North America has become Ford Motor Co.'s profit machine, in contrast to losses in Europe and growing pains in Asia. That has positioned Mark Fields, Ford's president of the Americas, as a leading candidate to succeed CEO Alan Mulally.
But Mulally hasn't hinted when he will leave, and Fields, 51, faces challenges. Several redesigned nameplates must be launched smoothly this year to halt a slide in Ford's U.S. market share. The company needs to reinvigorate the nearly comatose Lincoln brand.
Ford also hopes that a recent modification of its MyFord Touch system of controls for infotainment and other vehicle functions satisfies consumers, who had marked the brand down in quality surveys because of the system's flaws.
Fields became president of the Americas in October 2005. During his fast-track career he has been CEO of then-affiliate Mazda Motor Corp. and executive vice president of Ford of Europe. He sat down with Industry Editor James B. Treece and Staff Reporter Bradford Wernle to discuss the challenges facing Ford.
Q: You have two huge launches this year, the Escape and Fusion, amid a lower days supply than you've had in years past. Are you going to have enough cars to keep dealers supplied?
A: We've talked with our dealers. They know our plans for the production of our run-out models, and they know the plan for the ramp-up of the production of our new models.
They understand what's coming. They understand our marketing plans, and the good news is we are now shipping new Escapes to our dealers. We're off to the races on launching a very important vehicle for us. Then later on, the Fusion.
Escape buyers got a lot of vehicle for their money. Dealers worry that with the more modern redesign, the price will move up and consumers won't see the same value proposition.
I would just look at the success that we've had with the Focus. A lot of similar themes there, in terms of new design, new technology, the level of feature we've put in the new vehicle. Focus sales are up year-to-date 57 percent, and transaction prices are up. So I think consumers are seeing the value in the product.
Speaking of the Focus, its sales are up, but the Fiesta has been off. Why?
You have to look at the cadence. Last year at this time we were literally just a month into launching the Focus, and we were already in the marketplace with the Fiesta for a little less than a year. We had a lot of initial demand for the Fiestas.
Now we have the Focus in full availability, which is great, and I think the Fiesta is at about the current levels that we expect it to be. I think we're seeing a natural kind of level for the sales and share for each of those.
Ford's fleet sales are probably higher than just about anyone else's. Is that good?
Fleet is good business -- with the caveat that you have to manage it appropriately.
Our fleet sales are about a third of our total sales, but when you look at daily rentals as a percentage of our total sales, we're lower than the competition.
Look at commercial sales. We sell a lot of our trucks into commercial fleets, which is good business. Then you have the aftermarket, the parts and service business that you get after the acquisition of the vehicle.
You just have to make sure you manage it appropriately and don't get overextended.
You took a hit from consumers on MyFord Touch. Has the modification fixed that issue?
We're getting early indications that customers are very happy with the upgrade. We don't have all the hard data in yet, but a lot of the anecdotal data -- talking with customers, dealers, service managers -- they love the fact that we've made it easier to use. We've made it more responsive and more intuitive to use, so the feedback we're getting is that it's a big improvement.
Customers also appreciated how we delivered it to them, when we gave them the option of either install it yourself or go back to the dealership. And they really appreciate that they were able to get a brand-new -- literally, a brand-new -- MyFord Touch system in a vehicle that some purchased even two years earlier.
You've helped dealers financially so that they can have people train customers in MyFord Touch. Will that continue?
We'll have to see. It's a little bit of a generational issue as well. I mean, I've got a couple of teenage sons. They never open a manual. To them, using software is second nature. Baby boomers like myself and people that are older, sometimes they might not have as much affinity to that. We need to make sure that in our dealerships that we can support all of those [customers].
In many ways Ford is humming along in North America -- adding shifts, coming out with new vehicles in major segments. In what areas would you like to see North America improve?
All the good work of all the team members has produced a business that's on a much firmer foundation than we were a number of years ago.
Just to put that into perspective, the first quarter was a record for us since we've measured North America as a business unit -- since 2000.
The previous record for absolute profits and margin was in the first quarter of 2004. In 2004 we had 31/2 points more market share, the SAAR [seasonally adjusted annualized sales rate] was 2 million units higher, and we sold about 35 percent more wholesales versus the first quarter of this year. That gives you a sense for what the team has been able to do in terms of really adjusting this business.
Every day we walk in the door, we know that we need to do better. On a weekly basis, we look at the competitive business environment. It's important we celebrate successes with the teams. At the same time, it's important to understand that there's not a finish line and there's some very, very good competition out there.
A couple of things. One, with every product, we're taking the approach of product excellence and making sure our product execution is at a very high level, both from the vehicle itself but also the production launch.
Secondly, continue to eliminate waste in the company. There are still lots of opportunities as we learn to work smarter to avoid duplication of efforts, to become more efficient. As we become more efficient we can reinvest that effort or that bottom-line benefit right back into the product lineup.
Third is continue to look at really innovative ways of connecting with consumers, whether it be traditional media or social media. There are still a lot of opportunities for us to stay in the forefront of connecting with consumers in a very authentic way.
Why does Ford need a luxury brand?
I think any successful global automotive company is either dedicated to luxury or has a luxury arm. As we've grown the Ford business and as we have more consumers introduced for the first time to Ford, over their lifetime they may have the opportunity and the aspirations to purchase a luxury vehicle. It would be a shame to be growing our Ford business and then having customers have to look elsewhere to move up.
The second important element of that is that in the luxury brands, you can incorporate new features and new technologies. As you get experience with that in the luxury [brand], you can then incorporate it later on down into your volume brand.
Some dealers are still wondering, is there really the commitment to Lincoln to make it work? What would you say to say to them?
First and foremost, we are very much committed to making sure that Lincoln is a success and we turn it into a world class luxury brand.
I would only ask the dealers to not only listen to our words, but watch our actions in terms of the products that we put out into the marketplace, in terms of working with them on the consumer experience and the dealership experience -- both on the hardware end of it in terms of facilities, and also the software piece of it in terms of how consumers are treated.
Watch our actions in terms of our dedication of personnel who are fully dedicated to thinking about Lincoln 24/7.
How big is that team?
The team is probably over 100 folks: field personnel, design personnel, product development personnel. They're an energized group. It's great because we've been able to attract folks from other luxury brands to come to Lincoln and to be part of the renaissance. It's really a great dynamic on that team and they're very, very passionate about succeeding.
You talk about it as a journey.
This is a long-term project. We know very clearly that the best brands, and particularly the best luxury brands, are built over a period of years. The most important thing is consistency of purpose year after year after year.
At the annual meeting, Chairman Bill Ford supported CEO Alan Mulally's staying around for a while. You're a patient guy, but how do you feel about that?
Listen, I think Alan is providing great leadership for the company. My ambition is to contribute as much as I can to the profitable growth of Ford. That means continuing to lead the Americas and make our contribution to the company, and I'm very happy with that. c