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  (Source: Paul Stamatiou)
America's second largest automaker is targeting smaller vehicles, gunning hard for baby boomers and Gen Y buyers

At a press event on Friday, Ford Motor Comp. (F) unveiled its new advertising plan to target 160 million Americans that fall into either the "millennial" (aka "Generation Y"; born in the early 1980s to early 2000s) or "baby-boomer" (born between 1946-1964) generations.

I. Ford Guns for Gen. Y, Plugs Zipcar Partnership

Ford's new campaign will focus on the so-called "super segment" which includes small cars, midsize sedans, and small utility vehicles.  The segment accounted for only 35 percent of Ford sales in 2004, but as customers have moved towards smaller vehicles Ford today sees it account for 50 percent of sales.

The automaker has excelled in recent years, behind only General Motors Comp. (GM) in U.S. sales.  In fact, all of the U.S. automakers have done well -- Chrysler LLC is in third place, while Toyota Motor Comp. (TYO:7203) and Honda Motors Comp., Ltd. (TYO:7267) have fallen behind in U.S. sales.  Strong growth in the super segment has saved Ford, sustaining its U.S. growth, while sales have slumped in Europe.  "Super segment" models include the (re-introduced) Fiesta, Focus, Fusion, and Escape.

The automaker acknowledges that the large millennial generation represents a risk, with more of them living with their parents or having lower incomes, but says it's confident it can appeal to them as they settle down and have children.

Ford's Group Marketing Manager Amy Marentic remarks, "Millennial want a vehicle that looks great, but at the same time are sensitive to things like value, fuel efficiency, technology.  [They're] not going to be brand loyal to what their parent did.... When they drive up to the club they want to look fabulous... Just like their cell phone, just like their shoes... they want their car to make a statement about them."

The company views its partnership with Zipcar Inc. (ZIP) as a crucial piece of effective advertising to Generation Y buyers.  Ford Sales Analyst Eric Merkle says that when Gen. Y buyers graduate from colleges they're used to driving Ford via Zipcars, which mostly are Ford Focuses, with a few Escapes mixed in.  

Zipcar is a key partnership for Ford's Gen. Y appeal. [Image Source: Kelvin Ma/Bloomberg]

He says that some will move to cities -- where more Ford Zipcars await -- while others will opt to move to the suburbs and buy a vehicle for commuting.  He says those buyers are more likely to buy a Ford.

In total, Zipcar's Ford fleet logged 2.2 million driver hours last year, with about 700,000 drivers.

II. Manuals Seeing Strong Sales Among Younger Drivers at Ford

In an interview Eric Merkle was asked about how Ford would react to manual drivership decreasing in younger buyers.  Mr. Merkle disputed that premise stating, "Oh no, [Millennials] do really like to drive manuals.  I really think that you're starting to see the manual starting to come back."

He supports his claim with sales figures.  He says approximately 12 to 23 percent of Ford Fiestas sold per month (as many as 1 out of every 5 sold) and 9 to 17 percent of Focuses sold per month come with manuals.  

Manual Transmission
Around one in five Focus and Fiesta buyers pick manuals some months.
[Image Source: Automobile Magazine]

While he did not cite a breakdown by generation, the Focus and Fiesta are cars that are thought to do quite well with Gen. Y buyers, so his claim may well be accurate.

Ford views its chief competitors in the super segment -- particular in the manual sales -- as Mitsubishi Corp. (TYO:8058), Fuji Heavy Industries Ltd. (TYO:7270) subsidiary Subaru, and Volkswagen AG (ETR:VOW).

III. Ford Blasts Back at Critics of MyFord Touch

Mr. Merkle also commented, "[With Sync/MyFord Touch] we didn't want the vehicle to become the cell phone; we wanted to integrate seamless with the cell phone."

I asked Ms. Marentic about Ford's struggles with harsh criticism from J.D Power and Associates and Consumer Reports regarding its graphically overhauled MyFord Touch infotainment system.

MyFord Touch
MyFord Touch in the F-Series. [Image Source: Jason Mick/DailyTech]

She defended Ford's strategy, acknowledging that much like the smartphone, the system started with some bugs, but has gained from continual patches/improvements.  She also asserted that Ford's customer satisfaction surveys consistently rank vehicles sold with MyFord Touch above those not sold with it.

I asked her why the disconnect then, by Consumer Reports, when they are supposed to predict how consumers will react to a vehicle in terms of satisfaction.  She responded, "That's true.  That sounds like a good question for Consumer Reports."

Responding to my inquiry about whether the criticism would soften amid competitors like GM introducing similar technologies in their vehicles, she predicted it likely would, commenting, "As the first mover you get a lot of love, and you get a lot of criticism.  But everybody's going there [to infotainment].  It is the future."

IV. CAFE Quandaries and Looking Ahead to the 2014 Fiesta Mix

I asked Ms. Marentic if she worried about the demand for smaller vehicles to backfire if it flips in coming decades, as automakers may have grown more complacent with regards to tough CAFE increases, such as President Obama's 54.5 mpg 2025 target.  She said she didn't think so, arguing that Ford is always an industry leader in fuel efficiency.

The advertising campaign will kick off not long before the new 2014 Fiesta ST -- a performance-geared variant of the popular front wheel drive (FWD) subcompact  -- hits dealerships the new Fiesta ST "hot hatch" hatchback will be driven by a 1.6L EcoBoost four-cylinder engine, with 197 hp and 214 lb-ft of torque, feeding into a six-speed manual transmission with overall steering ratio of 13.6:1 and increased roll stiffness at the rear axle.  The hatchback is currently the sales leader in Europe in its segment.  

2014 Ford Fiesta
2014 Ford Fiesta ST

Ford will also introduce a new fuel efficient 1.0L inline 3-cylinder EcoBoost Fiesta later in the fall. The engine block of the I3 is light enough to carry onto an airplane (around 50-60 lb, according to estimates).  

Ford Fiesta
Ford Fiesta's 1.0L engine block takes a trip through airport security as a carry-on.
[Image Source: Ford via AutoBlog]

The petite engine is expected to produce around 123 hp and 148 lb-ft of torque.  It bumps the highway fuel economy to 40 mpg.  The new 2014 Fiesta models pack an improved MyFord Touch screen.

Ford's hybrids (Fusion, C-Max) have been seeing strong sales, although its Focus Electric battery electric vehicle has seen tepid sales, forcing deep discounting.

[A special thanks to web-designer and photographer Paul Stamatiou for the shifter shot.  

Sources: Ford [1], [2]

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RE: I'm in the market for a Manual 6-Speed.
By Darksurf on 3/23/2013 4:23:54 PM , Rating: 2
As fun as those may be, Gas mileage is less and Cost is high :( . This is one reason I'm looking into the Veloster Turbo and now the Ford ST series... More affordable. I also drive 1.5 hrs to work every day, then drive 1.5hrs back home. So when I need parts, they'll be much cheaper than Subaru parts. Where I'm from, its not uncommon to have a car reach 400,000 miles and you trying to keep it on the road and out of a junk yard.

RE: I'm in the market for a Manual 6-Speed.
By Reclaimer77 on 3/23/2013 7:32:18 PM , Rating: 2
High cost? There's pretty much nothing that comes close to the performance, safety, and practicality of the WRX/STI models for the money. Many magazines have agreed they have the 'best bang for the buck' out there.

Where I'm from, its not uncommon to have a car reach 400,000 miles and you trying to keep it on the road and out of a junk yard.

Than I wouldn't pick ANY of these vehicles. Boosted 4 bangers aren't exactly known for their fuel economy OR long-term reliability. I love the punishment the Subaru turbo boxer engine can take, but no way I would sit here and tell you 400k miles without major maintenance is going to happen. And I doubt Ford or Hyundai (of all people) could tell you any different.

RE: I'm in the market for a Manual 6-Speed.
By Spuke on 3/25/2013 2:28:26 PM , Rating: 2
Boosted 4 bangers aren't exactly known for their fuel economy OR long-term reliability.
Betcha I get better fuel economy than you do. :) And I have 120K miles of daily driving on mine too. I happen to think GM's implementation of DI and turbocharging is the best IMO. Their cars don't have issues with meeting their fuel economy numbers either. That said, I don't think reliability on these newer engines will be an issue. Most are way overbuilt for the tiny amount of boost they're running.

By chick0n on 3/26/2013 1:51:04 AM , Rating: 2
That's what they said about GM cars 10 years ago (like how reliable they are, how good they handle, blah blah blah)

but then 3-5 yrs later or 100+k miles, the car got so much problems and they just got so pissed over GM ...

GM never learns, why should they anyway? cuz no matter how garbage they are, every time when they're about to fold, the government gonna bail them out :)

history just gonna repeat itself.

By wrxtunr on 3/25/2013 11:44:02 PM , Rating: 2
I would have to say if you want the best bang for your buck and you realize that quality oil goes a long way towards a cars reliability then look into the wrx. Hell even used ones. Currently I drive an 04 wrx wagon, got it with 156miles on it for 24k out the door...i know people that got used maximas for more than that lol...the sticker said 18/25 mpg and now with 285k on the odo and my own personal tune for the past 220k i average close to 33hwy and 30 mixed with the 5spd. Only 2 clutch replacements (one by the dealer due to defective part) and absolutely no other mechanical problems. The ej series engines are some of the stoutest engines i have ever had the joy of owning. And last point, the great part about subarus are that most every part is interchangable from all of their models making parts extremely easy to find and usually not very expensive. Dont let yourself look away from such a great line of cars. I can say whenever a road opens up and I select a gear and mash the gas and the little td04 spools to 19.5lbs i still get a smile from ear to ear that not many other cars have given me unless spending more than 2x the price. And at this point i will end my wrx love story :-)

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