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It's thanks to an expanding truck market, expectation for relatively low gas prices and changing customer tastes
What took Ford so long?
That was the question on the lips of many industry watchers after Ford Motor Co. confirmed two well-known nameplates - the Ranger mid-sized pickup truck and a Bronco sport-utility vehicle offshoot - would return to the U.S.
The answer, according to company officials and outside experts, is a combination of an robust truck market, an expectation for relatively low gas prices and changing customer tastes built on a slimmed-down pickup.
Ford's strategy is part of an industry-wide push to bolster trucks and SUVs as consumers turn their backs on smaller, more fuel efficient cars. But the approach also carries risks, including the possibility for a spike in gasoline prices that could turn off customers from larger vehicles.
A union official last fall confirmed to the Detroit Free Press months ago that the Ranger and Bronco would both be built at Michigan Assembly plant in Wayne. But it took until Monday for company officials to acknowledge those plans at the North American International Auto Show in Detroit.
The Ranger, which is currently available in some foreign markets, will hit U.S. showrooms with new styling and powertrain options in 2019. The Bronco will return to dealerships in 2020.
"The bottom line is we have these two iconic nameplates in two segments that are growing," Fields said in an interview, describing the decision as "part of our strategy of keeping our core business healthy."
For four decades, Ford has had the best-selling truck in the U.S. with the F-150 and worried how other truck offerings might crimp sales of the signature brand.
"Ford has long argued that the size and price of the Ranger – so close to the F-150 – would create too much crossover, pulling away buyers from its best-selling and most profitable model," Mike Ramsey, Research Director at Gartner, Inc. "But a few things have changed over the past several years."
In market research, potential customers told the automaker they would not necessarily choose a truck because they were just seeking improved fuel economy or didn't need the capability of the full-size F-150.
Size matters, they told the automaker, and they simply wanted smaller.
"It was much more about physical size (and) that was a little bit different than what we have been hearing from the customer," Ford Chief Executive Officer Mark Fields told Wall Street analysts at a meeting in Detroit last week. "And so that’s why we think it’s a great opportunity and it’s actually not a cannibalization of the F-150, but the incremental opportunity because of the size of the vehicle."
Ford Chief Financial Officer Bob Shanks argued the truck market has changed.
"At the same time, that segment is up about 50% over the last five years or so," Shanks said. "And the other thing is we have a huge owner base. I mean, keep in mind, the last Ranger we sold was the end of 2011. So, there is still lot of folks out there that love Rangers and between that and the market changes and listening to customers, we just said now it’s the right time."
When GM re-introduced the Chevrolet Colorado and GMC Canyon, many were skeptical of its success. Ford was wary too.
"The F-150 is its most important vehicle and they didn't want any vehicle in their line stealing sales from it. Also the segment had dropped dramatically in sales volume. Many did not expect it to bounce back," Michelle Krebs said.
GM officials today acknowledge they felt the pressure.
“I took a lot of heat, from a lot of people who said that (midsized pickups are) completely dead," said Mark Reuss, GM's Executive Vice President for Global Product Development."
But as full-size pickups bulked up and raised prices and Reuss said the automaker saw an opportunity with younger buyers seeking a less expensive options.
"That strategy has really paid off.” he said.
General Motors is currently the number one pickup truck brand in terms of sales in the U.S., a fact that irritates its crosstown rival.
"That isn't something that Dearborn likes," Dave Sullivan, a product expert at AutoPacific, said. "Ford wants to not only have the best selling nameplate, they also want to sell more pickups than anyone else."
But the road back for Ranger and Bronco has been long and winding road.
Six years ago, Ford confirmed that it would not sell the next generation of the compact Ford Ranger pickup truck in North America after 2011.
There was raging debate about the Ranger internally," Michelle Krebs said. "Many thought resources could be better used" for cars and SUVs for cars (under Mulally) and sport utilities. I am guessing gas prices were a consideration. No one expected them to go this low for so long.
However, a larger version of the Ranger that will be sold in all markets outside North America will be unveiled Oct. 15 at an auto show in Sydney, Australia.
Company officials argued the new version of the Ranger sold outside North America was too close to the size of the F-150. Ford, which has been trying to simplify its global lineup, decided several years ago to eliminate the U.S.-made Ranger in North America and expand the capability of its F-Series pickups.
Rangers became available in the U.S. in 1982, and sales here peaked in 1999, at slightly more than 348,000, according to Ward's AutoInfoBank. But only 55,600 sold last year. So far this year, 35,029 have sold.
The Ranger is made at Ford's plant in St. Paul, Minn., where production will end in 2011.
Ford originally planned to close the St. Paul plant where U.S. Rangers are made in 2008, but the company delayed the closure until fall 2011. The factory employs 750 workers.
Ford officials remain quiet on specific nameplates, but speculation is growing that one of the four new SUVs the company intends to launch by 2020 will revive the Bronco name on a Jeep Wrangler-like vehicle sharing the same underpinnings as the next Ford Ranger midsize pickup.
According to details that leaked during UAW negotiations last fall, the two models will be built at the Michigan Assembly Plant in Wayne. That plant currently builds Ford's Focus and C-Max hybrid and plug-in hybrids, production of which is moving to Mexico.
Thanks to moving car production to Mexico and other moves, "Ford will have the capacity to build more trucks." In short, it took a while to move product around to make Ranger happen
"I think the end of the Ford Bronco coincided with an increased interest in four-door utility vehicles rather than less useful two-door personal statement vehicles like the full-size Chevy Blazer and Ford Bronco," Brian Moody, Executive Editor at Autotrader, said. "With an over-abundance of utility vehicles available today, shoppers are looking to stand out from the crowd."
The current SUV market, he added "is crowded with 'me too' vehicles that are long on utility and short on personality
GM’s brands are far and away the leader in terms of retail segment share, which is our focus
Ford will be entering a market with formidable competitors for its new Ranger, according to Moody.
"Given the excellent Toyota and Chevrolet mid-size trucks and an upcoming new Nissan Frontier, the Ford Ranger really needs to beat the competition in some significant way - price, towing, off-road, somehow the Ford needs to stand out compared to a small group of mid-sized pickups that do a lot well," Moody said.
Ramsey however argues Ford was smart to wait.
"If fuel prices rise to $4 a gallon, Ford is counting on its separate investment in hybrids and electric cars to soften the blow from weakened demand for bigger vehicles," he said.
