Ford of Britain

Date: Wednesday, July 28, 2010

Contributing editor Steve Banner has been talking to Steve Clary, the new commercial vehicles director at Ford of Britain, about what lies ahead for the mighty Blue Oval.


 

Van registrations have started to improve in recent months after an extraordinarily tough market in 2009. How are things going with Ford?

There’s plenty of demand for Transits and it’s interesting to look at where it’s coming from. Many businesses are nervous of committing themselves to acquiring vans given the state of the economy. So are operators who rely on public sector funding. As a consequence a lot of the demand is being driven by daily rental fleets that offer their customers short- and medium-term hire agreements. Rather than buying vans, many people are renting them instead while they wait to see how things pan out so far as the economy is concerned.


Surely that’s a potential problem for companies like Ford given that the rental fleets are notorious for driving hard bargains?

As a manufacturer you have to strike a balance between the number of vehicles you want to sell and the amount of support rental fleets demand from you. We could supply thousands more vans to the rental sector, but we have to think about the economics of doing so. We always have to try and achieve a balanced portfolio, without too much reliance on any one area of the market.


Are you offering the rental fleets buy-back deals?

No. They buy their vehicles outright from us, although they may of course be using third party funding to do so. Rental companies tend to hang on to their vans for at least two years, although one major player in the market keeps them for four.


Do rental customers tend to purchase vans with basic specifications?

In our case they tend to go for vehicles in middle-of-the-range Trend trim if we’re talking Transit rather than entry-level Base or top-end-of-the-range Limited. That’s particularly the case if they already know the customer that’s going to hire the vans from them and are confident that he’ll keep them for a reasonable length of time. They can offset the initial extra outlay against a predictable stream of revenue; and a vehicle in Trend spec will usually fetch more money second-hand than one in Base spec.


Are small businesses and self-employed people showing more interest in the higher spec trim levels?

Yes. The swing is quite strong and includes a shift in favour of metallic colours. Remember that for a lot of these customers their van doubles up as their private car at weekends. They want something they can use as a workhorse, but take their family out in too. That’s why they like the Transit Double Cab-In-Van. (It has rear seats plus a load area at the back – SB). They like the medium-wheelbase version in particular; it’s also available with a long wheelbase. Double Cab-In-Van is produced at our Southampton plant.


Transit is of course assembled in Turkey too. Will production at Southampton continue once the new model arrives in a couple of years’ time?

Production will carry on, but the plant will concentrate solely on chassis cabs. An annual output of 35,000 is what’s being quoted, but a lot of course will depend on what’s happening across Europe and the impact that has on demand. Transit vans will be built solely in Turkey.


What’s the sales split these days between front-wheel drive and rear-wheel drive Transits?

About 50/50. Vans and related models account for 90 per cent of our Transit sales while chassis cabs make up the balance.


What are you doing about alternative fuels?

We’re developing an electric Connect in conjunction with Azure Dynamics and we should hopefully have it available in the UK in 2012. This does not mean, however, that we’ve severed our relationship with Smith Electric Vehicles (Smith produces an electric Transit under the Edison banner – SB). We’re continuing to supply them with vehicles for conversion and we’re happy to do so. The low CO2 ECOnetic versions of Fiesta Van and Transit have also been well-received although they still represent a small percentage of our total volume.


What’s happening with the SportVan versions of Connect and Transit?

There’s still a strong market for them. In this context, around 250 to 300 of the 1,300 limited-edition Transit Sapphires we’re producing to celebrate Transit’s 45th anniversary will be SportVans. People who buy them want something that’s a bit individual.


Are you planning to launch a rival to models such as Citroën’s Nemo and Peugeot’s Bipper that could slot neatly between Fiesta and short-wheelbase Connect?

There could be a gap there. All I can say at the moment is watch this space.


You introduced a new Ranger last year. How successful has it proved to be given the problems with the economy and the impact they have had on vehicle registrations?

Ranger is built in Thailand and supplies have been somewhat constrained. As a consequence we’ve found it quite difficult to keep up with demand. Fortunately the situation has improved in recent months. Ranger sales remain dominated by the Double Cab 4x4. It accounts for about 65 to 70 per cent of our volume.


Last year saw a collapse in light commercial sales. Where do you think total registrations will get to this year?

Just over 200,000.


A long way below the total achieved in the boom years, but an improvement, albeit a modest one, on 2010’s performance. Are you finding that more and more of the vans you retail are being financed by Ford Credit as a result of the continued inability of many businesses — even well-established ones — to obtain funding from other sources?

The percentage has certainly increased and it’s interesting to note that Ford Credit has not altered its underwriting criteria.


What’s happening with the dealer network?

I took on the job I’ve got now last February to be told that we’ve got a plethora of new products coming. I realised that the danger in the current economic climate is that our dealers won’t be geared up to handle it because they’re understandably cautious about investing. So we got all of what we refer to as our Backbone dealers together at our research and development centre at Dunton in Essex and showed them what’s on the way over the next four or five years. We’ve never done that before; the engineers at Dunton tend to be very guarded. What we said to the dealers is that we’re at the bottom of an economical cycle, but we and the rest of the industry will climb back out of it and volumes will thrive. The products Ford will have available mean that our market share will increase as overall sales rise because we’ll be more competitive in certain sectors of the marketplace than we are today. As a consequence we’ll need more dealer network representation and much better dealer standards so that customers get what they want.


What’s a Backbone dealer and how many are there?

Backbone dealers are entitled to sell the entire Ford commercial vehicle range and we’ve got 103 of them. They’re supported by outlets that are classed as Transit specialist dealers. They too can sell the whole line-up, but will refer the more complicated inquiries, including those about our One-Stop tipper, dropside, curtainsider and box van conversions, to the Backbone hub dealer. That gives us around 150 outlets in total. Don’t forget, however, that all Ford dealers, including car dealers, can sell Fiesta Vans and Transit Connects. That’s about 550 dealerships. Yet despite that breadth and depth of coverage, one of our key challenges is to make it more convenient for our customers to gain access to our van range. That was one of the topics we discussed at the Dunton dealer meeting.


What are you going to do to improve accessibility?

We want to see more and more of the sites that predominantly sell our cars put our smaller light commercials on display as well. Fiesta Van, short-wheelbase Connect and the Ranger pick-up too are vehicles that appeal to retail, self-employed and small business buyers. If every single one of our dealers displayed them then I’m sure we’d sell a lot more because a lot of people drive past our dealerships and assume that they only sell cars.


Do you think you’ll ever get to the stage where all Ford dealerships have a line-up of vans on show?

If I can persuade half of them to do so then I’ll be delighted! That said, one of our biggest dealer groups now has commercial vehicles on display at all of its sites and is starting to sell more as a result.


Will you be recruiting additional Backbone dealers?

We think the Backbone network provides us with pretty good geographical coverage as it is. Our challenge now is to ensure that the ones we’ve got give customers the appropriate level of support. We expect Backbone dealers to, for example, be capable of diagnosing a fault on a van within a day, then either immediately order any parts they need to get it fixed or get on with the repair if they’ve got them in stock so that the customer gets his vehicle back as soon as possible. That sort of approach to aftersales is vitally important. No manufacturer makes a bad product these days. It’s the dealer’s ability to deliver a service and ensure that the vehicle is out there doing what it’s supposed to do that makes the difference.



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