Ford's Explorer, Back from the Dead
Ford Motor (F) is trying to jump-start one of its most iconic models. On Jan. 13 at the North American International Auto Show (NAIAS), the embattled Detroit automaker took the wraps off an all-new concept, the Explorer America. The prototype vehicle is a tease of what the future might hold for a once popular SUV, sales of which have cratered thanks to rising fuel prices, safety problems, and buyers' growing environmental concerns.
Though designed to look like a rough-and-tumble SUV, the new Explorer America is built on a carlike unibody frame rather than a traditional truck frame. This setup, commonly referred to as a crossover, drastically improves fuel economy, drivability, and safety. Marisa Bradley, a Ford spokeswoman, says the new vehicle is also intended to serve as a "poster child" for the company's recently announced line of so-called EcoBoost engines, which further improve fuel economy via turbo boosting and direct injection technology. All told, the combination of smaller size and high-tech engine should give the Explorer America a 20% to 30% hike in fuel efficiency over today's version.
The current Explorer is in desperate need of an intervention (BusinessWeek.com, 9/1/06). Once a darling with the SUV-crazed American public, in recent years it has become an automotive pariah. In 2000, Ford sold more than 445,000 Explorers. In 2007, it sold just 137,813, down 23% from the preceding year, according to data provided by Automotive News. The Explorer has also suffered from a protracted rollover controversy that forced Ford to pay out millions of dollars in legal settlements.
Betting on Crossovers
The dramatic rise and fall of the Explorer's popularity since its release as a 1991 model echoes the mounting difficulties of Detroit's Big Three during the past decade. Over-reliant on 30 truck-based vehicles, General Motors (GM) and Chrysler, now owned by private equity giant Cerberus, have, like Ford, suffered drastic losses as consumer tastes shifted and buyers lost interest in gas-sucking heavy trucks and SUVs. Overall, combined light-vehicle sales for domestic automakers were down 7.1% in 2007. All three manufacturers are now pinning their hopes on new crossover models.
The crossover segment has taken off: About 2.7 million, or just under 17%, of the 16.1 million new vehicles sold in the U.S. in 2007 were crossovers, according to Erich Merkle, an analyst with the automotive forecasting firm IRN. Merkle expects sales of crossovers to increase to 3.4 million by 2011. The category itself has broadened to include a wide variety of vehicles, from the relatively small Toyota (TM) RAV4 to luxurious speed demons, like BMW's (BMW) new X6, also on display at NAIAS this year. Ford itself has already introduced other crossovers to cater to different price points, including last year's Edge and the Flex, which goes on sale this summer. If the Explorer America goes into production, the Expedition would likely be Ford's only remaining true SUV.
Carry the Load
But the new setup could cut into a key element of the Explorer's traditional appeal. Crossovers are not typically as adept off road or for towing loads as traditional 4x4s. For instance, the current Explorer is capable of towing more than 7,000 lb., whereas most crossovers can haul only about 3,500 lb. "A lot of traditionalists think this is a soft way to go," admits exterior design manager Stuart Jamieson of the carlike approach.
But Jamieson and company are hoping the benefits of the crossover setup will outweigh any perceived drawbacks. For one thing, the new vehicle would likely be built on Ford's "D3" platform, which underpins its other crossovers, the Taurus sedan, as well as Volvo's S80 and XC90 vehicles. Manufacturing the SUV on this same platform would result in greater economies of scale and boosted profitability per vehicle sold, according to Merkle.
"This new Explorer is a no-brainer," says Wes Brown, a partner with the Los Angeles-based consumer marketing firm Iceology. "Ford used to stand for innovation, and here they have a product that can help them regain some of that lost ground." Brown, who says the new truck's design retains the Explorer aura while drastically improving fuel consumption, expects to see the next Explorer roll into showrooms in 2010, likely as a 2011 model.
And yet it's a delicate balance. Designers and engineers are walking a tightrope, promoting carlike improvements on the one hand while also trying to retain the rugged, go-anywhere look and feel of previous Explorers. In a rapidly changing automotive market, the new model is also a significant test of the role design can play in repolishing a tarnished brand, with a need to balance the new, fresh look with the old-school 4x4 gusto that made the model successful in the first place.
"By communicating a robustness with the body design and giving the vehicle a higher ride height, we manage to maintain the SUV look," says Jamieson. The vehicle will likely be marketed as an SUV, with improvements in handling and efficiency loudly trumpeted, he adds. Ford designers have already been working on the vehicle for about a year.
According to Jamieson, the design of the new Explorer is intentionally low-key. Missing are the chrome door accents and hubcaps found on many current Fords; they've been replaced by matte surfaces as well as simple lines and rounded edges. "We wanted a lot less glitz and glam," Jamieson says. "The super-pared-down look makes [Explorer America] more utilitarian, more of a commodity, a tool." The vehicle does, however, keep the rounded rear window, a hallmark of previous Explorers.
It won't be the first time Ford has tried to make an old stalwart shine once again. A gutsy redesign of its classic Mustang in 2004, after decades of neglect, sparked a market-wide resurgence in muscle cars. But CEO Alan Mulally's more recent attempt to resurrect the Taurus nameplate has yet to show significant signs of success.
Ultimately, the new model is a test of how much life is left in the Explorer brand. It remains to be seen if consumers will reconnect with the nameplate after nearly two decades of closely identifying it as a fuel-inefficient, heavy SUV. "The original was an icon," says Jamieson reverently. "But we desperately needed a replacement."
See the BusinessWeek.com slide show for more of the new Explorer concept.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- China Warns It May Retaliate If U.S. Imposes Metal Tariffs
- Box-Office Smash ‘Black Panther’ May Be Game Changer for Artists
- All 65 Aboard Plane Feared Dead in Crash in Southern Iran
- Noble Group Flags a $5 Billion Loss as Debt-Deal Endgame Nears
- Asian Stocks Rally as Yen Rise Stalls; Oil Climbs: Markets Wrap