This morning’s announcement by Ford of Europe that it intends to drop out of unprofitable market sectors to drive harder into the niches that make real money follows close on heels of a very similar plan unveiled by Fiat-Chrysler (FCA).
Last week FCA boss Marchionne revealed a new strategy that would see run-of-the-mill (and barely profitable) US-market saloons such as the Chrysler 200 and Dodge Dart dropped and factory space given over to RAM pick-ups and Jeep models, both of which are experiencing booming demand.
Ford of Europe boss Jim Farley didn’t say directly which models the brand would be dropping in Europe, but his future strategy was not dissimilar: more SUVs, more premium-trim Vignale models and a push on performance models, which already do pretty good business in Europe.
While this is sound business practice for the medium term, established car makers are also facing longer-term societal shifts. The move towards the market splitting between budget and premium or upmarket branding, which began over a decade ago, is the new norm.
For example, a whole generation of future car buyers have grown mixing budget clothes from Top Shop and pricey Apple iPhones. The middle market - although it still has traction with older buyers - has been buckling under the strain.
Indeed, the UK’s own Marks and Spencer is a perfect test case. It sells ever greater amounts of upmarket food but struggles to make decent headway with middle market fashion.
Mass carmakers are facing the same strains and stresses. One senior European car boss once told me that the continent’s mainstream car market was a “break-even at best” business and lamented that the few profitable niches open to the mainstream were being hammered by premium makers stretching their ranges – BMW’s venture in MPVs being a case in point.
For Ford - and Vauxhall-Opel - know it is not enough to roll out new crossovers. They are also engaged in a serious battle to change perceptions of their brand image. There’s no margin in being ordinary. Hence Ford’s massive ‘Unlearn’ marketing campaign which broke a coupe of weeks ago.
According to the UK website, ‘Unlearn’ is about “letting go of what you know, taking a fresh look and stepping outside to new ways of thinking. This progressive thinking is reflected in our latest vehicle line up including the Ford GT, Focus RS, Mustang and Edge, and in many of our latest technologies.” Amusingly, the ad campaign uses three Ford US-developed models, the Edge SUV, Mustang and GT supercar.
But I was very surprised to see Ford so directly address probably its biggest issue in the TV campaign. At one point it mentions ‘Mondeo Man’. This is a common phrase that must chill the bones of Ford’s UK marketing department. Nothing speaks more of ordinary, suburban and run-of-the-mill than being a ‘Mondeo Man’.
The irony is that this label was originally associated with aspiration and achievement. It was coined in the late-1990s by the press when then-PM Tony Blair told a story about how he knew Labour would lose the 1992 General Election.
Out canvassing, Blair recalled, he’d met a man who was washing his Ford Sierra outside the council house he had bought from the government. This voter explained he’d made progress under the Conservative Government and wasn’t prepared to risk a vote for a Labour government.
By the time Blair told this story, the Sierra had been replaced by the first Mondeo, a sparklingly good car. Sierra man had become much-improved Mondeo man and the press adopted the moniker to describe how ‘middle England’ had changed beyond recognition.
20 years later, the wider world has again changed significantly. Definitions of aspiration and modernity have moved on. The rapid adoption of SUVs and crossovers reflects a generation that sees itself as more active and sporting, more individual, more open-minded and more adventurous. They have, as IKEA once suggested, chucked out their chintz.
The problem for Ford of Europe as it tries to built a business that prospers ‘in good times and bad’ is that simply rolling out three sizes of crossover, dumping the poor-selling models and - perhaps - blending the next Mondeo with the S-Max is not enough.
It has to ensure that potential buyers approach the idea of Ford ownership with genuine positivity. Which will be far harder to achieve than just engineering some of the best-handling cars on sale.