Ford has bigger aspirations than challenging Toyota’s Camry. Its Fusion is about to take on the law of supply and demand.
An assembly plant about 20 miles south of Ford headquarters in Dearborn, Mich., is rolling Fusion family cars off the line for the first time. The additional supply will test the staying power of a more than $2,300 per-sale premium that Fusion has commanded this year over America’s longtime best-selling car, the Camry.
“Ford has managed to be a volume player competitive with the Toyota Camry and the Honda Accord while still maintaining a far more competitive price point,” said Alec Gutierrez, an analyst with Kelley Blue Book. “You might see prices come down a few hundred dollars, but I don’t think they face any significant risk of serious price degradation. They’re going to hold their premium spot in the segment.”
The Fusion is Ford’s best shot at eventually reclaiming the car-sales crown it last held in the 1990s heyday of the Taurus, a model Chief Executive Officer Alan Mulally studied at Boeing Co. The Fusion’s sale surge — 13 percent so far this year — has cut a quarter of Camry’s sales lead, demonstrated how much consumers care about attractive design and shown how aggressively U.S. carmakers can now compete in all segments.
It has also overwhelmed capacity at the only plant where it has been made, in Hermosillo, Mexico, which couldn’t make more than about 350,000 Fusions and Lincoln MKZ sedans. The Mustang assembly plant in Flat Rock, Mich., hired 1,400 employees to produce as many as 100,000 more Fusions.
The added output draws Ford closer to production levels that Toyota and Honda reach with their Camry and Accord. It also positions the No. 2 U.S. automaker to continue growing in coastal states that were long a source of weakness.
The average price that the Fusion has sold for this year through July climbed 5.8 percent to $26,343, behind only Volkswagen AG’s Passat in the mid-size car segment, according to Kelley Blue Book.
Fusions are selling at a premium of $1,176 above the segment average and $2,378 over Camry, which ranked No. 11 in segment pricing this year, behind entries such as Chrysler’s 200 sedan, said the researcher, which includes some incentives in its analysis.
Camry’s average prices have fallen 2 percent to $23,965, and the car has slipped from ranking eighth in the segment at this point last year.
“The Fusion is probably the most interesting mid-size car because it’s being sold on a variety of fronts,” said Alan Baum, an independent auto analyst in West Bloomfield, Mich. “No. 1, it’s gorgeous, and the fact that design matters in the mid-size segment has not always been a given.”
Another selling point has been Fusion’s fuel economy, said Baum, whose research on electric and plug-in vehicles was used by the Obama administration to set U.S. green car sales goals. Ford is offering Fusions powered by a standard gasoline engine, three turbocharged EcoBoosts, hybrid and plug-in hybrid powertrains — everything but all-electric, Baum said.
The range of options has enabled Ford to generate interest by marketing the 47 miles per gallon highway fuel economy rating for the Fusion hybrid, even though the bulk of sales are the traditional gasoline-engine model rated 34 mpg highway.
Ford is training new workers at its assembly plant in Flat Rock to help boost inventory in markets such as Los Angeles, San Francisco and Miami.
“Ford spent a lot of money on the vehicle, it’s gotten really good reviews, it looks really nice, and you want to be able to make as many as you can now,” said Adam Jonas, an auto analyst for Morgan Stanley.
Even with its looks, prices will probably come down some as Ford accelerates Fusion production, because the earliest models were loaded with content and the extra output may be of lower-priced versions, Jonas said.
The automaker has said it’s on track to increase Fusion production this quarter.
The Fusion is a standout among Detroit’s most competitive set of passenger cars in a generation. The car’s redesign has drawn comparisons to Aston Martin styling.
General Motors’ Chevrolet Impala last month received the highest rating from Consumer Reports among all sedans, a first in at least 20 years for a U.S. carmaker to have outscored all Japanese and European competitors in that segment.
“We have an automobile market unlike any other in the last 40 years, where everybody is equal in that they all have terrific cars,” said Maryann Keller, principal at auto-industry consulting firm Maryann Keller & Associates in Stamford, Conn. “Now, everybody is fighting for every sale.”
The additional production from Flat Rock could allow Ford to stretch for as much as 450,000 units of combined annual Fusion output from the Michigan factory and its Hermosillo plant in Mexico, said Jeff Schuster, an analyst for LMC Automotive.
The researcher estimates that Toyota has capacity in North America to build about 475,000 Camrys per year, while Honda can assemble about 450,000 Accords.
LMC forecasts Ford making about 350,000 to 360,000 Fusions this year, Schuster said.
“Ford is not saying this extra production is what we’re going to do to enable us to be the most popular car in America,” said Baum, the independent analyst.