Ford Explorer back ‘on track’ following flawed launch, exec says

A Ford Motor Co. Explorer Hybrid sports utility vehicle (SUV) is displayed during the 2019 North American International Auto Show (NAIAS) in Detroit, Michigan, U.S., on Monday, Jan. 14, 2019.

Daniel Acker | Bloomberg | Getty Images

Following a flawed launch of its Explorer SUV last year, Ford says production and sales of the popular vehicle are back “on track” and gaining momentum.

February retail sales of Explorer were the vehicle's best for that month since 2005 and Ford has regained its retail market share of 17%-18% of the midsize SUV segment, according to Mark LaNeve, Ford vice president of U.S. Marketing, Sales and Service.

“The bad news is we had some delays in the launch. The good news is we have a product for several that looks like we have a winner, and we're optimistic about the balance of the year,” he told CNBC. “We're certainly off to a good start.”

The redesign of the Explorer was a complete rebuild of the vehicle as well as the plant that produces the model. Ford has described the launch as one of the most complex in its history, including redoing the Illinois plant in just 30 days.

Ford CEO and President Jim Hackett has described the launch as a “company issue” with fumbled execution, which increased pressure from Wall Street on Hackett amid lower-than-expected earnings.

“The lost volumes in Chicago during ramp-up marred the year, and there were some important lessons that we learned,” Hackett said last month when discussing the company's fourth-quarter loss of $1.67 billion that heavily weighed on its $84 million profit for the year.

For 2020, the company has identified the Explorer as a tailwind with improved product mix and pricing strength. The average price consumers paid for an Explorer this year is $39,200, up $2,400 from a year ago and higher than the segment average, according to Ford.

“We feel good. We knew all along we built the right product,” LaNeve said. “Despite some glitches as we were getting going there with the rebuild of the plant in Chicago, we feel we are on track now and looking forward to many successful years with this product.”

He said Ford hasn't seen any effect yet on U.S. production from the coronavirus, but added: “We take it very seriously.”   He declined to discuss sales forecasts for the year.

Year-over-year Explorer sales remain down 9% overall through February due to timing of less-profitable sales to fleet customers, Ford said. However, those sales are expected to return to normal levels following the company filling its retail supply chain.

“Our fleet sales were down 46% (in February),” said Erich Merkle, U.S. sales analyst at Ford, touting retail sales gains in New York and Los Angeles. “Because it is a new product, we're working to manage the amount of fleet we're going to put through.”

Jeremy Kennedy, a Ford employee, secures the engine and transmission to the subframe of a new 2020 Explorer at Chicago Assembly Plant.

Ford

Despite Ford's retail gains of 24% to start the year, Jessica Caldwell, Edmunds executive director of industry analysis, believes it may be difficult for Ford to fully recover from last year's flawed launch amid increased competition such as the Hyundai Palisade and Kia Telluride. 

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“It had been #1 for so long and then dropping to No. 4 last year, it was definitely a big hit for them,” she said. “It's questionable whether some of these consumers will ever come back.”

The Explorer led its segment from 2011-2018 before dropping to fourth due to last year's redesign and production problems, according to Edmunds. Ford says it has regained its top overall sales position in the segment through the first two months of the year.

Online shoppers, according to the automotive research firm, are cross-shopping the Explorer the most with the Telluride, Toyota Highlander and Honda Pilot. 

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