THE AUTO BUSINESS
Chief Alan Mulally and his executives are rightfully proud they avoided bankruptcy. But they're not safe yet. Not by a long shot. The coronation went exactly according to Ford's script. At the North American International Auto Show in Detroit 2,400 reporters hushed as video screens the size of tractor trailers flooded their vision. A booming voice shook Joe Louis Arena: Two household names, Toyota Camry and Honda Accord, dominated the midsize car business last decade. "Then," said the voice, "something changed." Their sales and market share ran flat in 2008. When the recession hit, they plummeted. "What you might not realize is that Camry and Accord never recovered." Camry sales fell 31% between 2007 and 2010. The Accord fell 28%. Both slid further after the 2011 quake in Japan. But not the Ford Fusion. Its sales rose 66% in the last four years. By 2011 it passed the Accord, but still trailed the Camry and Nissan's Altima. Cue the loud music, the smoke machine and the car: the reinvented Fusion, a pretty sedan with premium features like technology that keeps you in your lane or helps you parallel park. When it goes on sale later this year, it'll be available with a variety of fuel-efficient power trains: gasoline, hybrid and plug-in hybrid that Ford says will get the equivalent of 100mpg-better than a Chevrolet Volt or a plug-in Toyota Prius. No price just yet. The message is unmistakably aggressive, arguably arrogant: Ford just redefined the midsize-car market. The rest of the field, including General Motors' redesigned Chevrolet Malibu and the popular Hyundai Sonata, should pack it in. "I think we're going forward with some quiet confidence," Ford's president of the Americas, Mark Fields, said later that evening over a filet mignon dinner with reporters at the stately Detroit Athletic Club. Aggressive? Nah. "We're just laying out some facts." As anyone in this town will tell you, believing one's own hype in the car business is more reckless than texting while driving. Just ask General Motors. Ford should keep this in mind. While it would have you believe that the new Fusion is the latest in a string of product home runs-stylish, fuel-efficient cars, loaded with technology, that consumers around the world are dying to drive- here in the U.S. facts suggest otherwise. Let's start with the Fiesta, Ford's smallest car. Introduced in 2010, it had a decent first year, but it's already fading. In the last two months of 2011 Chevrolet's new Sonic handily outsold the Fiesta, which is among the highest priced in the segment. Ford ended the year with 126 days of supply but says that's typical for December. Dealers generally like to have 60 days' supply or less. Then there's the Focus, Ford's new compact. It, too, has great looks and lots of premium features (and a premium price). But it was outsold by the Toyota Corolla, Honda Civic, Chevy Cruze and Hyundai Elantra in 2011. Launch issues last spring hurt production-some bad dashboards and transmissions-but those seem to have been ironed out. Now there's a glut: 89 days' worth. There's no denying that the new Ford Explorer, now more carlike and fuel efficient, is a bona fide hit. And sales of Ford's bestseller, the F-series pickup, rose 11% as the housing market started to improve (but Chevy and Ram trucks sold faster, so Ford lost market share). Some of Ford's other best-known products lost ground in 2011, too, including the Taurus, the Mustang and the Flex. Oddly, Ford's hottest sellers are products that are in the last year of their life cycle and about to be replaced: the Fusion and the Escape. Best guess: Bargain shoppers are scooping up great deals on these out-going models. Ford ended the year with 16.5% market share, one-tenth of a percentage point better than in 2010. But it achieved that only by shoveling more cars into commercial fleets and...