In the late 1990s, at the peak of America's love affair with sport-utility vehicles, North Hills (Calif.) Ford dealer Beau Boeckmann had an entire showroom dedicated to the Ford Explorer. The rugged SUV racked up 300 sales each month for his dealership, and it accounted for most of the profits for Ford Motor (F) and its dealers nationwide. These days the gas-guzzling Explorer is a has-been and Boeckmann is lucky to sell five a month. Once the top-selling SUV in America, it today ranks No. 13 among utility models. "The Explorer isn't even on people's radar," he says.
Desperate to revive the brand, Ford this summer will unveil a redesigned 2011 Explorer that goes on sale in the fall for about $30,000. Ford's challenge: Craft a politically correct SUV to win back buyers and beat back critics. That's a lot to ask of the Explorer, an SUV synonymous with the kind of big-rig addiction that nearly destroyed Detroit. "It's a vehicle that has to sell against its name," says consultant Jim Hall of 2953 Analytics in Birmingham, Mich. "People still think of the Explorer as a truck and say, 'I don't want a truck.' "
When Ford began the rehabilitation of the Explorer in 2007, SUVs were quickly falling out of fashion as gas prices surpassed $3 a gallon. Ford was on its way to losing $30 billion from 2006 to 2008, and the Explorer that once generated $10,000 per vehicle in gross profit became a pariah. CEO Alan Mulally, only four months into the job, demanded his staff justify spending about $500 million redesigning a model that seemed to have outlived its usefulness. "Alan told us that we need to convince ourselves that we can truly reinvent the Explorer," recalls product development chief Derrick Kuzak.
Job One was ending the SUV's reputation as a rolling refinery. The current Explorer drinks a gallon of gas every 13 miles in the city and every 19 miles on the highway. That's 27 percent worse than today's SUV leaders like the Honda (HMC) Pilot and the Chevy Traverse. Ford says poor gas mileage is the No. 1 reason buyers reject the Explorer, which saw sales fall 88 percent over the last decade, from 445,157 in 2000 to 52,190 last year. "We said, 'Oh my goodness, what are we going to do about that?' " says Amy Marentic, an engineer on Explorer who now leads Ford's SUV marketing. "We needed jaw-dropping fuel economy."
To get that, Ford cut Explorer's weight (it won't say how much) by switching the SUV from a heavy pickup truck frame to the same chassis as the Taurus sedan. Designers sculpted the shape to lower wind resistance, further improving fuel economy. Engineers installed the tiniest engine ever in an Explorer—a turbocharged 2-liter, 4-cylinder motor. The result: The Explorer's mileage exceeds the 24 mpg highway rating of its most fuel-efficient rival, the Chevy Traverse. The automaker won't give a specific mpg yet for fear competitors will find a way to top it before the new Explorer goes on sale this fall.
That may solve a practical problem. Yet the thornier issue—perception—remains. "There's the nagging guilt of, 'Am I ruining the planet? What do my neighbors think?' " says marketing manager Craig Patterson.
So Ford plans to hawk the new fuel-economy numbers in Explorer ads, boasting they're better than some sedans. It probably won't win over "Sierra Club types," Patterson concedes, though it could make buying the new Explorer "guilt-free" for some of the 3.5 million owners of the old model.
The risk for Ford is that, in its quest for fuel efficiency, it may lower the SUV's perceived utility. "When you take an Explorer and put it on a car frame and give it car attributes, well, then you've got a wagon," says Charlie Vogelheim, publisher of automotive researcher IntelliChoice (SORC). "But the marketing guys don't want to use the word 'wagon.' "
Then there's the wimp factor. Ford says the towing ability of the new Explorer will be reduced yet will still meet the needs of about 80 percent of current customers. It also will ride lower, limiting its off-road abilities. That could deter some image-conscious SUV buyers. In one focus group, Ford asked eight men how many felt towing was very important to them. Eight hands went up. The same eight men were asked what they tow. They each responded: nothing.
Whether a tamer Explorer appeals to the big-hauling set, Ford can't afford to ignore the growing demand for SUVs with car-like characteristics. That segment has grown to 3.5 million vehicles a year—30 percent of the U.S. auto market. Besides, the truck mania of the '90s isn't coming back. "That," says dealer Boeckmann with a sigh, "was a unique moment in time."
The bottom line: Ford spent about $500 million to redesign the Explorer. Whether drivers want a tamer, less thirsty version of the SUV remains to be seen.