2009 Ford Escape
Four-dollar-per-gallon gasoline may be wreaking havoc on sales of the Mustang, F-150 and Explorer, but it comes along at a convenient moment for the facelifted 2009 Escape and Mariner. Six-speed automatics replace four-speed automatics, there’s a new lower front chin spoiler below the redesigned front fascia and rear tire spoilers for better aerodynamics, and new low rolling resistance 16-inch Michelin tires across the board. The old 153-horsepower 2.3-liter four has been bored and stroked (among other upgrades) to a 171-horsepower 2.5-liter, and the 3.0-liter V-6 gets new cylinder heads, injectors, intake and exhaust cams, manifolds and pistons, and a compression ratio bump from 10.0:1 to 10.3:1.
So now the V-6 actually has a V-6-like horsepower number, up 40 ponies to 240. Both engines get intelligent variable valve timing. The hybrid gets the new 2.5-liter, too, and for ‘09 runs on the Atkinson cycle. It has a new engine processor and a new powertrain damping system, to cut vibrations and feedback.Ford anticipates EPA mileage will be up 1-mpg city, 1-mpg highway, whether you get the four, the V-6 or the hybrid. The biggest change, though, is that you no longer have to buy one of the bottom-feeder trim levels to get four-cylinder fuel economy. The 2.5 is available all the way up to the Escape Limited and Mercury Mariner Premier versions. Small engines are big now, even with buyers who can afford more. Ford even removed the “V-6″ badge from so-equipped ‘09 models as if it has become a badge of extravagance and disregard for the environment and global oil supply.
That makes the extra 18 horses for the four-banger the most important improvement. The 171-horse Escape isn’t a rocket. It’s simply an adequate engine in a smallish crossover, the right vehicle for those who like to ride higher than in cars, carry a few things and manage 21/27 mpg (FWD) or 20/25 (AWD), assuming the EPA backs up Ford on its estimates. Ford says about 45 percent of buyers choose four-cylinder models, virtually unchanged since the first Escape launched as a ‘01 model. Now that the new four is close to the fours in the Honda CR-V and Toyota RAV4 for refinement, and packs in five extra horses, the “take rate” ought to zoom well past the V-6.
Added refinement comes with the new four, producing better engine noise. It’s still a raspy sounding four under full-throttle acceleration, but it’s fairly smooth under most conditions. The six-speed automatic (a five-speed manual remains standard with the four) smoothens the power delivery, and there’s none of the hunting for gears of the old 2.3-liter/four-speed auto combo. Acceleration matches the ’08’s 200-horsepower V-6/four-speed auto combination, at 10.4 seconds for 0-60 mph, Ford says.
The extra 40 horses in the V-6 made necessary by the more powerful new four cuts 0-60 mph times by 1.7 seconds, according to the manufacturer. Ford also has revised the suspension, including the addition of a rear anti-roll bar for all models, making the “2009 Ford Escape, Mercury Mariner more fun to drive.” Well, no. It’s not fun to drive. It’s a crossover sport/utility vehicle. But it’s more refined and quieter at speed. And by the way, Ford claims the lower-front air dam saves 3/4-mpg at 70 mph. The low rolling resistance tires makes the steering feel lighter at low speeds. Suspension is stable and reasonably comfortable over crusty roads. As for “fun to drive,” you don’t want to take any CUV this tall too deeply into the curves, anyway. This one is no exception.
Ford to close deal with Tata
Final sale of Jaguar, Land Rover expected on Monday
Ford Motor Co. is expected to close the sale of its Jaguar and Land Rover luxury brands to India’s Tata Motors Monday, sources familiar with the situation said on Friday.
Terms remain largely unchanged from those in the preliminary agreement that Ford and Tata announced in March, they said.
Tata will pay Ford about $2.3 billion for the British carmakers, but Ford will contribute about $600 million of that to the Jaguar and Land Rover pension funds.
That means Ford will net about $1.7 billion from the deal, which concludes the Dearborn automaker’s long involvement with British luxury brands. Last year, Ford sold the Aston Martin carmaker to a group of investors for $925 million.
Ford declined to confirm. “As we have said, we expect to close in the second quarter,” said Ford spokesman John Gardiner.
With the U.S. auto market now in a severe contraction, Ford needs cash. After posting a $100 million profit in the first quarter, Ford is expanding its restructuring efforts and contemplating cutting as much as 12 percent of its U.S. white-collar work force.
Of the companies it acquired in Europe in the 1980s and 1990s to create a Premier Automotive Group, Ford still owns the Swedish carmaker Volvo. But with Volvo now struggling financially, it may also end up on the selling block, say sources close to Ford.
Analyst David Healy at Burnham Securities said the $1.7 billion that Ford will net “isn’t going to make or break Ford.”
But like most Wall Street analysts, he views the sale as a good move for the U.S. automaker. The cumulative cost to Ford of Jaguar has been estimated at between $11 billion and $13 billion.
While Land Rover — one of the first manufacturers of SUVs — has become profitable, its contributions to Ford were negligible. The two British carmakers “were a drain on both management and finances,” Healy said.
The sale of the British brands to Tata initially raised eyebrows. The Indian automaker, part of a $29 billion conglomerate, specializes in making trucks and inexpensive vehicles. It recently rolled out a $2,500 Nano car.
But industry experts say Tata has a good record managing acquisitions. In the past 10 years, it has bought Anglo-Dutch steel giant Corus Group to become the world’s sixth-largest steelmaker, the Daewoo commercial vehicles business, Britain’s Tetley tea company and American hotels, including the Pierre in New York.
With the acquisition of Jaguar and Land Rover, Tata Motors gains a foothold in most major markets. And with Daimler AG as a 7 percent shareholder in Tata, the Indian automaker may be able to seek cooperation or technical expertise from the German carmaker.
Ratan Tata, chairman of Tata Motors and Tata Sons, one of the holding companies for the group, said earlier this year that he was spurred to expand abroad by the prospect of fast-growing Chinese manufacturers. He pledged that Tata would preserve the identities of Jaguar and Land Rover.
Ford Cuts Trucks
The unthinkable has happened—and probably not a moment too soon. Ford Motor is cutting its production of its one-time cash cows, pickups and SUVs, to instead increase production of smaller and more fuel-efficient cars. In doing so, the automaker is forced to abandon its goal of turning a profit next year after several years of annual losses, but it might be able to better position itself long-term for a world of high oil and commodity prices.
The announcement sent Ford’s share price down 57¢ to 7.23, or 7.3%, in midday trading May 22.
“What we are seeing [consumers leaving trucks and SUVs] is a structural change in the marketplace, not a cyclical one,” said Ford Chief Executive Officer Alan Mulally in a morning conference call. “Unless there is a fairly rapid turnaround in U.S. business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American automotive profitability goal,” said Mulally, who predicted Ford would report a full-year loss this year and do no better than break even in 2009.
Ford is re-evaluating some aspects of the restructuring plan Mulally has been leading since he took over the struggling automaker in September, 2006. Specifically, Mulally told Wall Street analysts and media May 22 that the company is in the midst of negotiating commodity contracts for materials such as steel. In July, said the CEO, he will announce whether Ford will forecast full-year profitability by 2010, or delay guidance. “We will know much more by July,” he said.
Standard & Poor’s on Thursday changed its outlook on Ford to negative, from stable, citing heightened concerns over the North American auto industry, while Moody’s Investors Service affirmed its rating on the automaker.
Limiting the Damage
To cope with falling consumer sales, Ford is increasing production of its passenger cars to meet demand, targeting specific assembly plants (especially those making SUVs, for employee buyouts to further cut payroll) and reducing its white-collar workforce for cuts through buyout and attrition. Mulally said the company may announce additional plant closures in July.
Ford is also burning more cash than it expected. It expects cash burn between 2007 and 2009 to cope with losses and the costs of buying out employees to run from $12 million to $14 million. Ford recently sold its Jaguar and Land Rover brands to Indian carmaker Tata Motors to rid loss-making businesses and raise cash to see it through the crisis. Ford has $29 billion in cash on hand and $41 billion in total liquidity including credit lines.
“If lower-than-expected U.S. light-vehicle sales persist through 2009 or higher fuel prices cause an even more dramatic shift away from light trucks, Ford’s liquidity could reach undesirable levels by late 2009,” S&P said, in lowering the automaker’s outlook. This could occur even if Ford continues to make progress on its turnaround program in North America, S&P added.
Ford Motor Credit, said Ford’s Leclair, is seeing higher loan defaults, but will earn a profit in 2008. One of the issues creating losses for Ford is the number of trucks and big SUVs coming off lease back to Ford. The value of such vehicles at auction has been falling, forcing Ford to absorb the difference between what it projected resale value to be when it wrote the lease and what the market is actually delivering.
Ford has a few bright spots. Sales of the Edge crossover are up 38% as former Explorer and Expedition owners gravitate toward the less thirsty utility vehicle. Also, the redesigned Ford Focus is a surprise hit. The new design was derided by car reviewers before it went on sale last year. But with fuel economy above 30 mpg, sales were up 29% through April, compared with the same four-month period last year. Ford has a smaller, even more fuel-efficient vehicle, the Fiesta, arriving in the U.S. by 2010. Mulally said the company can’t get it to dealerships any faster. But the company is looking at other designs to build off the same vehicle engineering platform. It is also developing a smaller, lighter, more fuel-efficient version of the F-Series pickup that could go on sale by 2011.