Bill Ford: Market share bleed stops now
New models will stop the erosion, he says, but the company won't do anything "stupid."
By Alex Taylor III, Fortune magazine

DETROIT (FORTUNE) - Ford Motor Co. has lost market share in the U.S. for ten years in a row so, today, Ford Chairman and CEO Bill Ford said his company is drawing a line in the sand.

"I think it's important to stabilize market share," Ford told a meeting of reporters at the Detroit International Auto Show. "We want to stop the slide in '06 and rebuild from there."

Bill Ford, Ford Motor Co. CEO and Chairman
Bill Ford, Ford Motor Co. CEO and Chairman

He also said that the company will show a profit for 2005.

In the past, Ford has said he was willing to concede market share if winning it meant hurting the company's profitability.

Ford's aggressive statement has important ramifications.

Auto companies can basically increase share year by year in two ways: introducing new models and cutting prices on older ones.

Ford's share has slid in recent years because it has moved slowly into new product segments like crossover utilities, and it has been unwilling to match the generous incentives offered on GM vehicles. Last year, it ran up huge losses in its North American operations.

As recently as 2002, Ford Motor Co. accounted for 20.2 percent of the U.S. market. Its market share has slipped about one percentage point a year in the face of aggressive foreign competition since then, reaching 17.4 percent in 2005.

Bill Ford said the company expects to stabilize its position as new models introduced in 2005 -- the Ford Fusion, Mercury Milan, and Lincoln Zephyr -- benefit from a full year's production. Ford also said that the company's European brands, like Land Rover, Jaguar, and Volvo, expect to introduce some 20 new models in coming months.

"We have the products in the part of the market that is growing," he said. "The product lineup in '06 is the best we've had."

He added: "We're not going to do anything stupid to stabilize [share]. You can always buy it. We want organic growth."

Analysts aren't so optimistic. Mike Bruynesteyn of Prudential Equity Group expects Ford's share to fall to 16.6 percent in 2006, 16.5 percent in 2007, and 16.0 percent in 2008 because its competitors are introducing more new models than it is.

"We believe that Ford's share loss should be substantial in 2006, owing to an over-aged portfolio of products," he wrote in a report published January 5.

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