Contributing editor Steve Banner headed for Essex this month to meet up with Steve Kimber, director of commercial vehicles for Ford of Britain.
What impact has the recession had on Ford light commercial sales this year?
The LCV market has been, to say the least, challenging, and we believe it will be 37 to 38 per cent down on 2008. The good news from our viewpoint is that our market share has improved, although it is of course a share of a significantly smaller pie. At present we’re about 0.6 per cent up, a trend that’s reflected right the way across our model range.
How difficult is it for customers to obtain finance to acquire new vans?
The availability of funds is really tight. Even companies with sound track records and good order books are finding it increasingly difficult to get the funding they need. It’s the single biggest factor that’s holding the market back. As a consequence we’re seeing a big rise in the amount of light commercial finance business being done by Ford Credit.
With perhaps a better understanding of the needs of van operators than the high street banks, Ford Credit may be willing to help in circumstances where other funders, no matter how sound the proposition, are not. Looking at individual vehicles, how has the new Fiesta van been received?
It’s selling well. Production has built up slowly, but is now gathering pace and we’ve pretty much sold out of all the old ones.
Do you regret not having an equivalent to Citroën’s Nemo, Fiat’s Fiorino, Peugeot’s Bipper and Renault Kangoo Compact in your range?
No. We’re always looking at different segments of the market and balancing the cost of entry against what we’ll get back. We already have Fiesta Van on the one hand and the short-wheelbase Transit Connect on the other and the gap between them is very narrow. At present we don’t think it is big enough to make entering the sector worth our while.
How’s the latest Connect doing?
The new ones are just arriving at dealerships and we’re pleased with the reception they’re receiving from customers. That whole sector is being squeezed, but Connect is doing what we need it to do. Like cars, light commercials benefit from the government’s scrappage scheme and Connect accounts for 42 per cent of our van scrappage business. In fact Ford has taken 53 per cent of the van scrappage market to date. Our closest competitor for scrappage business has taken less than half that.
Which Connect is the most popular?
The short-wheelbase 200. However, we continue to be impressed by the performance of the long-wheelbase. It fits neatly into the segment of the market between the short-wheelbase version and the full-size Transit.
Interesting to see that you’ve launched a new, limited edition, version of Transit SportVan finished in white with blue stripes rather than the other way round. It’s got 18in alloy wheels, side skirts and air conditioning among other goodies. Is there a demand for vans like this in a recession?
We’re seeing incredible demand for SportVans and the last version has really captured the imagination of customers. We don’t build SportVans in huge numbers and they only represent around two per cent of total Transit registrations at most, but they appeal to a particular sector of the market; buyers who are individualists and real Transit enthusiasts.
So which Transits are the big volume sellers?
We’re talking about the 280 short-wheelbase van and the 350 long-wheelbase van. Between them they take 20 to 25 per cent or so of registrations.
What’s the sales split between front-and rear-wheel drive across the Transit range?
How many Transits do you sell above 3.5 tonnes?
They make up around four to five per cent of registrations, with the emergency services and certain local authorities accounting for a high percentage of the volume. The percentage is about what you’d expect from a van-type vehicle. While the desire to carry more weight drives sales volumes upwards, downward pressure is exerted by the regulations that come into force above 3.5 tonnes, especially those that relate to Operator licensing, Drivers’ Hours and the obligation to fit and use a tachograph. Given the need to meet these requirements, many customers may conclude that they might just as well run a 7.5 tonne truck. Actually what I think we’re seeing if anything is people trying to move out of that sector and run a 3.5-tonner instead if they possibly can.
Do you expect the rules governing the operation of 3.5-tonners to become stricter over the next few years?
What we’re picking up on is the possibility that tighter legislation will affect everything over 2.8 tonnes. I think there is some merit in this, but any regulations will have to be drafted with great care. If they aren’t, then there is a risk that a lot of businesses will end up being stifled with red tape.
How successful is your One-Stop range of ready-to-go-to-work conversions?
Having been going for 12 years it now takes 70 per cent of the manufacturer-supported conversion market and the conversions have been accredited by TUV, the German testing and certification agency.
Designed to improve the quality and standard of bodies and conversion work, European Whole Vehicle Type Approval will have a big impact on converter activities. What’s your view of it?
It’s a great initiative and we fully embrace it. We are working closely with the Vehicle Certification Agency in order to understand fully how it will affect our industry and to make sure that our dealers are prepared for it. In fact we’re already investing a lot of money in dealer preparation. One thing we’ll have to ensure though is that the administrative system that will have to be put into place and the mechanics of how it will all work will be user-friendly so far as all parties — the manufacturer, the bodybuilder and the dealer — are concerned. That will help us ensure that the customer benefits.
Do you think it will prompt more operators to opt for pre-packaged solutions such as One-Stop rather than order a chassis cab and then ask the dealer to look around for a local bodybuilder who can put a body on it?
Potentially, but that’s not the reason why we’re supporting it. Its real advantage is that it drives quality forward in an area of the business that is increasingly dominated by legislation, and health and safety, and duty-of-care-in-the-workplace legislation in particular. What it should result in is better-quality conversions. It will prevent Fred-in-a-shed doing something absolutely horrendous to a vehicle over which we have no control. It will get rid of that kind of abuse.
You have of course recently launched the revised Ranger pick-up so there’s no denying the breadth of the Ford range. But how are you setting about making your light commercials more environmentally friendly?
We’ve just put the Transit ECOnetic into production and we’re already seeing real-world fuel economy improvements of up to 20 per cent. There’s nothing whiz-bang or complicated about it. What it does instead is optimise the technology we’ve already got. As a consequence none of the servicing costs change. You still benefit from Transit’s strengths, but it’s even greener than it was previously and an ECOnetic only costs a few hundred pounds more than the standard model. The fuel saving you can achieve soon repays the extra front-end cost. What’s clear in all of this though is that there is no silver bullet, no single solution, so lots of investment is being made in lots of different technologies. We are, for example, working with Smith Electric Vehicles on electric versions of Transit and Transit Connect. They’re great if you have a suitable duty cycle — in other words if you always return to your home base and don’t do more than around 100 miles a day — but they won’t help if you go from London to Edinburgh regularly. As a consequence I think what we’re increasingly going to see are fleets running vans that are mission-specific; electric vans for local work and models such as Transit ECOnetic for longer runs, for example. What I would say in all of this is that we need a level of consistency from legislators and some medium- to long-term vision. What we don’t want to do is end up investing lots of money in a particular technology only for them suddenly to decide that it isn’t the route to go down and opt for something else instead.
Given the decline in the value of sterling against the euro are UK van customers going to have to get used to paying more for their vehicles?
Exchange rate movements have certainly had an impact and prices are already increasing, but that’s not just a Ford problem; it’s an industry-wide problem.
Obviously you have the advantage that you source light commercials from your plant in Turkey and from the factory here in the UK at Southampton. You’re also going to be building Connects in Romania, some of which will be exported to the USA. So what does the future hold for the Southampton plant?
It will become the centre for chassis cab production, but that change is a few years away.
Are you concerned that price rises could choke off any recovery in light commercial sales?
I think we may see some dips in the market before it settles down, but they will hopefully be short-term phenomena as business re-adjusts. There is certainly a lot of pent-up demand for vans. I was, for example, talking to the operator of quite a large fleet the other day who is incurring huge maintenance costs because as a result of the recession he’s kept his light commercials for two years longer than he would normally have done. It’s a particular problem for him because he works in a fairly arduous sector of industry. As a consequence it’s likely that he’ll replace his vehicles either late this year or early next year; and he’s but one example. Home delivery companies that have held off acquiring new vans are already coming back into the market. We’ve yet to see firms in the construction business doing so, but eventually they too will have to return to the market because their vehicles will need changing. However, there is no denying that there are still negative pressures. I’ve already referred to the lack of availability of finance and businesses are still understandably concerned as to whether the so-called green shoots of recovery are genuine. As a consequence I believe it will be some way into 2010 before we see any sort of sustained van sales recovery.