As Australia's large cars face the battle of their lives, Holden and Ford must find new ways to remain competitive. In Holden's case, it means the new Commodore due in August will have more foreign parts than any model before it. In Ford's case, it has to slash the development budget and get government assistance.
As much was confirmed by Ford Australia president Tom Gorman last week after announcing Federal and State government funding support for the car, which is codenamed Orion and scheduled for launch about March 2008.
"We have changed our view of the future and it is not as robust as it once was," Gorman said. "That forces us to look at our investments and change things.
"To tell you we haven't reduced our investment plans for the next-generation [Falcon] would be a lie. We have had to because we have had to try and get it all into a bucket that makes sense.
"There's nothing that you guys [the media] would probably ever even pick up. But there are things we have had to say 'we can't do this time round' because the volume is a little less than we would have thought even a year ago."
Car companies don't usually like to talk about new cars two years out from their likely on-sale dates but that's what Ford found itself doing last week when it hosted the Prime Minister at its Melbourne technical headquarters last week.
The main thing Ford wanted to trumpet was its new role as an Asia-Pacific and African region engineering and design centre.
However, the $100 million in funding that John Howard and Victorian Premier Steve Bracks came to announce was primarily aimed at Falcon and Territory. The money comes with conditions. Ford must give local automotive component manufacturers a shot at winning future supply contracts and it must also make a concerted effort at winning export deals for the Falcon and Territory.
In reality, the only places where there appear to be sales opportunities for large rear- and all-wheel-drive vehicles - either as built-up cars or in the form of technology transfers - are the US, the Middle East and China. These are all left-hand-drive markets.
Perhaps unintentionally, Gorman's budgetary conservatism was confirmed in Ford's own press release that announced a "significant" investment of $1.8 billion over the next 10 years, most of it to go into future development of the Falcon and Territory.
While that sounds impressive, it's less than Ford has admitted publicly to spending in the last 10 years on local model development.
Ford sold just 563 Falcon sedans last month as the entire large-car segment slumped 20.2 per cent compared with 12 months ago.
Much hope within the local car industry rests on the arrival of the all-new VE Commodore and the sales stimulus it may bring to the entire large-car segment. The VE is believed to be costing Holden about $1 billion, not including the upgrade of its Elizabeth plant in South Australia to build the car, or the construction of a new engine plant in Melbourne.
The next Falcon will present fresh sheetmetal to the world when it goes on sale from about March 2008 (it is said to have hint of the Iosis show car, pictured above) but underneath the mechanicals will be an evolution of the current Falcon.
One thing Gorman did rule out in these fuel-conscious days is a four-cylinder Falcon. By contrast, Mitsubishi Australia boss Rob McEniry has said such an option is being considered for the Adelaide-built 380. "You can fit a four-cylinder in a Falcon ... but it would have trouble getting out of its own way. That's not what we are selling, we are selling a performance vehicle," Gorman said.
"I still don't believe people are going to run away from what is really a great product here; package, performance and safety are still very important to the Australian consumer."
Limiting the spend on the next Falcon also makes sense considering the amount of work that has gone into the car in recent upgrades. The $500 million BA in 2002 included substantial changes to sheetmetal, drivetrain and suspension. It was a premature investment required by the unsuccessful AU Falcon launched in 1998.
Last year, Ford spent another $200 million on the BF upgrade, concentrating on refining drivetrains to meet new emissions regulations, introducing a new six-speed automatic on upper specification models and improving refinement.
The look of the mainstream Orion sedan has been signed off and already exists in clay form. Ford Australia design chief Scott Strong said its exterior draws strong inspiration from Europe.
"They have taken into consideration the very dynamic styling direction you have seen now in some of the European products that will join the next-generation Falcon in the showroom," Strong said. "It is a very dynamic, exciting car that picks up some of the DNA of the European Fords."
Through all this, the future of the Fairlane and LTD luxury cars remains doubtful. Combined sales have fallen below 100 a month and at that level the cars appear doomed. Export contracts seem to be the only hope.
"We are working on this [exports] but there is nothing to confirm or deny," Gorman said.
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Originally Posted by Gorman
