Major Autos Duke it Out Over Midsize Sedans
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In a desperate effort to compete with rivals, Ford (NYSE: F) has pulled a few surprises from its bag of tricks. Ford’s launch of its new 2013 Ford Fusion is turning heads.
For starters, CEO Alan Mulally appeared in Times Square for a recent “CBS This Morning” with American Idol host Ryan Seacrest. At the event he gave away one of the new vehicles.
Shaped more like a BMW than a Ford, the new Fusion is expected to be Ford’s saving grace. Ford invested hundreds of millions into creating the vehicle, and it hopes to roll out virtually the same car throughout the world. The car is appearing in almost identical form in North America, Europe, and Asia, though it is sold under different names depending on the locale.
Ford hopes that the new vehicle will challenge competitors for the 25% share of the auto market that is spent on midsize sedans. Tackling a market traditionally owned by Honda’s (NYSE: HMC) Accord and Toyota’s (NYSE: TM) Camry, Ford is attempting a daring feat.
Sizing the Competition
Laced with competition, capturing the midsize sedan market is a challenge. Toyota’s Camry is the market leader through August 2012. During those eight months, Toyota sold 280,536 Camrys. The 2012 Camry, starting at $22,055 gets 25 miles to the gallon in cities and 35 mpg on highways.
The company’s website also has a neat feature that lets consumers compare autos. For a quick comparison of Toyota’s 2012 Camry (2013 not yet available at the time of this writing), Honda’s 2013 Accord, General Motors’ (NYSE: GM) 2013 Chevy Volt, and Ford’s 2013 Fusion, simply look here to customize a comparison.
Second to the Camry through 2012 is Honda’s Accord, selling 218,665 vehicles. Honda is continually improving the model. In fact, Car and Driver magazine just named the Accord to its 10Best list for the 26th year in a row, a new record. Further, Honda’s drivetrain has a history of accumulating miles well into six-figures before needing replaced.
In terms of a vehicle that the Fusion resembles, the Chevy Volt comes close. To charge the hybrid Volt, drivers plug it in, similar to the Fusion. Surprisingly, the Volt only gets 35 mpg in the city and 40 mpg on the highway, in contrast to the Fusion’s 47 mpg for both.
One hang-up for Chevy’s Volt is its price. The 2013 Volt sells for just under $40,000, before taking out incentives. For comparison, a similarly equipped 2012 Toyota Prius, a similar vehicle, sells for around $27,000.
Ford sold 181,865 of its Fusion through August 2012, far less than its foreign competitors. To close the gap, Ford has added a few new features.
In addition to its aerodynamic design, the Fusion has auto start-stop. This feature shuts down the engine when the car stops, and it starts “seamlessly” when the driver takes his foot off of the brake. The aim is to save gasoline.
Another nifty feature is the Fusion’s regenerative braking. Typically friction causes a loss of energy when a car brakes. However, Ford’s technology allows the car to capture up to 90% of that energy and use it to power the car.
The Fusion also sports safety upgrades. When drivers deviate from their lanes, the car’s electronics warn them. The system also makes a noise when it senses that the vehicle is about to be involved in an accident.
Finally, perhaps the “coolest” feature is the car’s interior light kit. To be succinct, it lets drivers feel like they are manning a space ship instead of a midsize sedan.
In all, Ford’s new Fusion has sparked increased competition among its closest rivals. The company has been pushing public relations events constantly in hopes that its multi-hundred-million investment reaps rewards.
Ford has engineered a beautiful vehicle with intriguing new features. With one-fourth of the entire car market comprised of midsize sedans, Ford has chosen its investment dollars wisely. Now it is time to see if they will pay off.
Know What You Own
Ford has been performing incredibly well as a company over the past few years -- it's making good vehicles, is consistently profitable, recently reinstated its dividend, and has done a remarkable job paying down its debt. But Ford’s stock seems stuck in neutral. Does this create an incredible buying opportunity, or are there hidden risks with the stock that investors need to know about? To answer that, one of The Motley Fool’s top equity analysts has compiled a premium research report with in-depth analysis on whether Ford is a buy right now, and why. Simply click here to get instant access to this premium report.
ChrisMarasco has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.