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Full-size sedans see sales falter

Michael Martinez
The Detroit News


Ford has cut back its Taurus production at its Chicago Assembly Plant.

Full-size sedans, once popular with kid-toting parents and client-ferrying businessmen, are now afterthoughts for most customers.

The once-hot segment has been relegated increasingly to fleet and government sales, and has lost nearly two points of market share in the past five years as customers flock to hipper crossovers and small SUVs.

The Ford Taurus in particular has been hard-hit. Sales reached a peak of 409,000 in 1992, but fell to around 250,000 in 2006, when the vehicle was discontinued. The Taurus name was revived two years later on Ford's Five Hundred sedan, but sales never recovered. Last year, Ford sold 69,063 of the sedans.

Earlier this year, Ford ramped up production of its hot-selling Explorer SUV — made at its Chicago Assembly Plant alongside the Taurus — and cut back Taurus production.

Full-size sales are down for General Motors Co. and Fiat Chrysler Automobiles, too. GM recently redesigned the Impala, which provided a sales boost, and Chrysler could see an uptick in sales when it reveals a refreshed 300 next week at the L.A. Auto Show. Some forecasting firms say the current Taurus — designed in 2010 and last refreshed in 2013 — is due for a change in 2017, but Ford won't comment on its plans. Some analysts believe the Dearborn automaker should cut the product altogether, as customers opt for more fuel-efficient, sporty vehicles.

"I don't know that there's much future for that segment. There's so many other choices," said Michelle Krebs, Autotrader.com senior analyst. "I don't know how many more brands will be dropped, but it's certainly something companies think about as they figure out where to put their resources. They don't put it in a segment that's done a huge decline."

Ford has killed full-size offerings in the past, including the Crown Victoria, Mercury Grand Marquis — and the Taurus itself in 2006.

In September at Ford's "investor day," CEO Mark Fields noted the significant growth in the small-vehicle segment, saying there's a "fundamental shift from cars to utilities." In Ford's annual filing to regulators, the automaker listed a "shift in consumer preferences away from larger, more profitable vehicles" as a risk to profitability.

But Ryan Cashman, Taurus marketing manager, said it's still an important vehicle.

"We still see it as a viable segment," Cashman said in an interview. "There's definitely a customer who wants a little bit bigger car, a car with some power. They're looking for a high-quality, comfortable ride."

Forecasting firm LMC Automotive predicts the Taurus will receive a minor refresh next year before a complete redesign in 2017.

In its "Car Wars" report, Bank of America Merrill Lynch Global Research also said the Taurus sedan should be updated in 2017.

Cashman wouldn't comment on if or when Ford plans to update the vehicle.

"In general, there's a constant process the company takes to evaluate where we put our funds," he said. "We're going to keep this car as competitive as we can moving forward. Everything's on the table."

Fighting for market share

Taurus had the second-highest market share among the Detroit automakers in that segment, at 13.8 percent through September, according to IHS Automotive data.

The Impala was first with 28.2 percent, while the 300 had 10.7 percent market share. Jeff Schuster, an analyst with LMC, expects the Taurus will lose some market share through the rest of the year thanks to the Impala redesign and facelifts to the Chrysler 300 and Dodge Charger.

The Taurus's average selling price was $27,958 in the first quarter of 2014, down 6 percent from the same time period a year ago.

That's the cheapest among the Detroit automaker's full-size offerings. A tricked-out Taurus SHO goes for nearly $50,000 — creeping to the price range of Ford's more prestigious Lincoln luxury line.

Ford says about half of Taurus sales are retail, with the rest going to fleets.

Most of those retail sales go to older, educated customers. Cashman said 56 percent of Taurus owners are couples 55 years old and above. When they turn in their Taurus, however, most look for a different Ford vehicle. Only 25 percent get another Taurus, Cashman said.

"You always want to retain more in the vehicle," he said. "I don't think 25 percent is all that shabby, I think it's a pretty OK number."

Tom Libby, an analyst with IHS Automotive, said automakers haven't been focusing as much on their full-size offerings because they feel they can cover the segment with mid-size cars. Still, he doesn't think Ford would consider dropping the model.

"It's an extremely competitive market and they're fighting for every tenth of a market share," he said. "It's almost impossible to keep those buyers with that brand if you drop a model."

Push to be competitive

Chevrolet rolled out a new Impala for the 2014 model year. The stylish full-size car has been highly regarded, has received numerous awards and in 2013 won Consumer Reports magazine's top-ranking sedan honors.

GM has flipped its retail-fleet ratio, and now sells 70 percent retail and 30 percent fleet.

Executives have said the redesign has helped reduce the average age of a customer by three years and has dramatically boosted average sales prices. In August, the Impala's average sales price was around $29,700.

Model redesigns do generate an increase in AutoTrader.com site activity once released, the company said.

And IHS's Libby said that could be all the incentive Ford needs to refresh the vehicle sooner rather than later.

"If you leave a model in for more than six years, your model becomes obsolete," he said. "I think they'll be forced to do something to keep it competitive."

mmartinez@detroitnews.com

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Twitter.com/MikeMartinez_DN