As the F-150 got bigger and pricier, Ford saw an opening

DETROIT — To understand why Ford Motor Co. is reviving the Ranger midsize pickup after an eight-year hiatus in the U.S., look no further than its big brother, the full-size F-150.

Executives say there was no eureka moment that spurred the Ranger’s return, but the business case became obvious when the first aluminum-bodied F-150 was built in November 2014. The 13th- generation pickup was 2 inches wider than its predecessor, and it came with a bigger price tag, too.

For years, Ford used the F-150 as the rationale for not selling the Ranger in this country, arguing it didn’t want to cannibalize sales of the best-selling F series, which generates the bulk of its global profits. But by the time the latest generation debuted, the F-150 had simply grown too large and too expensive for some buyers, and Ford would much prefer they get behind the wheel of a Ranger than go to the Chevrolet dealer down the street.

“It was pretty clear to us there was a price band and a size that would fit under the F-150,” Joe Hinrichs, Ford’s president of global operations, told Automotive News. “We knew we needed to work to make the business case.”

That work got going in earnest in 2015, when company officials identified an opportunity to convert the Ford Focus plant in Wayne, Mich., to build body-on-frame pickups and utilities instead of low-margin cars. Since the Ranger alone wouldn’t fill the sprawling Michigan Assembly Plant, executives chose to bring back another storied nameplate to pair with it: the Bronco SUV.

The desire to build the Ranger and Bronco in a renovated Michigan Assembly became a key bargaining chip that fall in negotiations with the UAW. Days before Thanksgiving, union members ratified the agreement and secured the Ranger’s return.

Different billing

Three years later, the Ranger, due in showrooms next month, is joining a suddenly crowded midsize segment. Ford is billing the Ranger as a rugged lifestyle vehicle that’s comfortable on sand, dirt or rocks and can ferry buyers — and their gear — on weekend camping trips or excursions to the beach. It’s a big shift from the yeomanlike F-150 that’s more suited for construction sites or lumberyards.

“Our research says the buyer isn’t someone who wants an F-150 and can only afford a Ranger; they want something different,” Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service, said in an interview. “We felt Ranger would be much more of a personal-use, adventure product. It became a relatively easy decision.”

The midsize pickup segment has rebounded drastically since Ford closed its Ranger plant in St. Paul, Minn., in December 2011. It has more than doubled in size since 2014, to more than half a million vehicles this year, and is up 16 percent this year through November after rising less than 1 percent in 2017.

The long-dominant Toyota Tacoma is closing out its fourth consecutive year of gains, and General Motors, which bowed out only for a brief period, has sold some 600,000 Chevy Colorados and GMC Canyons in the Ranger’s absence. Ford also will face competition from the upcoming Jeep Gladiator, which is similarly aimed at adventure-ready buyers.

“We’re about to enter a golden era for lifestyle trucks,” Chase Disher, chief analyst at Autolist, said in a November study about the segment.
IHS Markit predicts only modest growth in the segment into the next decade to just over 600,000 vehicles, according to analyst Stephanie Brinley, which means the players would be fighting over existing buyers more than attracting new ones.

“The majority of the growth has already happened,” Brinley said. “Organic growth is not going to be easy at this point.”

The previous Ranger was regularly among the segment’s top sellers and No. 1 as recently as 2004. Ranger sales routinely totaled more than 300,000 a year in the 1990s before fading in the early 2000s.

Ford says it built 7 million Rangers from 1982 through 2011 and will lean on the nameplate’s history to help sell the new model.

Autolist says the Ranger is still the second-most recognized midsize pickup behind the Tacoma, despite being out of the market for so long.
If the new Ranger is to be successful, Brinley says, it likely will have to steal share largely from the Tacoma, the oldest product in the segment. Ford believes it has a good chance of conquest, saying that nearly 80 percent of early hand-raisers for the Ranger don’t own a Ford vehicle today.

LaNeve said he’s not concerned about Ford’s late re-entry relative to GM and is confident the arrival of the Ranger and Gladiator should drive more growth.

“You are going to continue to see proliferation in this segment,” LaNeve said. “This won’t be the end.”

Watching GM

LaNeve, a sales executive at GM before coming to Ford in 2015, said the decision to bring back the Ranger was further cemented by looking at what his former employer did with the Colorado and Canyon.

LaNeve said the prior-generation pickups significantly ate into sales of the full-size Chevy Silverado, but that hasn’t been the case with the revived versions.

“When they came back in, what was affirming to us is that we didn’t see in the data cannibalization of their full-size truck nearly to the degree before,” he said. “That was affirmation of our own market data.”

The F series has been the nation’s best-selling truck for 41 straight years, and the price of the F-150 has been steadily inching up. Ford sold more than 72,000 F-series pickups in November at an average transaction price of roughly $42,000, LaNeve said.

The upcoming Ranger, meanwhile, will start at $25,395 and top out at over $40,000. That’s about the same as the segment-leading Toyota Tacoma, which starts at $26,595 for the 2019 model, but more than GM’s midsize duo. Pricing starts at $21,495 for the 2019 Colorado and $22,095 for the Canyon. All prices include shipping.

Although consumers are receptive to the high-priced vehicles — Lariat, King Ranch, Platinum, Limited and Raptor account for roughly one-third of F-150 sales — rising prices overall for the vehicle have pushed some buyers out of the market, Hinrichs admitted.

And then there was the issue of size. Some pickups are so massive, they barely fit in standard parking spaces.

“Customers want something that’s ‘garage-able,’” Hinrichs said. “We feel really confident the Ranger buyer is different than the F-150 buyer.”
That buyer, Ford believes, craves off-road performance and capability. The Ranger’s turbocharged 2.3-liter four-cylinder engine will be able to tow and haul more than the V-6 gasoline offerings from its rivals, Ford says.

Simpler configurations

It will come in just three trim levels: XL, XLT and Lariat. Ford will sell two-door SuperCab and four-door SuperCrew configurations, with each offered in either two-wheel drive or four-wheel drive. An off-road FX4 package will be offered across all trims.

Although those options add up, the Ranger is available in a fraction of the myriad ways an F-150 can be ordered.

Interior and exterior designs on the Ranger have been changed to give the truck a more rugged look for U.S. buyers compared with the overseas model. It has a mostly steel body and axles made by Dana Inc., which also supplies the Jeep Wrangler.

“We’re fairly confident Ranger’s going to be a big success,” Chad Callander, the truck’s marketing manager, said during a media drive of the truck in San Diego last week. “We intentionally designed and built this Ranger so that it would have capability. We wanted to make sure what we were bringing back to the marketplace could live up to the ‘Built Ford Tough’ promise.”