With investors questioning Ford‘s near-term outlook, the American automaker heads into the fourth quarter needing a shot in the arm from its bread and butter truck: The F-Series.
The new pickup, which is a dramatic shift incorporating aluminum panels, rolls into showrooms later this year and comes at a time when Ford finds itself dialing back earnings expectations.
Monday afternoon the automaker told analysts it expects to earn at least $1 billion less in 2014 due to a series of setbacks including weaker profits in Europe and the recall of 850,000 vehicles with defective air bags. The recall will cost the auto maker a half billion dollars.
“We’re looking at about a $6 billion year with very strong cash flow and continuing to invest in a future, that as we outlined today is going to be much better in 2015,” said Ford CFO Bob Shanks.
Ford may be optimistic about growing its business in 2015 and beyond, but in the near term, investors have decided to park the stock. It finished Monday down more than 7 percent.
If ever there was a time when Ford needed its bet on an aluminum F-Series to pay off, it’s now.
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The new F-Series is 700 pounds lighter and promises to be far more fuel efficient than the F-Series its replacing or the latest pickups from Chevy, GMC and Ram.
While Ford is careful to say the new truck’s official fuel economy has yet to be established, the expectation is the new, lighter F-Series will deliver at least 27 or 28 miles per gallon on the highway.
That fuel efficiency is one benefit of having a lighter pickup with aluminum, not steel panels.
“When you go from an all steel body to an aluminum alloy body, it is a big, big change and you know this is a buyer base that is very traditional,” said Jack Nerad with Kelley Blue Book. “They are used to traditional things so you are potentially throwing something different at them. That is kind of radical in a way.”
“Radical” is rarely a word that companies use when they refresh their best products, especially one that dominates an industry as the F-Series has since the early 80’s.
In fact, the F-Series is the bestselling vehicle in America for 32 straight years.
Ford could have played it safe and refreshed the pickup with steel panels and it would likely have seen solid sales for the next few years.
“That is the big gamble with changing something as radical as they are changing it. Not only could it affect sales in the short-term, but sales down the road,” said Nerad.
Mud runs and durability
We drove the new F-Series in and around San Antonio, Texas for several hours Monday afternoon. The drive included towing a trailer and taking the F-Series through an off-road course that was challenging and revealing.
After putting the F-Series through mud-bugs, extreme terrain where it showed the value of greater clearance and steep downhill drop where the new F-Series regulated the brakes itself while I handled the steering, I have to admit I was impressed with how it handled in a variety of conditions.
The most impressive part of the drive was the responsiveness of the truck through the equivalent of a shallow stream. Despite pushing the speed and swerving back and forth aggressively, I never found myself feeling as though I would lose control.
“We are extremely confident in this truck,” said Joe Hinrichs, President of Ford of the Americas. “We believe this truck sets all the standards for durability and capability.”
To back up that claim, Ford says it’s put the F-Series through ten million miles of testing.
Despite that claim and what journalists like me say after a brief few hours in the truck, the real challenge is whether the new F-Series will deliver over time.
That’s something we won’t know for a couple of years.
Not your granddaddy’s pickup
Ford is banking on the F-Series taking the pickup to whole new level, primarily because of the technology it built into the truck.
From 360 degree cameras giving drivers a view completely around the truck while. Parked or driving at very slow speeds to trailer hitch assist to help owners line up their truck and trailer without leaving the pickup, this F-Series is packed with technology.
That content is one reason why Ford executives are confident F-Series sales will surge when the new truck hits showrooms. The key is whether or not the launch of this truck is smooth.
Ford cannot afford any hiccups. That means few delays and no major recalls in the first year the truck is on sale.
“I think it is crucial that they have a clean launch of the F-150 and I also think it is crucial that the first year or so go very clean,” said Nerad. “I think there are probably going to be some people and some fleet buyers who say well let someone else buy it in the first year, we will see how it goes and if it is going well we will jump in the second year.”