Will Ford Profit in 2010?

While Ford Motor Co. stands alone as the only American automaker that didn’t solicit bailout money from the U.S. government and subsequently file for bankruptcy protection, it was far from unscathed. And as the No. 3 manufacturer of vehicles tries to save an eroding market share on the heels of perhaps the worst year for the industry, environmentally aware and African American consumers could play a pivotal role in its future.

With the industry still in a state of flux and consumer demand remaining questionable, Ford sees the minority space–and, of course, the environmentally conscious consumer–as areas of increasing importance as it looks to regain lost market share. “The great thing about Ford, particularly in the last year where everyone else cut multicultural marketing–our spending actually went up,” says Crystal Worthem, manager of Multicultural Marketing at Ford. “We do the print ads and TV and try to find ways to communicate with the customer to help change their mind, and we’re especially doing it in the African American community.”

Expanding minority-owned and -operated dealerships in minority communities is key to Ford increasing auto sales, says McGrath. “There is an opportunity to become a dominant presence in minority neighborhoods if [minorities] invest in it. It tends to be an underserved market,” he says.

All told, African Americans spent $11.5 billion on new car sales, using an average retail price of $20,000 per vehicle, according to Marc Bland, multicultural marketing lead for R.L. Polk, a provider of automotive information and marketing solutions.

Ford’s Worthem says the best way to speak to those consumers is through one-on-one relationships and the company has responded to that trend. “So from awareness to purchase consideration all the way down to sales, they’ll take a look at you when you’re at those one-to-one events more often than somebody from the general market. Ford realizes that the African American market is critical to us selling product and driving profits.”

These marketing strategies come on the heels of a steady rise in competition–primarily from Asian companies–and a shift by consumers away from the more profitable large pickup truck and SUV

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segments to smaller, less profitable crossover utility vehicles (CUVs). According to Standard & Poor’s, this shift has led to a steady erosion of Ford’s U.S. market share that the research firm says is likely to continue to hurt market share until the company can introduce more of its own CUVs.

On the green front, Ford has committed to produce half a million Ford, Lincoln and Mercury vehicles annually using EcoBoost Technology in North America over the next five years. EcoBoost uses gasoline turbocharged direct-injection technology–which takes waste energy from the exhaust gas to drive the turbine. This gives the car up to 20% better fuel economy and 15% fewer carbon dioxide emissions versus larger displacement engines. “I think we are getting a lot of credit for not only having fantastic vehicles that people want to buy that are really fuel efficient, but from an environment standpoint [we] are also doing it in a more environmentally conscious way,” says John Viera, director of sustainable business strategies at Ford.

Although Ford finished 2009 profitably, it wasn’t without its share of sacrifices over the past few years. In December 2005, Ford sold its Hertz Corp. unit for about $15 billion. In June 2008, it sold Jaguar and Land Rover to Tata Motors for $2.3 billion and reduced its stake in Mazda from 33% to 13.8%. In December 2009, Ford announced plans to close the sale of its Volvo unit to China’s Zhejiang Geely Holding Group Co. Ltd. in the 2010 second quarter.

Even still, Bland predicts that Ford will increase its market share both overall and specifically in the African American segment. For one, Ford’s Lincoln brand was ranked No. 2 for African American brand share in 2009, according to statistics from R.L. Polk.

And although the Ford brand ranked No. 13 for African American brand share, the Ford Motor Corp. ranks No. 1 for African American loyalty, based on R.L. Polk’s evaluation of return customers. Also,

of the top 12 makes and models for African Americans, the Ford Fusion is the only vehicle to sell more units in the model year of 2009 than they did in 2008. “The market overall was down in 2009 and somehow they found a way to sell more units to the African American community that year than the previous year,” says Bland. “That is a strong indicator that there is a high affinity for the Fusion in the African American community.”

In terms of the general market, McGrath says that the “Toyota debacle” involving the competitor’s recall of faulty vehicles, will definitely open up more market share for domestic manufacturers, giving Ford a chance to increase market share. “There is a lot of positive momentum and consumer buzz about Ford,” says Bland, who based his forecast on the 2010 North American International Auto Show where Ford won quite a few awards. “That leads me to believe they are primed to do some really good things in 2010.”