TrainTrac
Well-Known Member
EcoBoost guns the engine at Ford
Buyers get high mpg; carmaker gets higher revenue
BRYCE G. HOFFMAN
The Detroit News
Ford Motor Co.'s big bet on its new line of EcoBoost engines appears to be paying off.
Demand for the engines, which promise better mileage while delivering more power, has taken off since they debuted last summer -- boosting vehicle sales, luring new customers and raising average transaction prices by thousands of dollars.
Ford's first analysis of EcoBoost sales data, completed last week, found that the number of customers opting for EcoBoost engines far exceeded the Dearborn automaker's expectations for all four models that offer it as an option.
Now, Ford is rushing to put the V-6 version of the motor in new vehicles, such as the F-150 pickup in the United States and the Ford Falcon sedan in Australia. Next year, the company plans to introduce new four-cylinder models here and in Europe. And The Detroit News has learned Ford has developed a 1.0-liter three-cylinder version that could power future versions of the Ford Focus and Fiesta.
"It clearly was part of our plan to distinguish us in a very crowded marketplace," said Derrick Kuzak, Ford's global head of product development. "It's doing that very well."
EcoBoost is also part of Ford's plan to boost revenue by increasing net pricing -- the amount of money customers pay for its cars and trucks after incentives. Here, too, Kuzak said EcoBoost is hitting on all cylinders.
Customers who opt for EcoBoost are paying $5,000 to $10,000 more for their vehicles than those who buy the same products without it. That is one of the drivers behind Ford's $3.8 billion net pricing gain since the start of the year, said analyst Erich Merkle of Autoconomy.com in Grand Rapids.
"It's EcoBoost, plus everything Ford is doing on the quality side, the design side and safety side as well," Merkle said. "They're hitting on multiple fronts. EcoBoost is an important piece of their competitive strategy. It will become a bigger competitive advantage for them as they start to expand it down into their higher-volume vehicles."
EcoBoost engines combine turbo-charging and direct fuel-injection to generate more horsepower and torque from a smaller motor. German automakers were the first to combine these technologies for performance, though Ford was the first to optimize them for better mileage, as well as more horsepower and torque. It has filed some 125 patents to protect the EcoBoost approach.
Ford's first EcoBoost engine was a 3.5-liter V-6 that produces as much power as a V-8 with the fuel economy of a V-6. It debuted on the Lincoln MKS sedan in July. Since then, the same engine has been offered in the Ford Flex crossover and the high-performance Taurus SHO. Its latest application is in the new Lincoln MKT crossover.
The take-rate for EcoBoost is exceeding Ford's projections on all four vehicles, said Amy Marentic, marketing manager of Ford's car and crossover group.
She said the sales data revealed that more than 30 percent of MKS retail customers are opting for EcoBoost. Ford had been hoping for 25 percent. More than 40 percent of MKT buyers are springing for EcoBoost, 15 points higher than Ford had projected. The Taurus SHO, only available with EcoBoost, is accounting for about 20 percent of all retail Taurus sales -- double Ford's target of 10 percent. And about 13 percent of Flex customers are choosing the premium powertrain. The company had projected an 8-percent take rate.
Engines boost bottom line
These sales are giving a big boost to Ford's bottom line.
Lincolns equipped with EcoBoost engines are selling for between $5,000 and $7,000 more than the same models without it. EcoBoost-equipped Ford models are commanding an even higher premium -- as much as $10,000 more, Marentic said.
That is partly because the engines are packaged with other options like all-wheel-drive and premium wheels. But higher sticker prices are only part of the equation; vehicles equipped with EcoBoost engines also are selling at closer to sticker price, with less haggling over discounts, Marentic said.
Ford needs higher transactions prices to fund its turnaround, but that is not the only way EcoBoost is helping the company. The new engine also is winning converts to Lincoln and the Blue Oval.
Customers who buy EcoBoost-equipped vehicles are younger, more educated and wealthier than those who buy the same products without EcoBoost, according to Ford's analysis.
About 55 percent of MKT buyers who opt for EcoBoost are conquests from rival brands, compared to 45 percent for the MKT without EcoBoost. The conquest rate for the Taurus SHO is almost as high -- 54 percent, compared to about 44 percent for the regular Taurus.
"They're customers who used to drive a BMW," Marentic said. "We're playing in a place we've never played before in the sedan market."
Can sales be sustained?]
Some analysts wonder whether Ford can sustain this level of success with EcoBoost.
"It's being heavily advertised, so you're going to get a lot of early adopters jumping on-board," said Stephanie Brinley of consulting firm AutoPacific Inc. in Troy. "Clearly, Ford has found the pricing sweet spot for it. It's not scaring people away."
Marentic acknowledged that sales of EcoBoost may slacken a bit after these vehicles have been on the market for a while, but she said Ford has plenty of new EcoBoost offerings in the pipeline. It has promised to offer EcoBoost engines on 90 percent of its North American nameplates and 80 percent of its global nameplates by 2013.
The next vehicles to get EcoBoost in North America will be the F-150 and the all-new Ford Explorer, both due late next year. The 1.0-liter three-cylinder version is designed to replace small four-cylinder motors and will likely find its way into future versions of the Ford Fiesta and Focus.
Merkle said Ford's success with EcoBoost has not been lost on other automakers.
"Other companies are working on what Ford is already bringing to market," he said, adding that EcoBoost is changing the way Detroit thinks about engines. "We've always said there's no replacement for displacement. We're finding that isn't necessarily true."
Last edited by a moderator:
