Ford's newest gamble

THE BALTIMORE SUN

Ford Motor Co. has rolled the dice -- again.

The company that 10 years ago bet its future on the Taurus' revolutionary design is gambling $2.8 billion on the car's first major overhaul.

A lot is on the line. Taurus has been the best-selling car in the country the past three years. And it is credited with bringing Ford back from the brink of bankruptcy.

While Detroit insiders say they think Ford has another big hit, the company isn't taking any chances. When the car officially goes on sale next week, it will be accompanied by the most expensive new-model advertising campaign in Ford's history.

Years of planning went into the new Taurus, and the design was not settled upon until after consumers in every region of the country had their say, said Philip M. Novell, general sales manager of the Ford division.

"We think we hit a home run," Mr. Novell said.

Time will tell.

"We are definitely in a period of high anxiety," said Edward E. Hagenlocker, president of Ford Automotive Operations. "We have given birth to a new creation, and the ultimate verdict rests with the consumer. They will decide if it's a success. We won't know how successful it is for another six months, when dealers have an adequate supply of cars in inventory."

That anxiety is not limited to Ford executives in Detroit.

"There's no doubt about it, everybody's on pins and needles," said Stanley M. Goldsberry, president of Archway Ford in Northwest Baltimore.

Although the design of the original Taurus was considered radical, it set the style for cars to come and proved that U.S. carmakers could compete with the best from Japan.

The new model goes even further. Its design offers a substantially more rounded look -- making the original seem almost boxy.

Initial reaction to the '96 model has been favorable. Automobile magazine wrote: "The first new Taurus in 10 years looks new, but not shocking. It drives better, but not differently. It's an evolution, not a revolution."

But will consumers like it? Ford is taking no chances.

The company will spend an estimated $110 million on an advertising blitz that will include spots for the Taurus on every prime-time show carried by the three major television networks.

"We are confident we have a good product," Mr. Novell said. "But we're not of the mode that we don't have to spend money to sell this car, that it will sell itself. That's how companies get into trouble. We are going to go after it like nobody had every heard of Taurus before and this is the most exciting thing to hit the market since the original Mustang in 1964."

Taurus has been the best-selling car in the U.S. since 1992, edging out the Honda Accord. Taurus sales totaled about $7.5 billion last year and are expected to top $9 billion this year -- accounting for one out of every four cars sold by Ford and the jobs of 10,000 assembly plant workers

"Vital is too strong a word, but this car is very important to Ford," said David Healy, an auto analyst with Burnham Securities. "It will not be the end of the company if the car doesn't sell well, but it sure would be a lot better for them."

Ford is more financially secure today than it was in the mid-1980s when, Mr. Novell readily admits, "We bet the farm on the original Taurus."

Ford ended 1994 with five of the eight best-selling vehicles in the country. Sales totaled $128.4 billion and the company earned a record $5.3 billion, double its profits from the previous year.

"Ford is gambling on the Taurus," Mr. Healy said. "The styling is quite radical. It will put a lot of pressure on their retail profits if Taurus is not a success and they have to push a lot of them through Hertz and the other rent-a-car companies."

Mr. Healy credits Ford's designers for their courage, but he's not certain how well the Taurus will be received by the public.

Mr. Healy said he first saw the new Mercury Sable, which is patterned on the Taurus design, at the Detroit Auto Show and he was amused by the reaction it generated.

"I was at the turntable, and the person behind me said, 'What a disaster. My God, they have ruined the car.' On the other side of the display I heard a couple other people talking and they said: 'What a beautiful car. They really hit a home run this time.' "

"They have done a good job on the new Taurus," said David E. Cole, head of the University of Michigan's Office for the Study of Automotive Transportation. "The only question I have has to do with its affordability.

"Taurus is a couple of thousand dollars more expensive than a comparably equipped Chevrolet Lumina. It is a far more sophisticated car than the Lumina, which is more what I would call basic transportation. Taurus is a more refined product, but are customers going to appreciate that added refinement for the added price?"

Like their customers, Ford will also keep a close eye on its finances. Mr. Healy wonders how profitable the new Taurus will be for Ford. The basic car, which is expected to represent 75 percent of unit sales, will be priced at about $19,390.

"Ford put a lot of sophisticated equipment in this base car, and they would like to have jacked the price up more than they did," Mr. Healy said.

"They would like to have sold it for $21,000, but the market is too competitive. I don't think they have recovered all of the price increase built into the new Taurus. They made about a $1,500 profit on the old Taurus. I doubt they will make as much on the new car."

At the top of the line is the LX model, which will have a sticker price of $23,445. It includes a 200-horsepower engine, bucket seats, anti-lock brakes, electronic temperature control, anti-theft system, premium sound system, gear selector in a console on the floor and leather-wrapped steering wheel.

Ford hopes the Taurus will take market share from the Japanese automakers. The car is designed to appeal to younger motorists, who might normally consider a Honda Accord or Toyota Camry.

"We are looking at the median age of the buyer of this car to drop 10 years from 55 to 45," Mr. Novell said. "With that we would position this car right in the middle of the market where the Japanese have been so strong."

In the past, though, the company has been unsuccessful in luring those consumers to the Taurus.

"It's going to be tough," Mr. Cole said. "They are going after young buyers who have often purchased imports. One of the problems they face is that the younger the customer, the less likely they can afford a $20,000 car."

Ford's move to take market share from the Japanese companies is not going unnoticed.

Toyota is working on a restyled Camry that is to come on the market next year. By cutting back on the number of parts, eliminating some gadgets and revamping production, the company is seeking to trim $1,000 off the price.

Mr. Cole said Ford and General Motors Corp. have gone in opposite directions in hopes of boosting their share of the intermediate-size car market. GM's tactic is to boost share by offering the lowest price with its Lumina sedan.

Ford is betting that consumers will pay a little more for cars with more technology built in, including stronger bodies, 100,000 miles between tuneups, a quieter, smoother riding car with a V-6 engine, power windows, and a front-passenger armrest that unfolds as a console with sections for cups, coins and audio tapes.

"Ford is betting a lot on its Taurus," Mr. Cole said.

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