Ford halts Melbourne Falcon assembly as demand drops off

[Struggo]

Originally Posted by Road_Warrior

Yep. Ford and Holden, despite being competitors are partners in the Australian automotive industry. If a car maker the size of FoA falls, it is going to mean a whole world of pain for Holden and the suppliers that provide parts for both of them.

True Road Warrior, but if FoA only produce 50,000 vehicles per annum, this only means Toyota and Holden need to find an extra 25,000 sales each either domestically or via export markets.

IMHO, that is achievable with the locally built Camry/Aurion and Commodore/Caprice/Cruze.

[DanielXR8]

Originally Posted by Ford_The_Win

Or they could just build cars properly that don't need new parts all the time?
Ford have burned a lot of people over the years by letting con artists run their dealerships and letting dodgy cars leave the factory. The pillocks in head office still think it's 1986 and Ford is everyone's default choice.

Exactly and even now, there is no signs from Ford Australia management that they get that.

If nothing else the drop in Falcon sales, gives them the perfect reason to get rid of a lot of the deadwood in their dealer network and rewrite the franchise terms for future dealers.

[Joe5619]

Originally Posted by bobthebilda

See, now your going where most games of chinese whispers go. You have changed $12 million to 12%. No one knows how much money Ford has invested in australia, so it would be impossible to convert anything into percentages.

You have misunderstood me.. I was just picking any % to show that we are pocket change to Ford no matter what Ford AUST does... It is nowhere near 12% OP.. I think they'd be luck to make 1% OP.. Anyone knows the net revenue number.. 12 million/ net revenue & we’ll have an OP %

[SteveJH]

Commodore could potentially be in an even worse position though. It cost at least twice as much to develop, though its partly being paid for by Camaro. Plus they are selling them at a much lower price then falcons.

So even if the Zeta/VE architecture makes money due to Camaro, unless they go to the Alpha (?) architecture next round, they might not be making enough to break even either.

Its all very interesting and with only access to the overall profit-loss Press Releases we can't really draw any conclusions.

[Sprint XR8]

Originally Posted by jpd80
2005 to 2009 Holden lost $574 million

2005 to 2008 Ford lost $240 million

Looks like all those Holden Exports and extra local sales have been losing money for years.

Originally Posted by Brazen

How can that be? Ford lost $274million in one year alone

Ford Australia:
2009 - $13 million profit
2008 - $274.4 million loss
2007 - $87.2 million loss
2006 - $40.3 million loss
2005 - $148 million profit
Total - $240.9 million loss 05-09

Holden:
2009 - $210.6 million loss
2008 - $70.2 million loss
2007 - $6 million loss
2006 - $146 million loss
2005 - $144 million loss
Total - $576.8 million loss 05-09

[DanielXR8]

Originally Posted by prydey

how much money are toyota making on that sale? no point selling cars for no profit.

When did the memo come out that the Australian car industry had decided the only smart people who knew economics would be working at Ford Australia?

[DanielXR8]

Originally Posted by Road_Warrior

Look, the future for the Falcon - if there is one - is as a niche performance and luxury product. As a niche product it will probably only sell in the numbers it is now. Ecoboost and LPI can take care of fleet stuff but will it be a case of too little too late?

Which means it needs an export base for the numbers to add up.

Hopefully the Mustang/Falcon stories prove true.

[Brazen]

Originally Posted by CoupeXB

Ford Australia:
2009 - $13 million profit
2008 - $274.4 million loss
2007 - $87.2 million loss
2006 - $40.3 million loss
2005 - $148 million profit
Total - $160.3 million loss 05-09

Holden:
2009 - $210.6 million loss
2008 - $70.2 million loss
2007 - $6 million loss
2006 - $146 million loss
2005 - $144 million loss
Total - $576.8 million loss 05-09

cheers CoupeXB, Jdp80 also posted those numbers elsewhere I think from memory. I dont really pay much attention to those figures as I know in that game we used to allocate a lot of cost to low-tax countries, ie inflate US engineering services to reduce our profit on various projects, or vastly inflate depreciation on capital assets. One day I'l write a book on it, it would be fascinating. Toyota OZ got stung badly recently because of it (transfer costs) unfairly in my book, as everyone does it.

Edit, I would like to add, the companies arnt 'cheating' as such due to Double Tax Arrangements, just which country they are allocating the cost to can be brought into question.

[jpd80]

Originally Posted by CoupeXB

Ford Australia:
2009 - $13 million profit
2008 - $274.4 million loss
2007 - $87.2 million loss
2006 - $40.3 million loss
2005 - $148 million profit
Total - $240.9 million loss 05-09

Holden:
2009 - $210.6 million loss
2008 - $70.2 million loss
2007 - $6 million loss
2006 - $146 million loss
2005 - $144 million loss
Total - $576.8 million loss 05-09

Thank you, even more compelling.

[Road_Warrior]

Originally Posted by DanielXR8

Which means it needs an export base for the numbers to add up.

This could be a role for the Ecoboost version in places like Singapore, Thailand (FTA), Malaysia, the UK etc that are very emissions sensitive places to register and own a car.

[Brazen]

Originally Posted by Road_Warrior

This could be a role for the Ecoboost version in places like Singapore, Thailand (FTA), Malaysia, the UK etc that are very emissions sensitive places to register and own a car.

Also some countries have a tax based on engine capacity, so the 2 litre EcoBoost would do well. I will contiunue to be very critical of the EcoBoost plan in lieu of a diesel Falcon program, but if exports were dependent on the Ecoboost in this current generation - then I'l gladly eat my hat.

[SteveJH]

Possibly a topic for a new thread, but do we know how much has actually been spent on developing FG Falcon and SX Territory as of now?

I mean...

Falcon:
FG 1 = $ x million
FG 2 = $ x million
Miami = $ 40 million
Ecoboost = $ x million
Duratec V6 (cancelled) = $ x million
Euro 4 = $ x million

Territory:
SX (including diesel) = $ x million

If we could work out exactly how much was spent on all this. It would be quite easy to work out how much ford would need to make per car to:
a. Break even
b. make a greater then 12% ROI over the life of the E8 platform

Also, does anyone know if FPV/Prodrive have looked into selling Ford Badged FPV's through Ford UK and Ford South Africa? Sales would presumably only be the GS and GT given that the I6 is much more of an orphan.

[Brazen]

Originally Posted by SteveJH

Possibly a topic for a new thread, but do we know how much has actually been spent on developing FG Falcon and SX Territory as of now?

I mean...

Falcon:
FG 1 = $ x million
FG 2 = $ x million
Miami = $ 40 million
Ecoboost = $ x million
Duratec V6 (cancelled) = $ x million
Euro 4 = $ x million

Territory:
SX (including diesel) = $ x million

If we could work out exactly how much was spent on all this. It would be quite easy to work out how much ford would need to make per car to:
a. Break even
b. make a greater then 12% ROI over the life of the E8 platform

Also, does anyone know if FPV/Prodrive have looked into selling Ford Badged FPV's through Ford UK and Ford South Africa? Sales would presumably only be the GS and GT given that the I6 is much more of an orphan.

I like where your coming from, although one thing I hated in manufacturing management accounting was the allocation of some resources. Ie. If we developed a product we would always allocate the engineers, buildings, various costs and resources time at an hourly rate to the development, even though we would have to pay for the engineers and leases and taxes and rates and electricity and deprecitation whether they were working or not!!! I always thought this type of accounting hindered development proposals.

So when Holden says it costs a billion to develop the VE, in reality it probably cost them a lot less as all the staff, buildings, projects, taxes, rates would have to be paid regardless of the VE - its just that the expense can be allocated when the development starts.

[jpd80]

IIRC,

FG I was around 700 million but the government threw in like $130 million
FG II /SZ Territory are approx $230 million both all up (includes DTCI, Ecoboost and Eco LPI.
Falcon Update for emissions, engine cost $21 million but Government threw in $13 million.


We did this exercise a few years ago and it worked out to around $4,000 a car over the product cycle.
The best you could hope for with an imported car is $3,000/car reduction but given the cost of freight,
local development costs and Ford pocketing the rest, I doubt you'd see too much difference.

[WOTDAH]

Don't know what has taken the media so long. Ford have been running 3 days a week since the beginning of Feb

[b0son]

Originally Posted by DanielXR8

Which means it needs an export base for the numbers to add up.

Hopefully the Mustang/Falcon stories prove true.

At best, we'll design it.

Are Ford US importing chassis for any of their cars? I cant see Ford US doing it if the volumes are at all significant.

[csv8]

Hindsight is wonderful!! but FG2, Ecoboost and LPG should have been out a year ago. Advertising should ramp up a notch or too. No more mr nice guy. Really hit the hybrids with the better economy ad etc..or its farewell Falcon hello Taurus

[Dr Smith]

Originally Posted by csv8

Hindsight is wonderful!! but FG2, Ecoboost and LPG should have been out a year ago. Advertising should ramp up a notch or too. No more mr nice guy. Really hit the hybrids with the better economy ad etc..or its farewell Falcon hello Taurus

I agree.

The problem is many things have changed to cause delays in some of these. Eg Tdi Terry was canned when Gorman took over and perol turbo brought out, tdi was due back around '06 (?), V6 was R&D's to replace local I6 meaning lilpg development was halted on I6 and not started yet on V6, then MB joins and V6 dropped, Geelong engine given a reprieve from closure and Falcon goes back to I6. Thus LiLPG program is restarted and now way behing original schedule plus some technical issues surfaced causing delay. Then Ford US makes an edict that ecoboost 4cyl must be used in all variants across the globe so Falcon program is announced when local Focus production is canned. And if I got that all right it's a mess of a situation at best. I didn't even mention wagon or lwb variants also being killed off.

I'm very fortunate to own and drive the best product Ford Australia has ever built in this country. The men and women who designed it did so on a budget that would cause laughter in a German car company as they joke and say "you do mean thats the powertrain budget only for 4 cyl models of our 5 engine range ... The problem is not enough Australians even consider it when shopping. Ford Aust doesn't have the latent loyalty of Holden and never will so just building the better car doesn't work. Hopefully the new Terry changes the "fuel guzzler image" which will filter down to Falcon. The new advertising bill-boards are specifically targetting this and as we know perception is difficult to break unless you go on the front foot and shout it out until you cause headaches. It's time to release the moths from the corporate wallet and spend big on marketing...for the whole range, regularly and consistantly....

From the moment my father brought home a brand new XW Falcon 500 wagon until when I suprised my wife when I brought home a G6ET (she expected a G6E) I've had Ford blood in my veins. It will be my preferred brand of choice regardless of who I know that works there (it does help though ) and maybe this is the shock-treatment that was needed.

[jpd80]

Call me insensitive but I would have been just as happy if Territory
had shared T6's two diesels and skipped the I-6 all together.

Still very pleased with the effort and refinement goals of the V6 TCDI but
I just think in a mostly I-4 diesel segment it might be pearls before swine...

[Road_Warrior]

Originally Posted by jpd80

Call me insensitive but I would have been just as happy if Territory
had shared T6's two diesels and skipped the I-6 all together.

Still very pleased with the effort and refinement goals of the V6 TCDI but
I just think in a mostly I-4 diesel segment it might be pearls before swine...

Insensitive bastard!!!!1!1one

I think the TD V6 gives it that extra selling point with economy. I would imagine it will also be capable of generating a rather handsome profit considering the diesel is a crate motor and bought in bulk through internal channels...not as profit-happy as the I6 though probably.

[BroadyFord]

http://www.theaustralian.com.au/busi...-1226018656636

MANUFACTURING: Ford has refused to rule out more down-days at its Melbourne factory as sales of its locally built cars plunge ahead of long-awaited upgrades.
A 31 per cent fall in demand for Falcons and Territorys this year -- equivalent to 2400 cars -- has forced the company to schedule six down-days over three weeks this month. It follows the worst year ever for Falcon, with fewer than 30,000 buyers in 2010, after delays in introducing its new liquid petroleum gas-powered models and the deletion of the Falcon wagon.

Chief executive Bob Graziano said it was crucial that Ford did not build more cars than it could sell, and it would rebound from the downturn.

"The first half of the year may be difficult," Mr Graziano said yesterday. "We don't have LPG (in the Falcon) and we're in Territory run-out, and the rental market was down significantly.

Start of sidebar. Skip to end of sidebar.
.End of sidebar. Return to start of sidebar.
"We're trying to ensure that we're matching our production to demand."

Mr Graziano said the Melbourne factory would ramp up again as it switched to produce the new Territory at the end of the month. The long-overdue upgrade fits a diesel engine into the SUV for the first time and Ford expects its lower running costs to boost sales when it reaches showrooms in May.

A more efficient four-cylinder engine is also being fitted into the Falcon, although deliveries are still six months away.

The engine projects are part of a $230 million investment in upgrades for the cars, backed by $42m from the government's green car fund. Both new engines are imported and Mr Graziano refused to comment on the impact for Ford's Geelong engine factory, which will continue to build the six-cylinder petrol engine offered in both cars.

[billy302]

I live in Perth and last week went to Rotto for the weekend. Haven't been there for a while. There was less than half the people on the island that you would normally see. Even Thomsons bay was empty, no boats. I spoke to the publican at the pub and he says this is the new normal, people are not spending the way they used to. In Perth anyway. Property values have fallen markedly. Car sales have dropped too. 2010 was a bad year for car sales in Perth.
What is my point. People are not buying anything at the moment.

[Gobes32]

Originally Posted by billy302

What is my point. People are not buying anything at the moment.

Someone give this bloke a medal. When you take away all the marketing, smoke and mirrors, etc, this is the main problem. I don't buy new cars because I cannot afford it, much like the rest of the nation. In my opinion, that is one of the biggest reasons for the downturn we are experiencing?

[winovin]

Car sales in Australia are relatively strong - 80,896 in February, so down 1.6% over 2010, and an annualized rate of 970,000.

http://www.caradvice.com.au/107997/f...off-2010-pace/

The Falcon is about as cheap as it has ever been on a relative basis - the G6 Limited Edition is advertised at $34,990 drive away, with 6 speed ZF auto, 18" alloy wheels, leather upholstery.

As to comments about culling the dealer network, some areas already have a shortage of dealers - inner Sydney has no Ford dealers - between Parramatta and the City there are none - City Ford moved out near the airport, so anyone that lives close to the CBD doesn't have a convenient dealer, either for purchase or for service.

[stang65]

Yes but as per your link

"While large cars are down 22.8 percent this year, medium cars are also slipping out of favour, with sales down 13.4 percent."

[SteveJH]

Originally Posted by winovin

As to comments about culling the dealer network, some areas already have a shortage of dealers - inner Sydney has no Ford dealers - between Parramatta and the City there are none - City Ford moved out near the airport, so anyone that lives close to the CBD doesn't have a convenient dealer, either for purchase or for service.

What, so you have to drive half an hour out of your way to see a car dealer? How sad.

I'm sure you'll live.

[winovin]

Originally Posted by stang65

Yes but as per your link

"While large cars are down 22.8 percent this year, medium cars are also slipping out of favour, with sales down 13.4 percent."

I agree - my response omitted the quotes from billy302 and Gobes32, so was in reference to the comments that people are not buying cars.

Quote:
Originally Posted by billy302
What is my point. People are not buying anything at the moment.


Someone give this bloke a medal. When you take away all the marketing, smoke and mirrors, etc, this is the main problem. I don't buy new cars because I cannot afford it, much like the rest of the nation. In my opinion, that is one of the biggest reasons for the downturn we are experiencing?

[Bossxr8]

Ford will have to manage Falcon numbers until July when LPi comes on line. It should be enough to boost numbers closer to where they were, then FG MCA will come later as well as Ecoboost, so hopefully its only temporary. I don't know why people are saying the Falcon is finished, wait until the end of the year when the updates and new engines come on stream and then make a judgement, its pointless doing it now.

Territory is just about ready to go so no problems there. SYII will finish up next week.

[#Russ#Es#]

Originally Posted by SteveJH

What, so you have to drive half an hour out of your way to see a car dealer? How sad.

I'm sure you'll live.

Given the number of people that work in the CBD, travelling 30 mins just to get to a dealer isn't great. Given where City Ford now are (Mascot), public transport isn't great (using private train line = $$$), it isn't convenient for people who work in the CBD to drop their car off for a service then walk to work. Might seem trivial, but having the Ford brand exposed to a lot of people is a good thing.

[#Russ#Es#]

Originally Posted by Bossxr8

Ford will have to manage Falcon numbers until July when LPi comes on line. It should be enough to boost numbers closer to where they were, then FG MCA will come later as well as Ecoboost, so hopefully its only temporary. I don't know why people are saying the Falcon is finished, wait until the end of the year when the updates and new engines come on stream and then make a judgement, its pointless doing it now.

Territory is just about ready to go so no problems there. SYII will finish up next week.

As much as the media still enjoy creating a picture of doom and gloom for Ford Oz, it is a very exciting time to be a Ford fan.

Given so many of us have followed new products coming out for some time now (new Ranger, new Focus, FG2, Territory, Coyote, etc), its easy to be critical when we know there are (hopefully) better times around the corner.

We all want to see more new Ford's on the road, but the decisions made by management over the past 12-18 months do seem to be making Ford Oz profits - by this time next year they should be in a better position to increase sales.

As has been mentioned here a few times, Ford Oz aren't the best at blowing their own trumpet, so whilst its frustrating when it appears sales are poor/Falcon (and Ford Oz) future is in doubt, I guess we need to trust management will continue to make the right choices.