Just to Clarify

Detroit, Hybrids and EVs

As I toured the Detroit Show earlier this week, I was struck by the sheer volume of announcements touting EVs and hybrids. 

Of course, these are announcements that are likely to garner the most headlines and the automaker’s PR people know this well.

But the truth is that these vehicles, as exciting as they are from a technological perspective, are still very much on the fringe of the marketplace.  (Even with hefty tax credits available for high battery capacity vehicles.)

Despite the impressions created by current headlines, the most popular vehicle in America today is the Ford F150 pick up.  Knowing this, I was interested in Ford’s announcement that they'll be  bringing their Ecoboost V-6 engine to the F-150.  (Ecoboost features advanced valve timing, turbo chargers, direct injection and other tweaks to essentially match the power of a V-8, but with weight savings and most importantly better fuel economy.  The extra cost over a V8 is around $700.)

Entering the Ford stand, there were huge displays for the Focus EV.  It took some hunting before I was able to see the F-150s, off in one corner.  But finding info on Ecoboost was even harder.  I found some engines on stands, but precious little on comparisons between the 3.5 liter Ecoboost V6 and a comparable V-8.

I mention all this because, in terms of real world impact, advances in the internal combustion engine can result in far greater overall fuel savings than the introduction of more EVs or hybrids.  (Higher costs and smaller sized vehicles have so far limited their popularity.)

For these fuel savings to be realized, the manufacturers need to tell this story.  Not just Ford, with Ecoboost, either.  GM has a great V6 with direct injection and around 300hp available for the Camaro, CTS and others.  With the Camaro it actually improves the overall performance of the vehicle due to significant weight savings.  There are also the Chevy Cruze and Hyundai Elantra, which both offer 40 mpg high.  

A variation on this theme is diesel.  Also benefiting from advanced technology, diesels from VW, BMW, Audi and Mercedes are climbing up the sales charts—especially when offered in an SUV.  (Sales gains achieved despite diesel's higher costs.)

Visit the auto shows and the headlines will be about EVs and hybrids.  But take the effort to learn about advanced versions of traditional power plants.  They're where the real action is.

Ford's Great Earnings

Ford announced earnings today that continued a trend for the year: They are nicely profitable in a market with sales stuck at low levels.

It is interesting to note how two years ago, when faced with some of the worst sales in recent memory, the U.S. industry cut capacity, restructured and raised prices.  (Through cutting incentives.)

Ford is not the only car company to show these efforts are paying off.  But they do seem to be doing a bit better than almost everyone else.

I have been fielding calls today asking why.  Is it better a product?  Partially.  Ford has been introducing a product that is competitive, but not necessarily segment leading.  (Although SYNC is a nice differentiator.)

Is it because they were able to avoid bankruptcy?  Again, partially.  This was a PR win, but also means they have to deal with a higher debt load than GM or Chrysler.

Better marketing?  They have had a few visible successes, but looking more deeply, their marketing might actually be viewed as more conservative than their competitors.

The big thing Ford has going for it right now is consistency of management.  Alan Mulally has been there long enough to be making a difference.  They have been implementing his plan, with relentless focus, and with the same team in place before, during and now as a recovery seems underway.