theSpiel on Business

Bleeding cash, selling off assets and now dressing up old ideas as their best new ones. All wrapped in a slick name. Help! Bail out of Ford now, before the rats jump! No, wait, it may just work. Let's announce a great "new" way to get more power out of a smaller engine and save gasoline to boot! And give it a catchy enviro-friendly name like "EcoBoost". From the Car Connection: With its EcoBoost technology, however, Ford engineers apparently are adopting new math. An array of new engines will not only boost power but increase mileage while also reducing harmful emissions. The technology will make its formal debut at this month's Detroit auto show. More significantly, the automaker plans to begin rolling EcoBoost out on a half-million Fords, Lincolns, and Mercurys annually over the next five years.

You'd imagine EcoBoost to be something unique and whizzbang, but it's a combo of direct injection and turbo charging. Not only is this old tech - like 1940s airplane technology - but it's not even newsworthy in the auto industry. Like direct injection is new? OK, for an automotive petrol engine it's maybe 10 years old. Turbocharging? Decades old. Low-boost for fuel efficiency to make a 6 feel like an 8? Ancient history - go check out SAABs in the 80s for starters. And so on.

What it does show is that Ford doesn't have the cash to come up with genuinely new ideas. The only saving grace is that it's logical - and timely, if a bit late to the party. So it may just work, if staving off the inevitable is the goal. Just how long do you reckon Ford can keep banking on its past without bankrolling the future?

Labels: automotive, Ford

I may be too glib about it, but the car industry is being assaulted from all sides. Firstly, it burns resources, prodigiously, in manufacture, in using the product, in its distribution and in the infrastructure that supports it. It's not a happy product, but it has massive support from users.

The problem is that the industry is on the long tail of the product life cycle. Easy profit has largely gone and the way to make money is to sell more, more more; all the while hoping that the profit on service stays up as the core business margin dwindles. To fight this long term decline in profit companies have resorted to lean manufacturing and relentless quality improvement, both to squeeze out more margin and glue on some loyal buyers. It has worked for Toyota. They have reduced individual model cycles, and added value for younger buyers by offering a model for everyone and cutting out much of the aftermarket. Again, it has worked for Toyota. And they have moved upmarket to cream off a better margin. Again, it worked for Toyota.

But for how long? These are reproducible tactics. Korea's Hyundai is playing the same game. Soon China and India will join the fray. Ford is one major casualty right now, teetering on the brink. Expect big some changes in this market, very soon.

Labels: cars, Ford, Hyundai, product life cycle