Is Ford’s Alleged 2010 Fusion Shortage Guerilla Marketing or Legitimate?
By Chris Haak
Over the weekend, we received word from a few sources that Ford is simply running out of 2010 Fusions, and simply cannot make enough of them to satisfy demand. A typical story:
Thanks to all the great reviews for the 2010MY Ford Fusion and all the positive media attention given the Fusion and Ford, it looks like the Fusion is finally starting to gain some traction. Unfortunately, for some of us Ford Dealerships, Fusion inventory is hitting a critical stage. My Connecticut store had been advertising 2009 Fusions from November 2008 through late April 2009, almost exclusively on TV at a total cost of over $100,000. Last month the store sold 16 Fusions, mostly 2010’s, and we have only 6 left in stock and only 3 more that are due to arrive this week. After that, we’ll have allocation for only 2 more 2010 Fusions based on the most recently completed “wholesale” done last week. Ford offered us 2 Fusions for the next production cycle and we asked for an additional 8 but were informed by our Ford Zone Manager that we would only get the 2 Fusions offered as the plant is already working overtime and no additional units are available.
As such, it seems that Ford should consider retooling a 2nd plant for Fusion production if it’s not already in the works. Perhaps it’ll be a PR announcement soon amongst those that Ford is orchestrating so well.
You know what? The shortage is non-news, and part of the normal launch of a new model. Ford can’t snap their fingers and expect 50 Fusions to show up in dealer lots overnight. Eventually, as with 99.99% of all cars, the supply will catch up with demand in a couple of months (if not less) and you’ll be able to buy as many Fusions as your heart desires at your local dealer.
Ford’s marketing Chief Jim Farley is a brilliant creative mind, and I wouldn’t be surprised if these stories were his brainchild. We’re not talking about limited-production cars, here – we’re talking about $20-25k, garden-variety midsize sedans. Most Fusions will probably come with four cylinders, automatic transmissions, and cloth seats. Not the type of car to wait in line for overnight at a dealership, or to put a $5,000 deposit on.
The idea that Ford might want to retool another factory to increase production of the Fusion would be just about the most stupid thing the company could possibly do right now. This is not a reflection of Fusion demand suddenly exploding, but simply an example of the well-received 2010 Fusion’s production and launch not leaving enough vehicles in the pipeline to meet initial demand. In fact, high inventories of the 2009 Fusion, Milan, and Zephyr late in 2008 caused Ford to decide to shut down the trio’s Hermosillo, Mexico plant for all of January 2009, in spite of the need to produce the new-for-2010 models of all three cars. Volume production didn’t really begin in earnest until February for the three cars.
Sales figures for the Fusion were up a healthy 9.3% in May 2009 vs. May 2008, but year to date, Fusion sales are down 13.1% (not as bad as the overall market by any stretch, but still not evidence of the need for more Fusion production). Milan and MKZ sales were both significantly lower both year to date through May 31, and during May 2009. Overall, Ford has sold 86,778 Fusions, Milans, and MKZs through May 31, 2009, while it sold 106,675 of the same cars through May 31, 2008, which is an 18.7% decrease.
On the production side, Hermosillo has produced 58,384 Fusions through the first week of June, 2009, while in that same period, it produced 90,398 of them. The plant also produced 8,314 Milans during the same period in 2009, against 15,653 in 2008, and 7,309 MKZs in 2009 and 16,217 in 2008. Basically, the shortage is coming from production falling significantly. Year to date 2009 production of the three cars at Hermosillo was 74,007 units, while it was 122,268 units in the same period in 2008. That’s 48,261 fewer units produced in 2009, or a 39.5% production decline.
It’s not that Ford needs more capacity for the Fusion – if it produced the car at even last year’s pace (or a little behind it), there would be no issues with demand exceeding supply and dealers not being able to find cars for buyers.
This is not a new phenomenon that is unique to the 2010 Fusion. When the Pontiac Solstice and Saturn Sky were launched, it was impossible to find the cars and dealers were tacking $5,000-plus markups on them. Those cars are now in abundant supply and their assembly plant in Delaware is being closed under GM’s bankruptcy. The 2006 Chevrolet Corvette Z06 was easily fetching six figures at many dealers at its launch, and now can be yours for just $64,495 (includes GM loyalty rebate). The Fusion example is another reason why I don’t let dealer markups bother me. By nature, I’m not a patient person, but knowing I could save thousands – if not tens of thousands – of dollars on a new car by waiting three months, I become far more patient than normal. Dealer markups offend me, but they also don’t affect me. The prices will come down after the gotta-have-it effect wears off, or those marking-up dealers won’t be selling that car.
So if you want a new Fusion, just wait a few months. And if you’re Ford, please don’t spend $600 million to retool another factory to build Fusions just for a short term supply problem.
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