Explorer Leads Ford's Sales Inroads
Not in their wildest dreams did Ford Motor Co. insiders imagine that the Ford Explorer would one day become the nation's fifth-best-selling vehicle.
"Nobody in their right mind would have," says Chet Kuziemko, Ford Division's manager of truck-marketing plans.
But now with the debut of a new and improved Explorer less than two years away, Ford insiders seem to think the best is yet to come.
Ford recently revealed plans to start making the compact utility vehicle in St. Louis as well as Louisville, Ky., in 1995, allowing the automaker to crank out 40 percent more Explorers. And Ford intends to make the Explorer one of its top export vehicles by the end of the decade.
Bottom line: Last year Ford sold more than 306,000 Explorers. Within two or three years, it expects to sell at least 430,000.
By today's standards, that would move the Explorer into the No. 2 spot on the list of best-selling vehicles, behind Ford's full-size pickup.
Of course, these are times of relatively slow sales. By 1995, analysts predict, total car and truck sales will rise 30 percent or more from last year. So it's difficult to predict whether the Explorer will one day outdistance top sellers like the Ford Taurus and Honda Accord.
Clearly, though, Ford officials think the Explorer's best days are still ahead. That outlook may seem rather rosy for a vehicle that sells for so much. Prices start at $17,100 and go to nearly $30,000. But no other autos are selling as well as compact utility vehicles.
While sales of all cars and trucks rose 5.4 percent last year, sales of sport-utility vehicles soared 23 percent. Ford actually lost a bit of market share last year because the Louisville Assembly Plant, which made more vehicles than any other auto plant in North America, couldn't keep up with demand for Explorers.
Otherwise, Ford could have sold 5 percent more Explorers, Kuziemko said.
The toughest competition comes from Chrysler Corp.'s Jeep, which last year introduced the Grand Cherokee and continues to sell the Cherokee. Last year, Jeep expected to sell 80,000 Cherokees, said spokesman Scott Fosgard. Instead, it sold 129,000.
Also last year, Jeep sold 84,600 Grand Cherokees. This year it expects to sell 170,000.
Ford will probably continue to lose market share until 1995, when the automaker will introduce a new, more car-like Explorer design and begin making the vehicle in St. Louis as well as Louisville. Analysts expect the new design to come with a better suspension to smooth the ride, an updated version of the four-wheel drive and air bags.
"This product update is obviously going to help them a great deal," says Tom Dukes, analyst for the market-research firm J.D. Power and Associates.
The sport-utility segment used to be one of Ford's weaknesses. The Bronco II, also made in Louisville, came in only a small, two-door version and finished a distant third in compact utility sales behind the Chevy S-10 Blazer and the Jeep Cherokee.
But with the introduction in the spring of 1990 of the bigger Ford Explorer in four-door and two-door models, Ford zoomed to the top of the sales chart. The automaker predicted that sales of the Explorer would one day double those of the Bronco II. In actuality, sales tripled.
This sales feat was accomplished during a recession and without rebates or discounts. Ford makes $6,000 in profit on each Explorer it sells, according to Fortune magazine. Last year that would have totaled $1.8 billion.
It's easy to see why Ford wants to sell as many Explorers as possible. And why they halted production of its Aerostar van to make room for more Explorers.
With all the sales possibilities at home and overseas, where sales are expected to quadruple in the next two years, Ford hopes to get much more mileage out of a vehicle that has already exceeded its expectations.
"I think the whole industry has underestimated the demand for sport-utility vehicles," Kuziemko said. "Everything indicates that the market is far from being saturated."