As the July sales numbers were released, Ford and GM made the headlines for their drop, while Chrysler still enjoys its momentum. But Ford’s challenges are not only in the U.S. – and I am not talking about Europe. In Brazil, where the market enjoyed a 22% growth in July, Ford sold 12% less light vehicles compared to June. Its monthly market share slumped to 8.44% from 9.90% in the previous month.
Ford, the first OEM to be established in Brazil (1919), has always faced challenges in Latin America's most important market. Between 1987 and 1995, Ford and Volkswagen had a joint venture to survive harsh economic times – the average inflation was 800% in the 80s. Almost all Ford vehicles were rebadged VW products. Many say that when the joint venture was terminated, Ford was left with nothing, not even automotive engineers.
However in 2003, Ford did some consumer research and found out that Latin Americans did not want a minivan like the one launched in Europe (Fusion, based on the Fiesta) and as Chevrolet was developing for South America and Europe (Meriva). Ford came out with a totally new product – the EcoSport, an affordable SUV based on the Fiesta that would make Ford survive increased competition from newcomers, such as the Peugeot and Honda versions. The EcoSport was a huge success, but Ford was still behind its main competitors.
Developed in Brazil, EcoSport's new generation is expected to reach the dealer network in September. It has been shown in auto shows in India and China, and will be produced in Brazil, China, India and Thailand. Quatro Rodas, one of the main auto magazines in Brazil, wrote "the change is so meaningful that it seems that a generation between the previous and the current one is missing." You can see the new EcoSport in the following video.
On the other hand, the new EcoSport poses two questions. Since it will not be offered in the U.S. nor in Europe, is it not worthy of the One Ford approval? And is Ford making the same mistake again to rely on just one successful product to survive in the Brazilian market?
Much of Ford's portfolio in Brazil is old and customers show signs that they want more modern vehicles. At least until 2013, Ford will produce the previous generation of the Fiesta in Brazil, while the new one is imported from Mexico with a Brazilian engine. The Focus produced in Argentina is still the previous European version. The new generation vehicle is expected to be at the Sao Paulo auto show in October. And the new Ranger just started being built in Argentina, though Australia has had it since last October.
What Ford needs to keep in mind is that the EcoSport has some serious competition, a decade after it pioneered the market. The Renault Duster, launched in 2011, has sold 25% more than the EcoSport this year. As more small SUVs enter the market in Brazil, like the Chevrolet Trax and the Peugeot 2008, EcoSport's task will not be easy. Polk forecasts that the small SUV segment will grow 26.4% in 2013, to around 130,000 units from 30,000 in 2003. In 2023, it should reach 300,000. Are you ready for that, EcoSport?
Posted by Augusto Amorim, Lead Analyst – South America Forecasting, Polk (08.03.2012)