Car maker questioning the place of small passenger cars in Australia
The future of the Ford Fiesta in Australia remains under a cloud of uncertainty, with the brand clearly considering whether it makes economic sense to bring the next-gen model Down Under. And now the Ford Focus could be in the firing line, too.
“My comment on that is that we haven’t even got to a stage where we’re happy to talk about the next product incarnation, so speculation will always be out there, but we haven’t come out and said anything at this point,” Whickman said.
“Every vehicle we have in our cycle plan, we go through an in-depth process of development, tailoring, and so, no, we’ve yet to make, and come out with, a particular point of view on that product, or any other product for that matter,” he said.
“It’s not dissimilar to how we would talk about the next Focus, or the next anything. You know, when we’re ready to talk about it, we’ll come out and talk about it. But there’s plenty of water to go under the bridge, there.”
Even with that all on the table, though, Whickman made it clear that there is some serious research into the future potential of a light car from the Blue Oval brand when the current model ceases production out of Thailand. There are suggestions the new-generation car won’t be built in Thailand, though Whickman didn’t confirm that.
As we recently reported, sales of light cars in Australia are struggling badly at the moment, prompting many brands to shuffle their smallest cars down the priority list here, and Whickman agreed that the market is moving.
“It’s getting smaller,” he said of the light car, or B-car, segment.
“Clearly it’s relevant to the people who want a small car, but en masse, customers are telling us they have a growing interest in other derivatives like SUVs or crossovers.
“From our point of view, I think we’ll always set out to be a provider of passenger vehicles, SUVs, pick-ups and commercials – we’re not going to walk away from that, because one of our strengths as a company is that we’ve always been a mainstream provider of pretty decent vehicles for all manner and walks of life.
“Does that mean we’re going to have every single segment? No, because the consumer will ultimately be the arbiter of that, and I think it’s a folly to try and hang on to that,” he said.
“In doing that, you either dilute your own investment, or you actually lose relevance in other parts of the market that are growing as well. You can’t be all things to all people.”
Still, Whickman said that passenger cars can’t be taken for granted, even if there’s a question over whether the economics will make sense.
“If that segment’s getting smaller and smaller, then that starts to bring that into question because there is, in my view, a critical mass – it’s not so much about how many people you see driving them on the roads, it’s actually how much investment you ask your dealers to put into a vehicle because they have special tools, they’ll have specific training in the back-end, in terms of engineering. We’ll have to invest in dollars to make people aware of that product – that’s the nub of the question for us, for any vehicle, not particular the Fiesta, but just any vehicle.
“A segment of five to eight per cent? I think is still of interest to us, as long as it’s economically sensible and the product we bring in still is relevant. That’s the decision process we go through," he added.
Could that mean the next-generation Focus is in doubt, too? Possibly. The Focus is something of a bit player in the small car segment, despite being one of the best cars in it, accounting for just 3.3 per cent of the market in that segment and sitting in 10th spot behind the big-name players.
“I’d want to be careful to say that it’s irrelevant, it’s still important and it’s still 17 per cent of the market,” he said of the small car (C-car) segment. “We’re talking about the C-car segment, but its weight is getting less, and it’s significance is shrinking a little bit when you start to look at some other car segments.
“We’re seeing, essentially, SUVs take a larger portion of the market than passenger vehicles now. We’re seeing that with some consistency. And you know, in the last two years we’ve spoken about trying to win better on SUVs, and obviously working hard on our pick-ups and commercial vehicles, but it doesn't mean we’ll walk away from passenger vehicles. It means we need to be relevant, and the market is actually morphing into something very different, I think, and I think it will continue to morph even further.
“Some months [the small car segment] has been a 17 or 18 per cent market share segment. When I arrived here, which was only three-and-a-bit years ago, it was 22-23. You’re seeing that market shift to SUVs, you’re seeing a bit of that in the small – and when I say small I mean Fiesta sized, not Focus – so you have to be careful how to characterise it.
“Passenger vehicles you’ve got, what, call it 17-18 per cent in C cars, 6-7 per cent sitting in B cars, maybe 6-7 per cent in C-D cars, maybe 2 or 3 sitting in large cars. So, do the math, call it the mid-thirties or whatever you want to call it: so it’s still one in three vehicles in this market is a passenger car,” he said.
“I think you’re seeing, essentially, a dilution of what people want, and therefore manufacturers are having to react and serve them in different ways.”
Whickman said that while the passenger car segments may be suffering blow after blow in light of new SUVs seemingly arriving in a never-ending conga line, the brand will take decisions on its passenger car offering seriously.
“We’ve made decisions in the past – we made decisions on D-E cars, the Falcon has left us a great legacy in terms of what we’re able to do with Everest and Ranger and the like, but the actual vehicle itself was in a very small segment. We made some decisions because it wasn’t economic,” he said. “When you become a full-line importer, those economics kind of change a bit, so vehicles coming into this market might be sourced from Europe, India, Thailand – the economics are of a very different nature, so you know you can be very entrepreneurial, without a lot of investment for the company.
“As a company we can homologate vehicles, that’s one thing we must do, and we have very tight safety thresholds and environmental thresholds, so it’s not like everything comes for free. There’s still investment, we’ve got hundreds of engineers who are working on a Mondeo program, an 'X' program, and some of those are going to be making sure it’s fit for purpose in Australia.
"I don’t want to come across like it’s an easy thing, but in relative terms, it’s not like you’re building a vehicle ground-up specifically tailored just for this market.
“So we can switch things on and off with, I’d say, comparatively less complexity than where we were in the past, so the hurdle of investment is not part of the economics so much. The question comes to, 'is there a market for it?'. That’s the biggest question in my view, is there market for the product, and we look at that and make that decision.”
Tell us what you think
Should Ford bother with the Focus and Fiesta in Australia? Or should it follow Mitsubishi’s lead and follow the market towards SUVs while strengthening its grip in the pick-up market? Let us know in the comments section below.