch....

Ford ordered mostly LX and everyone wanted Zetec and Ghia, guess what - four months wait with
a paddock full of LXs for dealers to try and sell to buyers wanting high series, not happy Jan.
That shows how Ford was stuck in a base model mentality and why they threw the Focus plan away.....

Back on topic,
I believe FoA should do another large car+ Mondeo+ companion SUV and all built here,
if they choose efficient up to date vehicles that can ask good prices then the plan should work.

[aussie muscle]

it's partly a shift to smaller cars for smaller families, but also as USA studies have shown, it's also because of high price of petrol. in the last spike, large vehicle sales dropped dramatically, but since prices have dropped, big car (suv, pickups, etc) sales are up

[tweeked]

A totally new floorpan building only 1200 - 1800 a month and you will send Ford Aus the way of Mitsubishi Aus within a year.

[BrisVegas]

I'm no expert, but I can see the RWD large/sports sedan becoming a niche market. It's pretty obvious that mainstream market has moved on from buying large sedans and now buy more upspec small/medium cars. I don't think it will be long before Focus and Mondeo sell in higher volume than Falcon.

If Falcon can share underpinnings with the next Mustang, then that's a good thing and would allow the Falcon sedan and Mustang coupe to be sold alongside each other both here and in America. There'll always be demand for a RWD performance vehicles.

I don't know what that means for Territory. If the medium/large SUV model becomes the Explorer then that will annoy those who buy Territory as a tow vehicle. However, I think the T6 Everest will fill that niche and offer up some competition to Prado/Challenger/Pathfiner etc.

If I won lotto and could buy a couple of upcoming Ford vehicles to suit our needs, it would be a T6 Everest kitted out at ARB for offroading and camping etc. plus an economical Mondeo or Focus diesel for my wife to run about town.

EDIT: If I had to choose just one vehicle, it would be the Everest for my wife to commute in and I'd be catching the bus (pretty much what our situation is now).