Ford announced that it's investing another $25 million into boosting production at its Kentucky Truck Plant, where it turns out the hot new Ford Expedition and Lincoln Navigator SUVs. The new plan to increase its total investment in the Louisville facility to $925 million is part of a broader offensive in utility vehicles whose timing could be perfect for Ford.
With the ongoing launches of all-new versions of its three-row Expedition and Navigator, and the debut of its EcoSport subcompact crossover, Ford is trying to make big splashes in three of the most important segments of the U.S. market these days. Combine those entries with the upcoming all-new Ford Ranger mid-size pickup truck, due in 2019, and its refreshed and expanded lineup of in-demand vehicles gives Ford a great chance over the next couple of years of adding further to its incremental 2017 gain in U.S. market share, to 14.8 percent from 14.6 percent.
And for all the anxiety among investors these days about whether Ford CEO Jim Hackett is making quick enough progress in overhauling the company financially, and in redirecting resources toward its mobility push, the success of these four vehicles could go a long way toward easing those concerns. Ford has boosted by about 25 percent the production targets for Navigator and Expedition that it hatched just last fall.
In fact, Expedition is Ford's most immediate opportunity. It's been a decade since the company overhauled its mammoth three-row SUV, and in that time the U.S. market has undergone almost a complete 360-degree cycle: favoring behemoth family haulers in the mid-2ooos, spurning them amid $4-a-gallon gasoline and the Great Recession from 2008 through early this decade, and recently favoring them again as the new generation of millennial buyers swings into becoming the key market for Expedition. The huge shift in demand toward hulking SUVs even is drawing in some completely new players that are planning upcoming entires in the three-row market, including Volkswagen and Subaru.
"About 35 percent of large-SUV buyers are between ages 35 and 44 now," Erich Merkle, Ford's sales analyst, told me. "They are younger than the industry overall. That's when they need it most, with growing families. They're not just bringing newborns home from the hospital now. When those kids get to be teenagers and in some cases are bigger than their parents, and they have friends, space becomes more necessary.
"And one thing we know is that the 35-to-44 demographic is going to expand dramaticlly in number over the next five to ten years, meaning more of a need for three-row products."
Now that these all-new vehicles are here, Expedition and Navigator are making an immediate impact. For Expedition, the top-of-the-line Platinum trim models represent 29 percent of sales -- pushing transaction prices up by $7,800 in January over prices for the previous version of Expedition a year earlier. Expedition retail sales were up nearly 57 percent last month and vehicles are spending just seven days on dealer lots, compared with the industry-standard ideal of a 60-day supply at dealers.
Navigator, too, is finding an immediate market for the new version, with customers trading in Land Rovers and Mercedes vehicles for the new Lincoln and nearly 85 percent of all Navigator buyers choosing the high-end Black Label and Reserve models, Ford said. Navigator's average transaction price in January was a staggering $21,300 over a year earlier, Merkle said.
"We do believe there will be a large degree of incrementality" in Expedition sales for Ford, Lew Echlin, Ford's manager of marketing communications, told me. "Eighty percent of the segment is made up of products from [General Motors], and we think these customers are largely underserved." GM models Chevrolet Tahoe and GMC Yukon "have third-row seats you can't sit in perfectly," Echlin said. "We have third-row seats you can cross your legs in. We have technologies in this product that are light years ahead of the competition and light years in front of where the past Expedition was. We look at this as unlocking a lot of pent-up demand for choice in the marketplace."
Among other things, the new Expedition boasts lightweighting, an improved standard V6 engine and a new 10-speed automatic transmission. Its second-row seats tilt forward for third-row access without folding, a handy feature as millennial parents manage kids.
Expedition is being highlighted in a new ad campaign by Ford headlined by a new advertisement, titled "We the People," that promotes the improved and expanded capabilities and amenities in the new version by tying it to Olympics viewership that typically unifies Americans. The spot deftly depicts adults sitting comfortably in the capacious third row, and teenagers enjoying the view up through a panoramic sunroof, among other features.
