Thursday, 17 January 2008

Company Focus – Ford at NAIAS ’08: The Explorer of New Models?

Something new, pertinent and powerful was hoped for from Ford at this year's Detroit 2008. At first glance the Verve compact and New Explorer concept don't appear to be the Big Punch; but look deeper at the latter and Ford appears to have subtley risen to the occaission. It demonstrates the mission to bridge the obvious “Explorer Chasm” that has hit it so hard in recent years. But possibly more so, if intellectually deconstructed, the concept attempts to explore the central tenents of the traditional automotive business case. 2 Explorer Models.

With regard to the vehicle itself, Dearborne has taken best ingredients of the ‘old skool’ SUV, reduced the fat-content, and instilled diet-conscious features. Essentially, an ‘Explorer Lite’, fulfilling the new-age masses’ need for big-car security, fuel efficiency and reduced carbon footprint.

Looking at the impetus behind the design strategy, Ford clearly wants to correlate the familial DNA of a new Explorer to that of the prestigious solid appeal of the Land Rover Discovery leaving the Ford brand stable. Just as it seeks to earn from L-R’s sale to TATA, so it wishes to, very wisely, retain a subtle visual Land Rover effect for ever aspirant mainstream buyers. [eg proud arches, clamshell hood, recessed side-glass] Exploiting the similarities doesn’t end with styling. Given the advanced construction materials & techniques incorporated into the LR3 Disco, a great deal of weight-saving engineering should be directly transferable between the closely related (but in parts materially different) Land-Rover T5 base and Ford U2 platform.

Exchange what are in industry terms archaic engines with a family of 30% more efficient ‘Ecoboost’ types, replace portions of the previously steel exterior skin panels with composite/LW steel versions and update the driveline system with a higher tolerance, reduced energy-loss replacement, and latterly a hybrid unit, and the making of a re-born modern classic is evident.

Thus Ford product planners have been intelligent enough to wring (metaphorically and literally) every ounce of brand, technical and cash-flow value out of Land Rover, using the extract as the re-launch catalyst for what was previously their biggest earner to potentially re-earn its crown.

Ford recognises that the public – American especially – prefers big cars when socially-economically viable, and so have endeavoured to provide an optimal solution.

But for Ford, this new car also encompasses more than genetic homage to Discovery. We believe the 2003 Ford Model U concept (a landmark philosophical statement) also serves to inject engineering elements into New Explorer, the basis and consequences of which reach into the very core of Ford's downstream and upstream Operations:

1. Technically:
For example through the possibility of exploiting bio-derived cellulose technology for specific skin panels.[This extraction process also features this year at Detroit for use as an alternative fuel-type with the GM-Coskata agreement. Could such an extraction process when massively scaled up provide both materials and fuel? Much R&D to be done, but the proposition is theoretically feasible].

2. Fundamentally:
Model U, just as with the original Model T, is we understand far more than simply a car. Like its spiritual predessor, it is a product derived from re-considering the conventional auto-maker’s business model. Looking at the reason d'etre for alternative material applications and the associated logistics chain, looking at the fundamentals of vehicle assembly and looking at altering the conventional purchase process.

So although New Explorer appears on the surface to be simply a mild concept vehicle, the technical, marketing and critically business-case ramifications could be prolific.
It demonstrates that behind the scenes at Ford, senior management has thought deeply indeed about how to creatively yet robustly structure the value-chain of the company. New Explorer highlights a willingness to best utilise and re-formulate transferable intellectual advantage (from in this case Land Rover), but perhaps “New Explorer” is not simply a vehicle moniker, but reflects the inherent management ideology of a “New Ford”.

That means looking beyond convention, to new horizons, possibilities and partners when seeking New Value Creation. As we’ve previously stated, we expect Ford and TATA to maintain close collaboration, and we suspect Ford will encourage TATA (and possibly assist) to fund continued high-value Land Rover R&D so that both partners can exploit that all important SUV/CUV technical trickle-down for many years to come.

But that looks to be just one thread of a re-shaped corporation that, potentially, could set a rapid pace of commercial change for volume auto-makers.

“New Explorer” = “New Ford” - Modern interpretations of classic themes?