FORD'S OTHER TRUCK GAMBLE

Transit family will replace long-popular E-series vans

Transit transition: The 2015 Ford Transit commercial van will be available in 2 wheelbases, 3 body lengths and 3 roof heights.

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Editor's note: In an earlier version of this story, the name of Ed Jolliffe, owner of Gorno Ford in Woodhaven, Mich., was misspelled.

DETROIT -- The aluminum F-150 pickup has gotten all the publicity, but it's not the only high-stakes truck move the Ford brand is making this year.

The 2014 Transit Connect Van and Wagon are arriving in dealerships now. And the full-sized 2015 Transit commercial van goes on sale this summer. Together, the Transit van family represents a change for Ford almost as significant as the shift from steel to aluminum in the F-150.

With the rear-wheel-drive Transit, Ford is replacing the body-on-frame E series, the market leader and a profit machine for nearly three decades. In its place will be a unibody commercial van that was designed in Europe and adapted for the United States. Gone are the two V-8 engines and the 6.8-liter Triton V-10, replaced by two V-6s and a five-cylinder diesel.

As with the F-150, Ford is taking a big chance, replacing a proven market leader with something radically different -- but not totally new. Ford has sold more than 7 million Transits in 119 markets since introduction in 1979.

In the United States, the E series has been shouldering the load for Ford's commercial and large passenger van business since Richard Nixon was president, dominating the market almost as much as the F series rules the pickup field.

In 2013 Ford sold 125,356 E-series vehicles -- 102,705 cargo vans and 22,651 Club Wagons for passengers. Ford held a 48 percent share of the full-sized van market last year, a slight drop from 2012, when it had 49 percent. Ford has been the leader for nearly three decades.

"Many people have asked me, with E series being so successful, why are we making a change," says Minyang Jiang, brand manager for the Transit, Transit Connect and E series.

There are a number of answers. Under Alan Mulally's One Ford plan, Ford is consolidating its offerings around the globe onto a few common platforms. The Transit is a global vehicle and fits that plan, while the E series has been primarily a North American van.

"Taking a successful product strategy and leveraging it across multiple regions, instead of having to design unique offerings for different regions, that's a big advantage" for Ford, says Mike Jackson, director of North American forecasting for IHS Automotive. With "all the different types of build configurations, that's a radical shift from the outgoing E series. That offers consumers a much broader range of choices. At the same time it would offer Ford meaningful opportunity for higher transaction prices and to deliver more value."

Says Jiang: "Transit offers a lot more payload and cargo capacity than we ever did with E series."

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Many choices


The Transit comes in an almost bewildering array of configurations: 58 in all. Ford will offer three roof heights, three body lengths, two wheelbases and three powertrains.

The E series hasn't changed much from the original Econoline of the 1970s. It comes in one wheelbase, excluding cutaway versions, and only one roof height.

"The market was evolving away from the Econoline van," says Jeff Carlson, president of Glenwood Springs Ford in Glenwood Springs, Colo. "Businesses were looking either for a larger van or a smaller van."

And everything in between.

Says Jiang: "With the small cargo van all the way up to the full-sized Transit, we're able to cover all kinds of businesses, from small businesses to large fleets. It [Transit] allows them to customize the fleet to the right size. Customers are telling us there's a lot of right-sizing. It's not one size fits all. It's the ability to customize it to exactly what your business needs."

What to order?


But that versatility has caused some head-scratching since Ford began taking dealer orders in January. For starters, dealers have never had the tall roof option before.

"It's going to be head and shoulders above what we were able to do with the vans before," says Ed Jolliffe, owner of Gorno Ford in Woodhaven, Mich. "Our van was good for a long time, but it needed to change because businesses today are so much different. The hard part for us is to know what to stock."

Says Carlson: "You can't have all the configurations in stock. When you stock configurations, you have to be sure you have the right vehicle. It will be a launch we'll have to pay careful attention to. Initially we're just going to have to see what the reception is. There are a lot of permutations there. We had the same issue when they extended the configurations on the Super Duty truck in 2007-2008."

Chris Lemley of Sentry Auto Group, which owns several Boston-area Ford dealerships, agrees: "Our only concern is it looks like it's not going to be an inexpensive product, and it is a much more complicated product than the Econoline."

Even though Ford is taking fleet orders, the company has not released prices. They should be announced in late spring or early summer, a spokesman said. Pricing will be crucial, since fleet customers are very cost-conscious.

"It's very complex. It's a lot of configurations," acknowledges Ford's Jiang. But she says Ford anticipated that and set up a system to help dealers narrow the choices.

"We've created a dealer-facing tool called transitbodydecoder.com," accessible only to dealers, she says. "If you're an inventory manager, by answering a few questions you can take the choices down from 58 to 12 to 4 to 2. That's a tool we've created to minimize complexity."

Changing horses
How the Transit van compares with the outgoing E series
 E seriesTransit
ConstructionBody on frameUnibody
Drivetrainrwdrwd
Engines4.6-liter Triton V-83.7-liter V-6
 5.4-liter Triton V-83.5-liter EcoBoost V-6
 6.8-liter Triton V-103.2-liter Power Stroke inline 5-cylinder diesel
Roof heights85 in.83.2 in. (low roof)
  100.8 in. (medium)
  110.2 in. (high)
Wheelbases138 in.129.9 in., 147.6 in.
Body lengths217 in., 236 in.219.9 in., 237.6 in., 266.1 in.

'Sprinter killer'


Chris Ramos, president of Detroit Custom Coach, a suburban Detroit company that converts commercial vans into limousines, food trucks, mobile marketing vehicles and other units, said his company has big plans for the Transit.

"We've dubbed it the Sprinter killer," says Ramos, referring to the commercial van sold under the Mercedes-Benz and Freightliner brands. "In the limousine and chauffeured-vehicle world, the Sprinter is taking over where the chauffeured vehicle used to be. With Ford bringing out the Transit, they're going to give Sprinter a run for their money."

Detroit Custom Coach buys basic passenger vans and then spends $20,000 to $70,000 to outfit them with luxury seating, Ramos says. Until the arrival of the Transit, the Sprinter has been the only option. The E series didn't work in his business.

"The style never fit that luxury transportation feel on the outside. The exterior would never fly in the luxury transportation industry. You wouldn't want to pick up executives and CEOs with that old body."

Ramos, whose company has been buying mostly Sprinters the last couple of years, said the Transit is an attractive option because Ford has a more extensive network of dealers to repair the vehicle. Ford has a network of more than 3,000 dealers including about 600 in its Business Preferred Network dealers.

He notes that there are fewer than 400 dealership servicing options for the Sprinter, adding: "And there are always complaints about price of parts."

For fleet customers, existing relationships with Ford dealerships could make a difference. Larry Campbell, director of fleet operations for the city of Fort Wayne, Ind., is thinking of replacing eight Sprinters in his fleet with Transits. "We can't afford the software to diagnose that vehicle," he said of the Sprinter. "We already have all the Ford software and have good dealer support that helps with current Ford vehicles."

Fort Wayne owns about 600 Ford vehicles and has relationships with two local dealers.

Christian Bokich, a Mercedes-Benz spokesman, acknowledged that Ford makes a "great product," one that has competed against Mercedes for many years in Europe.

"We're not in a sales race," he said. "We believe we have the best product as far as total cost of ownership and safety."

IHS Automotive expects Ford to sell more Transits than it did E-series vehicles, though it doesn't expect the change to be dramatic. "We expect sales volume will peak near the 140,000 unit mark," said Jackson.

But the real upside for Ford and its dealers may be increased transaction prices, Jackson said.

"Use Focus as an example. When the old Focus wound down and changed to new, Ford realized significantly greater scale in terms of volume. By offering a vehicle with the same design in multiple markets, they increased scale and at the same time increased transaction prices in thousands of dollars per unit."

Though there are no EPA fuel economy figures yet for the Transit, Ford says it will get 25 to 50 percent better mpg than the E series. A 2014 E-150 passenger van powered by a 4.6-liter V-8 is rated at 13 mpg city/16 highway/15 combined.

Jeff Carlson
Glenwood Springs Ford
"The market was evolving away from the Econoline van. Businesses were looking either for a larger van or a smaller van."


New powertrains


Perhaps nothing symbolizes the transformation from E series to Transit as much as the powertrain offerings.

"We're going from an exclusively gasoline engine lineup of two V-8s and a V-10 in the E series to offering customers a standard 3.7-liter V-6, the same 3.5-liter EcoBoost engine proven in Ford F-150 and an all-new 3.2-liter Power Stroke diesel option," said Len Deluca, director of Ford commercial vehicle operations in a statement.

Alec Gutierrez, senior market analyst for Kelley Blue Book, says commercial buyers are increasingly interested in diesels: "That could be huge for them."

All Sprinters are powered by diesels.

Different roof heights also will broaden the Transit's appeal. Customers can still buy a Transit with about the same roof height as the E series, which was designed to fit into garages with a 7-foot clearance. But a 7-footer could stand nearly erect inside the high-roof Transit, which has 81.5 inches of cargo height.

The medium-roof version provides 72 inches of cargo height inside, and the low-roof version has 55.8 inches. Cargo volume ranges from 246 cubic feet in the regular- wheelbase, low-roof version to 487 cubic feet in the long-wheelbase, high-roof version.

By contrast the E series has a maximum interior height of just 51.9 inches.

Horsepower, torque and towing capacity for the Transit have not been announced. The E series offers maximum towing capacity of 10,000 pounds.

New customers?


Colorado dealer Carlson, whose store is in an area with a number of ski resorts, predicts the Transit will retain E-series customers and add some new ones.

"I'm mostly sure the guys who are driving Econolines now are going to move into the Transit," he says.

"The question is whether we will have incremental business because of the redesign. I believe we will. I suspect it's going to be a lot of the resort limousine type of people. The longer-distance people will be interested in the bigger, taller van."

Jiang says Ford hopes the Transit will help Ford make inroads with more small-business customers. Currently Ford sells about 80 percent of E-series vans to large fleets. That will change this year.

During the first year, Jiang predicts about 50 percent of Transits will be bought by those large fleet owners. The rest will go to smaller businesses.

"Small businesses are increasingly migrating to medium and high roofs. The medium and high roofs will help us capture a lot of customers looking for that space."

Cargo vans may not be as sexy as pickups, but the segment is still critical.

"The full-size van category is an important one because it has been historically tied to the performance of the economy," said IHS Automotive's Jackson.

He says that the rwd Transit and the smaller front-wheel-drive Transit Connect will give Ford a one-two punch in the market. "They'll work closely in tandem," he says.

Jackson says fleet owners are increasingly conscious of cost of ownership these days, especially fuel economy.

Ford will gain economies by making the Transit its one global large commercial van.

Says Jackson: "Ford will benefit from having a largely common offering around the world in lock step with its strategy with passenger cars and truck offerings."

You can reach Bradford Wernle at bwernle@crain.com.


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