Monday, August 1, 2005

2006 Ford Explorer

Ford hopes new Explorer will stop skid

Automaker redesigns flagship SUV, cuts price in an effort to regain its sales momentum.

By Eric Mayne / The Detroit News

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LAKE PLACID, N.Y. -- It defined the SUV boom of the 1990s, led Ford Motor Co. to spectacular profits and bounced back from the Firestone tire controversy despite hundreds of product liability suits.

But the Explorer's impact on the U.S. market, and Ford's bottom line, has faded amid rising competition and gasoline prices. Despite big rebates, Explorer sales have fallen 20 percent this year through June.

Now, for the second time in four years, Ford is revamping the nation's all-time best-selling SUV.

The trademark exterior hasn't changed much aside from a bolder grille. But underneath the sheet metal, Ford went to work on everything today's buyers find objectionable about SUVs. The result, Ford says, is a quieter, smoother riding, more fuel-efficient Explorer.

And in a sign of just how competitive the marketplace has become, the company significantly cut the sticker price on the 2006 Explorer while adding standard features and more horsepower.

Hungry for more hot-selling vehicles, dealers are eager for the new Explorers to arrive next month.

"Explorer is a huge part of our business," said Joe Theis, sales manager at Bob Maxey Ford in Detroit.

It couldn't arrive in showrooms any sooner. Ford, stung by the sudden industrywide drop in SUV demand, is struggling under mounting North American losses. Ford's North American automotive operations lost nearly $1 billion in the second quarter, a $1.4 billion swing from last year's $454 million profit.

To lure buyers, Ford has beefed up the horsepower on the Explorer while improving fuel economy and reducing emissions. The automaker has also added advanced airbag technology and re-engineered the SUV's frame to improve its ride.

The 2006 Explorer will sell for $27,175 to $33,160, or $635 to $3,900 below the 2005 model.

Ford is counting on the aggressive pricing strategy, which is also being applied to other 2006 models, to jump-start Explorer sales that have slumped 24 percent since their peak of 445,000 in 2000.

"Typically what happens is, you've got a new model and you're trying to sell it," said Darryl Hazel, Ford division president. "But the dealer's worried about his old one, so he parks the new one in the back. ... This time, particularly with this price decrease, we should get better residual value. We should be able to do a much better job (of selling)."

Ford has much riding on the new model. The Explorer line is the best-selling SUV in U.S. automotive history, with 5.5 million deliveries since its debut in 1990.

It is assembled at Ford plants in St. Louis and Louisville, Ky., which employ about 5,000. It features an optional, made-in-Michigan 4.6-liter V-8 engine that's been upgraded to deliver an additional 53 horsepower, for a total of 292 horsepower.

"The powertrain advancement is an unsung story," said Stephanie Brinley, automotive analyst with California-based AutoPacific, who has test-driven the new model. "You've got a pretty significant horsepower gain, and you're not taking a hit at the pump for it."

The upgraded V-8 is expected to get 17 miles per gallon, an improvement of 1 mile per gallon. Its six-speed automatic transmission, a first for the midsize SUV segment, also boosts fuel economy.

Ford engineers pored over the vehicle looking for ways to reduce wind noise. Side-view mirrors were redesigned to reduce wind noise, a gripe of many owners, and the carpet inside was upgraded. Ford claims the Explorer is now the quietest SUV in its segment.

"Measuring the sound levels in all three rows, you can see that most companies spend their money on the first row," Ford sound specialist Lucy Yuen said. "In real life, the driver and front passenger are comfortable. However, in the competition, the driver will find that it's hard to hold a conversation with someone in the second row, and almost impossible to talk with someone in the third row."

Comfort features are becoming increasingly important in the marketplace. Moonroofs are in 36 percent of all 2005 Explorers, compared to a 26 percent installation rate in 2000, said Chris Feuell, Ford's SUV marketing manager.

"Everybody seems to want to be transferring the kinds of luxury that they get at home into their vehicles," Feuell said. Hazel expects 2006 Explorer sales to top 250,000. Through the first six months of this year, Explorer led the midsize SUV market with 134,000 sales, according to WardsAuto.com.

"It's going to be a nice addition," said Mark Douglas, president of Avis Ford in Southfield. "The Explorer, unfortunately, has gotten a little old."

Ford completely redesigned the vehicle for the 2002 model year during the height of the Firestone tire fiasco. The National Highway Traffic Safety Administration linked nearly 300 fatal rollover accidents to Explorers equipped with defective tires.

Ford has been hit with numerous lawsuits claiming Explorer, too, was defective. Court rulings have been split, but the traffic safety administration determined there was no need to investigate the SUV's design. But the Explorer's still took a hit. U-Haul, the nation's largest trailer rental agency, still prohibits rentals if they will be towed by an Explorer.

The policy was prompted by the intense interest among plaintiffs' lawyers in Explorer litigation, said U-Haul spokeswoman Joanne Fried. "It has nothing to do with safety," she said.

Exterior design changes are subtle. Patrick Schiavone, Ford's truck design director for the 2006 Explorer, said while some may view the redesign of the SUV as cautious, he points to its enlarged grille and headlights.

"We wanted to give it more drama than it had last time around," Schiavone said.

Despite these upgrades, analysts say the new Explorer isn't likely to cure for Ford's financial problems.

"It can stem the erosion of profitability," said Merrill Lynch analyst John Casesa.

"The market's maturing, there's new competition (from crossover vehicles) and it's not a new concept. SUVs are not the next hottest thing."

Detroit News Staff Writer Brett Clanton contributed to this report. You can reach Eric Mayne at (313) 222-2443 or emayne@detnews.com.