Q&A with Raj Nair - Annual 'Car Wars' Report

Raj Nair
Group Vice President - Ford Global Product Development

Bank of America Merrill Lynch recently published its annual 'Car Wars' report by Research Analyst John Murphy. Car Wars assesses the relative strength of automakers’ product pipeline in the U.S. The purpose of the study is to quantify industry product trends and then relate the findings to investment decisions.

In this year’s study, Murphy notes that the product replacement rate drives showroom age, which drives market share, which in turn drives profits and stock prices. The study finds that OEMs with the highest replacement rate and youngest relative showroom age have generally gained market share from 2002-2012. Murphy goes on to project this relationship to hold over a forecast period of model years 2013-16 and predicts that the total industry’s profit momentum will be strong as more new models are launched in the next four model years.

@Ford asked Raj Nair, group vice president, Ford Global Product Development, to share his perspective on this year’s 'Car Wars' report.

Q. This year’s Car Wars study places a great emphasis on product replacement rates. How does Ford measure up against competitors in this important area?
A. The Car Wars study confirms that Ford will deliver the industry’s best replacement rate, keeping our showrooms the freshest in the industry for our customers.

This year is one of our busiest ever with nearly 40 new Ford products being introduced around the world. In North America, we are introducing: the all-new Escape; Fusion range, including both Fusion Hybrid and Fusion Energi plug-in hybrid models; the C-MAX Hybrid and C-MAX Energi; freshened versions of the Flex, Mustang, Taurus and Super Duty; the new Focus Electric; Focus ST; and two new Police Interceptors (sedan and SUV). In addition, Lincoln will also offer updated versions of the Lincoln MKS and Lincoln MKT, as well as the all-new Lincoln MKZ and MKZ Hybrid.

Q. How critical is our One Ford plan moving forward?
A. Our product onslaught is enabled by the acceleration of our One Ford global product vision. By mid-decade, 75 percent of our global volume of approximately 8 million vehicles should be based on our five global platforms, allowing us to deliver more products people truly want and value more efficiently and more quickly than ever.

Our new product introductions will accelerate in the years ahead – with 168 percent of our global product portfolio being introduced as new or with major upgrades between 2011 and 2016. Ford data shows the next best competitor at 114 percent.

Q. What are our product plans for Europe this year?
A. We are introducing 10 new or significantly refreshed vehicles in Europe, including B-MAX, Focus ST, Focus ECOnetic, Fiesta ECOnetic, the Focus 1.0-litre EcoBoost, Focus Electric, all-new Kuga, new Ranger and (in Russia) the Explorer. We will also launch the first of our all-new commercial vehicles, the Transit Custom. In addition, SYNC, MyKey and inflatable seat belts are being introduced. We also will reveal several vehicles in 2012 that will go into production next year, including the all-new Mondeo and Fiesta ST, plus the new Transit and Transit Connect.

Q. Which products will be introduced in South America and in Asia Pacific Africa this year?
A. In South America, we are introducing our global Ranger, new Fusion and all-new EcoSport compact SUV in South America this year.

We are introducing seven new vehicles to the Asia Pacific Africa region, as part of the more than 50 new vehicles and powertrains for Asia Pacific Africa by mid-decade. We recently unveiled four new vehicles at Auto China 2012, including the the EcoSport, Kuga, Explorer and Ford Focus ST. We also are launching the global Ford Focus and new Ranger in selected markets, the Explorer 2.0-liter EcoBoost in the Philippines and Japan, as well as the iconic Mustang in Taiwan and the Philippines.

Q. What role will electrified vehicles have in Ford’s North American product portfolio?
A. We are committed to delivering on our electrification plan, which calls for tripling production of our electrified vehicle lineup by 2013. This plan builds on the promise to provide customers with the Power of Choice by offering fuel-efficient gas, hybrid and plug-in options. By the end of 2012, we will offer six all-new electrified vehicles in North America: Focus Electric, C-MAX Hybrid, C-MAX Energi plug-in hybrid, the all-new Fusion Hybrid, Fusion Energi plug-in hybrid and the all-new Lincoln MKZ Hybrid.

With our unprecedented launch of new electrified vehicles this year, nearly one-third of Ford’s vehicle lines in the U.S. will feature a model with 40 mpg or more in 2012 – a claim no other full-line automaker can match. Furthermore, our EcoBoost fuel-efficient engine, which delivers up to 20 percent better fuel economy than larger displacement engines, will be offered in 11 North American vehicles in 2012.

Q. How do you anticipate electrified vehicles to perform globally?
A. We expect that 10 to 25 percent of our global sales will be attributable to electrified vehicles by 2020. This includes hybrids, plug-in hybrids and pure battery electric vehicles, with most sales coming from hybrid-electric vehicles.