Despite suffering losses in numerous foreign markets, Ford Motor Co. (NYSE:F) still has reasons to be proud and remain optimistic, at least domestically: its Fusion model has taken the front-runner position among American cars in the top five best-seller list in the U.S., for the midsize sedan market.
The latest Fusion — a sleek, refreshed approach to Ford’s mid-range sedan — represents a growing force in the American auto industry. The vehicle is giving foreign car manufacturers a run for their money as auto sales continue to pick up after a multi-year slump. Ford’s flagship offers numerous options and perks that historically have been found in more premium brands, and its hybrid sibling brings superior fuel economy to the segment. The Fusion has been selling for higher prices than the other vehicles in its price bracket, but still far less than the luxury divisions, situating it neatly in between.
The Fusion still falls short of Toyota’s (NYSE:TM) Camry, the number one selling vehicle in the U.S. for the past 11 years, and Honda’s (NYSE:HMC) Accord. However, the success that the new Fusion has brought in its short life has sparked cautious optimism that American manufacturers will be able to compete against a weaker yen.
Higher prices and faster rates of sales over the Camry and Accord have caused Bloomberg analyst Kevin Tynan to believe that the model is more than just a two-month wonder, and that its performance may be more sustainable. “Ford’s turning them faster, they’re doing it at higher transaction prices and lower incentives, and the volume’s there,” Tynan said. “If volume was there but you see a decreasing trend in pricing or increasing trend in incentives, that would suggest maybe this isn’t sustainable.”
Jessica Caldwell, an analyst for all-things automotive source Edmunds.com, is not as convinced that the Fusion is the godsend that Ford needs. “Two months does not make a pattern,” said Caldwell. The car is “competing with the decades of dominance by Camry and Accord. Even though Fusion has sold well, the numbers don’t stack up.”
Caldwell noted that owners in the mid-size sedan segment rarely jump from model to model, and with millions of loyal owners on the road, Toyota and Honda are unlikely to lose their grip on the segment lead any time soon. However, if any American model has the shot, it’s the Fusion, which was outsold by Honda by 124 units in February — the smallest margin in 11 months.
Mid-size vehicles are a quickly growing segment, and is expected to swell to 33 percent next year, from 26 percent in 2009, according to researcher LMC Automotive.
“One of our problems is that we don’t have enough production,” said Amy Marentic, a marketing manager for Ford’s global cars. “This summer, our inventories are going to be tight. Our dealers are asking for more.”
Ford’s additional Fusion production could spell trouble for Toyota’s Camry. The Fusion took 35 days on average to sell in February compared to 38 for Honda’s Accord and 62 for Toyota’s Camry, Bloomberg Industries said in a report last month, citing Edmunds data. Fusion’s average transaction price was $26,586 in February, $2,772 more than Camry, Bloomberg said. To address the shortage, Ford has added a 1,200-person strong shift at its Mustang assembly plant in Flat Rock, Michigan, to build Fusions.
The Fusion is a landmark vehicle for Ford, which like other American companies, has been trailing as foreign companies continue to raise the bar. The new model shows that Ford can move the bar as well, and now the test will be to maintain that innovative power moving forward. Foreign rivals have not exactly been unprepared, and will give the new Fusion a run for its money as the economy continues to regain its health.
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