TMSBrad

April 4, 2005
To: All California Region Dealers
Subject: Mustang Retail Orders

As you know, the 2005 Mustang has been a true rebirth for an American Icon. Mustang sales in the California Region are up 45% year to date through March 2005 and continue to gain momentum. Mustang is drawing new customers to our showrooms and is a key element in our collective efforts to re-energize the Ford Car business.

While we continue to develop ways to increase production, demand is far ahead of supply. This is especially true for the Mustang GT; we currently have over 1,327 Mustang retail orders in the order bank of which 1,216 are GT's. We are working with our suppliers to increase GT production; however, we do not expect a significant increase before we balance out of the 2005MY.

Based on the current order bank and existing production plan for 2005MY, we anticipate that some retail orders may not be built as 2005MY vehicles. There will be no price protection for any orders carried over to the 2006MY. For these reasons, it is critical for you to manage your order bank, as well as the expectations of your customers.

Actions requested

• Set a realistic forecast of your expected allocation based on the final two wholesale periods (May & June through Balance Out). If your Mustang day supply is at Regional average, you can use your historical average allocation rate to forecast your estimated May – BO production. For GT, we estimate between 25-30% mix for allocation. The last 2005MY Mustang will be built on August 5th, 2005.
• Ensure that your retail orders are prioritized so that, when allocation is available, they are the first vehicles to be selected.
• If customers are interested in a GT and are not willing to wait, be sure to promote the V6. They will be surprised by the improved performance and appearance of the V6, and find that it has much of the excitement they're looking for in a GT—at a lower price. (Please note that V6 orders must be contained within your dealership's allocation.)
• When communicating with customers who are waiting for a vehicle, please manage their expectations by explaining the high demand for the 2005 Mustang and the potential for an extended wait.
• When taking new retail orders, please examine your current retail order bank versus your Mustang allocations. If you currently have several customers waiting, we recommend that you communicate this to the new customers and explain that the vehicle may not be delivered as a 2005 Model.

We are working aggressively to meet the demand for the extremely popular new Mustang. We appreciate your support in managing customer expectations to ensure the highest level of satisfaction.

Sincerely,
California Regional Sales Manager

GhostTX

OMG...GTs out number V6s nearly 10:1 for orders and Ford is only building 37% GTs??!? WTH is wrong with this picture?!?!

TomServo92

They're only building 37% because they only have parts to build at that ratio. The letter states they are working with the suppliers to ramp up production. From what I can Ford is doing what they can the fill the orders but production can only be ramped up so fast. That's why they have the disclaimer about unfilled orders being moved to 2006MY.

moc1976

OK, its like the point I was getting to in another thread, why didn't Ford have a contingeny plan in place for this new product

We all know its been a great success, and that Ford had to plan based on past numbers, but they had to know that GT numbers were going to be up from past years. 37% seems low to me. I"M NOT SAYING THAT ITS EASY TO INCREASE PRODUCTION, BUT PLAN FOR IT IN CASE ITS NEEDED.

When they planned their production breakup, I still think they should have increased the % of GTs over past years, and had a plan in place to be able to quickly adapt if demand for the GT was higher than their plan.

No price protection for an '06, that's BS, especially if you've been waiting for months for the '05. Just another example of Ford's great, I mean pathetic customer service :notnice: :bang:

clintoris

They're only building 37% because they only have parts to build at that ratio. The letter states they are working with the suppliers to ramp up production. From what I can Ford is doing what they can the fill the orders but production can only be ramped up so fast. That's why they have the disclaimer about unfilled orders being moved to 2006MY.
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I thought there was a 37% allocation for GTs to begin with because some idiot thought that the general public would prefer the v6 over the GT. I know there are a lot of people that would prefer the V6, but if they'd have done their homework, they would have found out that the production allocation should have been 63/37% with a GT bias.

Loch

What if they make a few thousand dollars worth of improvements/additions to the ’06 car? You think because you have an order in for a ’05 that you should get these improvements/additions for free if your order gets moved to a ’06 model?

moc1976

Few thousand dollars worth of improvements/additions? Do you have some information that Brad doesn't? The only thing I know is that the 18" fanblades will be an OPTION. Other than that, don't think we'll see many more changes.

Its a bit IF, but IF there are a bunch of improvements, than that's the only reason to not price protect. IF its pretty much the same car, it should be price protected.

k3druid

If they took and have been sitting with your Down Payment, then you should have some price protection.

lodom

I think they should be price protected too. This is bad PR for Ford, but they really don't care. They never have.

k3druid

OK, I would also like 18" fanblades and
change the colour to tungsten for FREE.

Stadifer

I gotta defend Ford a little bit here. First off historically it has been the V6 sales that has carried the Mustang (roughly 70%+ EVERY year for a long time). Why would you suddenly shift production when your past numbers clearly indicate that the V6 is the bigger seller? The only reason why GT's are in such high demand is because this is the first year of an amazingly succesful re-design of America's pony car. So in turn the major Mustang fans said "I want that!" so the first year is expected to see a surge in GT sales. Next year or the year following it is likely that sales once again shift towards the V6.

Should Ford had expected this change? Perhaps, but the numbers clearly showed that the V6 is the top seller.

As far as production capability is concerned. An article posted on here made it pretty clear how Ford figures out what cars get their V8 engine. The report stated that Ford felt the F-150 line was too valuable to decrease its production which takes the same engine. You can't increase production if you can't increase the production of ALL the components that go into the car. I can't blame Ford because they'll make far more money on an F-150 then they ever would a GT Mustang.

So Ford is left with only two options. Reduce demand by increasing price or allow the market to find its own equalibrium. So far it appears Ford is doing the later and for that I'm relieved. If Mustang takes a big price increase it could push it out of my price range easily.

I do agree that no price protection is crap. I also understand everyone is excited to get their very own pony. Unfortunately sometimes you have to wait for a very good thing. Look at it in a positive way. You'll have more time to save up a down payment and in turn decrease the interest paid for your loan.

Webba

This is what I was concerned about. Turning production up on something like this is probably a nightmare and cannot be done fast. At least not fast enough for customers. And I honestly dont know what you could do to plan for something like this. Only way is to invest in another production line and then hope it is needed. But the cost of doing so would be insane and our stangs would cost double what they do.

mr-mstng

Exactly. Suppliers are told they can expect X amount of widgets purchased over X years. So if Ford comes back and says "Hey, we need more widgets", then the supplier has to produce more. That may mean adding capacity, and that is not quick nor is it cheap.

Eleanor Dreaming

Well if the chemical makeup of the gallon of 2% milk I bought last year, is the same as the gallon I bought this year why is it more expensive.

Webba

And not only that but with the BS manufacturing sector clsoing plants in the US and sending it to China at an alarming rate there isnt alot of US suppliers. Those that are work off ridiculous margins. It is complicated and involved and will take time.

Maverstang

This once again shows the complete and utter failure of the market planning teams to understand the market for this car.

Product design and execution was perfect, but the market planners simply carried over the 2004 product mix estimates for what had essentially become dowdy car on it's last legs (Cobras not withstanding).

They failed to understand the broader market appeal of the all new model, which includes more affluent older people and baby boomers as well as perrformance enthusiasts. Not to mention the retro appeal. These groups all want higher spec GT models.

It's a good case study for a marketing course.

Xader Vartec

My 2cents:

I would normally prefer an '06 this late in the year. HOWEVER, the "Sonic Blue" color is my favorite color of all time. Well, the '06s don't have Sonic Blue. Sooooooooo, I would like an '05 because I can get the Sonic Blue.

BTW, anyone have a pic of a swatch with the new blue color for 06?

mr-mstng

Ask the cows.

Hellcat6

Any major manufacturing operation will have a built in ability to surge, to increase production to maximum capacity. Ford is telling us that they have already done that. It would take a major muscle movement for a dramatic change and Ford is not going to damage the bottom line to crank out low profit cars in exchange for high profit trucks. Any reason to expect that this situation will be vastly improved in 06? Maybe not.

The message says that "some retail orders may not be built as 2005MY vehicles". It does not say that the rest of the orders will automaticly convert to orders for the 06 with no loss of your place in line. In fact the "no price protection" comment leaves me to believe that existing orders not filled get dumped and the entire process starts over. Not good news for those waiting months already. Better be standing there to reorder the day they start taking orders for the 06. Ford is going to lose customers over this.

TomServo92

You keep talking about a contingency plan. Care to elaborate? What could Ford do as a contigency plan other than pay for additional production capacity that, looking from the 2002-2004 planning timeframe, may or may not have been necessary.