Dropping Fuel Prices Could Kill 2015 Ford F-150 Advantage?
Tim Esterdahl | Oct 22, 2014 | Comments 11
Recently, fuel prices have been dropping through the country leading to questions about what fuel economy advantage will be with the all-new aluminum-based 2015 Ford F-150. The lighter weight F-150 should be much better on fuel, yet will anybody care about MPG when it launches?
A recent story in the Wall Street Journal questions Ford’s advantage in light of fuel prices being on average 23 cents lower than this time last year. In fact, the last week fuel prices dropped nearly 9 cents. Overall, gasonline prices have dropped 15 percent in the last four months. Cheaper gas is great for consumers, however, it isn’t so good for pushing out the next generation fuel-efficient trucks.
Ford defends themselves by saying they are looking long term. Joe Hinrichs, Ford’s president of the Americas region, said the truck positions Ford to be competitive for years to come as government fuel-economy standards rise, according to the Wall Street Journal article. And it gets a jump on the No. 2 truck seller, General Motors Co., which also plans to increase the use of aluminum and composites to produce lighter-weight vehicles.
Speaking of lighter weight, the new F-150 weighs around 700 lbs less in the crew cab model versus prior models. However, as we have pointed out several times, this weight drop puts it on par with other makers and not the segment leader.
The weight savings should translate into anywhere from 5-20 percent improvements in fuel economy depending on the model setup. Unfortunately, fuel economy numbers haven’t been released yet and won’t be until sometime in November.
Currently, EPA fuel economy estimates of the 5.0L V8 is 15/21 mpg (2WD) and 14/19 mpg (4WD). If you add 20 percent to these figures, you get approximately 18/25 (2WD) and 16/23 (4WD).
This may seem like great fuel economy, but remember that these figures are for the base models and thus are the lighter weight models. All automakers do this when putting out truck information.
Real-world fuel economy is a different story. A quick scan of the popular Fuelly.com site shows most Super Crew trucks come in at 15-16.
If the new F-150 indeed provides better fuel economy for the Super Crew and real-world customers, it looks like it will be more in the 2-3 MPG range. This may not be a big selling point considering an oil glut is seeing fuel prices drop.
Financial analysts seem to agree. Ford shares recently traded at an 18-month low.
“The world seems to have fundamentally changed from when the product was” first planned, said Brian Johnson to the Wall Street Jounal, a senior analyst at Barclays who calculates the cost to Ford of developing new engines, production equipment in excess of $3 billion. Ford “will improve the price point over the outgoing truck by appealing to the price insensitive, upper-end buyer, but getting a premium based on future lifetime fuel-economy savings isn’t going to happen.”
Also, Adam Jonas, a Morgan Stanley auto analyst, recently lowered his outlook for Ford shares based on the risks associated with the F-150 launch.
As we have suggested several times, the new 2015 Ford F-150 is a big gamble. While it will pay off to some degree for Ford, it remains to be seen how much.
Filed Under: Auto News
This says a lot about the state of most American’s savings. Always looking at the short term. How many times have we seen oil swing up and down in the last 40 years. One day we have enough oil for 100 years then next year we will run out in 10.
Saving fuel is always a positive idea no matter what the cost. If gas is .25 a gallon it’s still a positive move to conserve whenever possible.
Just watch, people will move back to gas guzzling rigs and 5 years from now the surplus will all have been an illusion, they will be stuck with a 12 MPG 3/4 ton truck which they paid 50,000 for and they won’t be able to give it away or pay for the fuel.
If the new Aluminum small engine F150 turns out to be a solid truck, people would be stupid not to take advantage of it. Will it be solid? That is yet to be determined.
Agree with Larry! Falling fuel prices will have no effect on F150 sales. This is not the first time in the past 4 years that we have seen gas at the sub $3 mark. The point is that fuel prics are volatile and fluid. Like Larry said, people would be foolish not to take advantage of the truck’s fuel savings regardless of fuel prices. Unless prices fall back to the 1990s level of $1 a gallon fuel mileage will still be a major player going forward.
The major element that will “kill” the F150 advantage is Ford’s reputation. It is in the tank and most knowledgeable truck buyers know it.
Ford has proven to the truck buying public that out of the four primary half ton makers, they have the lowest quality and the poorest warranty.
There is no question their design prowess brings in a lot of buyers and even though they are the leader in that “one” area; the fact remains the quality is ultra-low and the warranty is worthless.
The F-150 is one manufacturer’s bold response to unnecessarily heavy vehicles. It’s known that both cars and trucks need to be strengthened and lightened and Ford is leading the way here.
Recently the price of oil was dropping quickly from the long anticipated contraction in Asia’s slowing economy. Up until this time, the US economy had been stagnant at best and our oil consumption was at historic lows when population is factored in. Our prices are also at historic highs and incredibly, we are refining the most oil in history and then exporting gasoline. Americans are not using fuel at the rate we once did. But low prices may be a thing of the past if the Fed remains a key influence in world markets.
Recently as Bent Crude approached $80 per barrel, the Fed single handedly halted the market’s decline with a commitment to print more money. Immediately the market slide stopped and with it, oil began to climb.
The US has the most oil of any nation on earth and our own unique shale oil production could propel us into the future with inexpensive fuel for more than 100 years. That has OPEC fearful. If reading the market correctly, we frankly do not need to import any nation’s oil and that includes the proposed Canadian oil pipeline that was rejected by the regime.
There is more at stake here than just the price of gasoline. Our nation’s financial future lies in the balance and we have a slim chance to bring immense prosperity to every American and auto manufacturers would see a concomitant boom in their business domestically.
The Saudis are trying to corner the market. They’re relying on their 3-year reserves to weather the storm that has dropped oil below $90/barrel. They want to rid the market of cheaper shale-produced US oil, our own golden goose. The Saudis just cut production predicting the market will quickly rise back above $90.
Low priced oil is good for Americans as our economy (prices of commodities, food etc.) is dependent on trucking with includes business travelers who are dependent on flying and just overall driving. Americans love our cars and trucks.
Oil, coal and natural gas are under attack by extremists in Washington. Until those people are removed and our government gets out of the way, we will see oil continue above $90 and beyond for the indefinite future.
Ford’s innovative and potentially segment-leading program despite assuming large financial risk, could consolidate its lead for a generation. Land Rover was first to cut massive weight and their sales are up 15% in ’13 (Jag up 42%). I can see the similar gains happening for Ford’s truck division.
What surprises me the most six years into an anti-energy regime is that most vehicle manufacturers haven’t developed at least a sound diesel engine program for its heaviest vehicles when any number of power trains are available at their disposal.
Rick,
You are right on the money in so many ways. The Fed has way too much influence in all of this.
As for diesel, I’m not sure the american public will accept the way a slow running diesel engine works beyond it being a niche segment of the market. Then we have the fed requiring so many add ons to the diesel exhaust systems putting it right at the point where it just has no cost advantage. My 5.9L diesel is old enough to not require DEF fluid or a particulate burn off filter and those 2 items would prevent me from buying diesel. It gets great millage but, it red lines at 3000 RPM. Step on the peddle to pass in 4th gear and it just does not behave like a gas motor but, that’s not what it was built for.
While the aluminum small turbo V6 F150 is not for me, I think people will jump on it and if by some change Ford gets the quality high it’s going to re-write the 1/2 ton truck market and every other manufacture will be forced to follow.
Larry,
I was driving a ’98 Chevy 2500 with a gas 350 motor (RCLB) when a salesman suggested I look at the ’02 Chevy Duramax. I wasn’t considering a new truck nor even a diesel until I took the Duramax for a spin. Shocked at the power and the MPG, I traded in my ’98 and bought the Duramax. That 4wd 3/4 ton truck weighed @7000lbs. In comparison, my Tundra weighs @5700 (non-4wd). My ’02 didn’t have many add-ons and a few mods made my truck very fast. The 18mpg combined also dwarfed my ’98’s 13mpg. I was confident my diesel would tow almost anything.
If Toyota had a diesel with at least 500 ft. lbs of torque for the Tundra I would have bought it. My 5.7 CrewMax is still the best gas truck i’ve ever owned and Toyota would have reaped benefits with a smaller V8 diesel combined with it’s low curb weight. They could have been the first manufacturer to offer big power in a 1/2 ton truck. Both Ford and Chevy have small V8 diesels but shelved them years ago. Inexpensive fuel may have been a factor.
By Nov. 2013, Ford had already passed its 2012 annual production for pickups and produced @700k F-series vehicles. GM finished at @665k, the Ram was at @367k and Toyota’s Tundra finished 2013 with @112k. If all four models increase production in 2014 at just 10%, the volume leaders would stand to gain the most with Ford making profits on 70k more trucks.
As “MK” pointed out, brand loyalty is huge factor and a steady desire to improve your brand is important to buyers. Weathering the storm from scattered reports about the reliability of its EcoBoost V6, Ford stands to gain from their new F-150.
The Ram has surprised the industry turning its product around dramatically. Dodge has seen substantial annual increases in sales and many of those Ram buyers were conquest sales. Their robust V6 diesel sales are a positive affect of a heavier pick-up being endowed with a segment exclusive diesel, albeit a small engine, geared with an 8spd.
This is a strong case that higher MPG is coupled with diesel and buyers are aware of that and ready to purchase.
It’s just a shame Toyota didn’t get an iron in that fire.
Rick all good points. I had to look up the word concomitant. LOL
The Fed: Oh yes I remember when regular gas was 22 cents and with a gas war pushed it down to 18 cents. You could also buy a trunk load of groceries for less than $20 and that include a ton of prime beef.
If the world of half ton trucks goes to aluminum then I will be more than happy to wait until Toyota makes it so at least there is chance it will actually work.
Holly smokes, 22 cents a gallon. I can remember gas down around, .25, but by the time I started driving was up a bit. The lowest I ever remember paying was .29 and I am 60. If you remember paying .22 the .18, you might be 61?
All this is too high tech for me. My 2006 diesel still has push rods.
Yep that .22 and .18 was Abilene TX about 1968. At the same time in DFW the price was around .25 to .29
I only wish I was 61 again. LOL
ford will still sell tons of f150’s due to brand loyalty regardless of mpg or price decrease in gas.
Many thoughtful points, but there’s one more: a Hino Powered 4 cylinder Taco with a 6/8 speed auto would be a threat as well–Toyota should do more with Hino, they really should and they not be shy about it either with their advertising/marketing.