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Ford launches Escape, Explorer as first in explosion of new vehicles

Ford launches Escape, Explorer as first in explosion of new vehicles

FINANCIAL NEWS

Ford launches Escape, Explorer as first in explosion of new vehicles


Automakers are preparing to launch a slew of new vehicles in the next few years, and Ford and Honda are at the leading edge of that effort.

The average of 40 new model launches per year from 2000-19 for the industry is slated to jump to 62 per year from 2020-23, according to an annual report from Bank of America Merrill Lynch.

All that new product will have real implications.

Ford, in particular, could see a $2 billion positive profit swing on just two of its vehicles – the Ranger, which launched late last year, and Bronco, which is still to come, according to John Murphy, a senior auto analyst who presented “Car Wars 2020-2023: The U.S. Automotive Product Pipeline” to the Automotive Press Association on Wednesday in Detroit.

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“This really should be a great thing for Ford and stabilize what’s been sort of an unstable business, at least what’s been perceived to be an unstable business, the past few years since (Jim) Hackett has taken over,” Murphy said, referencing Ford’s CEO.

For Ford, the product cadence begins “in earnest” with the 2020 Explorer and Escape and continues in 2021 with the new F-150 and Bronco. Both GM and FCA have new models planned, but they will trail the industry average for replacement rates.

Murphy said he does not see GM’s situation as serious because the company is preparing to launch its heavy-duty pickups for model year 2020 followed by large SUVs for model year 2021. Beyond that, the company is focused on Cadillac, “with a stated goal to launch a new vehicle every six months through 2021,” according to the report.

FCA will focus, not surprisingly, on Jeep, with Grand Cherokee and Grand Wagoneer for model year 2021, Cherokee and Wagoneer for model year 2022 and Compass and Renegade for model year 2023. The report noted, however, limited product plans for Dodge, Chrysler and Fiat, saying “we have to question FCA’s longer-term commitment” to those brands, which echoes concerns raised last year when FCA rolled out its five-year plan.

The report also highlighted the explosion in crossovers – what Murphy referred to as “jacked-up station wagons” – to 149 models by the 2023 model year. That will make it the most crowded segment.

Despite the new products, automakers should brace for a downturn, according to Murphy.

“We’re expecting the industry to have a pretty precipitous drop” in around 2022 from current sales of close to 17 million vehicles to fewer than 14 million vehicles per year, Murphy said, while noting that that drop should represent a relatively normal decline for the low end of a business cycle.

“This is not death and damnation structurally for the auto industry. This is literally saying we’re going to go through a normal trough and a relatively normal recovery thereafter,” Murphy said.

Follow Eric D. Lawrence on Twitter @_ericdlawrence



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