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2007, 2008 AND NOW 2009 SHELBY GT500


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Funny, funny. I don't think it was said "loses money" just "not a big profit car, due to the small numbers in relation to total FMC sales volume.

 

:hysterical2::hysterical2::hysterical2:

 

:hysterical2: I was just responsing your comment below... albeit in a verbose and roundabout way :) ...sorry for the long discussion... I can't help myself sometimes ;) --Dan

 

"I would suspect that if sales for next couple of quarters dosen't pick up on their regular auto and truck line, they may be cutting back on the non-profitable models such as the gt500."

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Legislation (in the Focus case CAFE) makes companies do funny things ;-) But the GT500 is selling out and the Mustang is one of Ford's most successful cars, therefore it is virtually impossible for the GT500 to not be 'profitable,' imo.

 

Admittedly, depending what level one chooses to abstract Ford's performance at, one could also make the [valid] case that all Fords sold in North America are unprofitable. Problem is, if [during recovery] they were to price every instance based on just profitability in the face of below-forecast sales and uncompetitive [legacy] cost-points, those vehicles would rapidly become price-non-competitive and enter a "death spiral." Instead, it makes more sense to plan their replacement and/or cost reduction staragey as non-disruptively as posible and avoid the much larger 'breakage' of a market-managed death spiral of individual brands (based on price-to-profit in the short term) -- something that remains indellible in the consumer's mind for a long time (not branding any Edsels lately).

 

So, in the face of $12B in losses last year (which is actually a huge 'overstatement' once you suck out the one-time buy-outs/resturcturing costs -- tho real), all/most N.A. Fords may be unprofitable today, but in the context of turning around the company and against their strategic plan costs (based on their long term plan to turn the company around), they are not. Don't laugh at that tho (I know, it sounds like double-talk). If the notion of a death spiral isn't desireable (hello DCX), capital must be raised to implement the cost reduction plans (reduced costs take money to achieve) so the actual costs and volumes will allign with plan costs and volumes over the strategic plan period. By definition, all vehicles in that timeframe will be 'plan-profitable.' Whether they are actually profitable will be either an indictment or a testament to how well Ford is/isn't managed and how effectively Ford creates and executes those plans. Nothing new in this approach that IBM, Motorola and others haven't managed, albeit that cars are a bit unique and manufacturing intensive. Not easy, for sure, just nothing fundamentally new either ...and. clearly, all the best planning is useless if the products are not fundamantally desireable.

 

Back to Mustang... given it's overall market performance and the reasonable, imo, assumption that the sizeable dealer-cost differences between the base V6, the GT and GT500 all reflect a consistent pricing philosophy, the GT500 has to be 'profitable,' imo.

 

Btw, I've read that the Ranger is also priced at a significant loss (not unlike the Focus,) in that the base models are priced very aggressively for the benefit of dealer advertising, knowing full-well that few will actually buy the austere hard-surface-interior beenie-hub-cap edition, if for no other reason than when you go to the dealer, all the ones on the lost are fitted-up very differently -- old story.

 

If anything, the GT500 may well be the most profitable Mustang made and may be one of the most profitable Fords sold in NA -- dunno -- than again, may be that statement, is merely "faint praise." ;)

 

Dan

 

 

Let's take a look at your assumptions. The invoice to the dealers for the GT-500 is no more than $39,000. If you piece out the parts of the 500...$20,000 motor, Tremec Tranny etc. there isn't much room for profit margin. This car was produced to be Ford's Halo car (loss leader if you will, to bring customers in who would buy the Mustang GT and V6...looking at the numbers this is where the mustang sales are coming from. Also, even if they invoiced these at a higher rate 9,000 doesn't make your botom line. A good friend of mine recently retired and sold his California Ford dealership and basically explained Ford's strategy. The problem with the Halo thing is the fact that it backfired in a way where the dealerships screwed so many customers they laid the ground work for their competitors success...although for now the Shelby still brings customers in and the customer buys a GT etc. because they want a Mustang and they feel like they are close to the Shelby world in a GT. So the dealers are making a few dollars on the Shelby and at the same time loosing their customer base because of their failure to work with long time customers. I heard of one guy who went to his dealership where he buys fleets of F-150's for his business. When he confronted his longtime fleet manager about a reasonable ADM on a Shelby, the dealer wouldn't budge from $25,000 over. That customer went elsewhere and purchased his Shelby at a decent price and will now be buying his fleet of trucks from this new dealer. Sometimes you really have to wonder about what is going on in peoples minds...

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Let's take a look at your assumptions. The invoice to the dealers for the GT-500 is no more than $39,000. If you piece out the parts of the 500...$20,000 motor, Tremec Tranny etc. there isn't much room for profit margin. This car was produced to be Ford's Halo car (loss leader if you will, to bring customers in who would buy the Mustang GT and V6...looking at the numbers this is where the mustang sales are coming from. Also, even if they invoiced these at a higher rate 9,000 doesn't make your botom line. A good friend of mine recently retired and sold his California Ford dealership and basically explained Ford's strategy. The problem with the Halo thing is the fact that it backfired in a way where the dealerships screwed so many customers they laid the ground work for their competitors success...although for now the Shelby still brings customers in and the customer buys a GT etc. because they want a Mustang and they feel like they are close to the Shelby world in a GT. So the dealers are making a few dollars on the Shelby and at the same time loosing their customer base because of their failure to work with long time customers. I heard of one guy who went to his dealership where he buys fleets of F-150's for his business. When he confronted his longtime fleet manager about a reasonable ADM on a Shelby, the dealer wouldn't budge from $25,000 over. That customer went elsewhere and purchased his Shelby at a decent price and will now be buying his fleet of trucks from this new dealer. Sometimes you really have to wonder about what is going on in peoples minds...

 

20K is the greatly exaggerated retail for the replacement motor -- do you think there's more than several thou (parts/labor and mfg cost to make one more, without corporate burden, advertising, etc ) in product-cost in that motor?

 

Will GM be losing money on the Camaro? DCX on the Challenger? Overall the big three are hurting, but I would expect these cars to have some of the best margins -- dunno.

 

...there are certainly loss leaders in business, but they typically pay back over their full cycle -- all the more reason to put that engine in either a GT500 or Mach in '09-11, imo, to mets it's [reportedly] 5-year production plan.

 

I certainly do agree with you points on dealer shortsightedness, etc. I guess markets vary but up here in rural NY, if a dealer tried to sell these cars to their local loyal customers at high ADM, it would create a lot of ill will. Big-city markets might be very diff though.

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Carol only signed a 2 year agreement for now, without his agreement there can not legally be an 09 GT500, Ford does not own the rights.

Carol will sign though if Ford wants him to, it all depends on how the car is selling by end of 08, I doubt there will be an 09, they would most likely have to offer big rebates because by that time the new Camaro with a blown 6.2 will be out as well as the Challenger and new Z06SS with 650hp, not to mention the 08 viper with 600hp.

 

I hope they release it as just a Cobra without Shelby anywhere on it. Maybe then it will cost 40k, which is what it should have cost to begin with before he put his name on it.

 

:hysterical:

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I agree. I believe that Ford would have still sold every 2007, 500 HP Mustang produced without the Shelby name. The drivetrain is what will sell the car not the badge on it. Since 1996 SVT was pumping out around 10,000 per year so my guess is that Ford still has an untapped market for this car, if they can keep the street price reasonable.

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I agree. I believe that Ford would have still sold every 2007, 500 HP Mustang produced without the Shelby name. The drivetrain is what will sell the car not the badge on it. Since 1996 SVT was pumping out around 10,000 per year so my guess is that Ford still has an untapped market for this car, if they can keep the street price reasonable.

 

+2 The extra $250 for the Shelby name is not exhorbitant, but SVT would look just fine back there too ;)

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I would not have bought without the Shelby name. I would have waited for the Challenger. I used to own one in the 70's. Most will know the SVT brand better than me so you are probably right about the market. It would just be different demographics I suspect.

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NEW TO THIS SITE . but i believe the competition gonna be tough for ford cause camaro and challenger .

 

Hi twicebitten!

 

WELCOME to SU -- glad yopu found us!

 

yeah, should be interesting in '09 -- make you wonder what the Blue Oval and Shelby have up their sleeves ;-)

 

we live in fun times again.

 

Dan

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There's a hot rumor I've heard that it's an MY'10 but with an unusually early intro in April '09, but I've not been able to get any validation on that. If that's true it would seem a refreshed chassis could support either a modular or a different block (H/Boss?) :spiteful: I've gotta hand it to Ford for keeping the leaks plugged -- even if it's driving me nuts! <lol>

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There's a hot rumor I've heard that it's an MY'10 but with an unusually early intro in April '09, but I've not been able to get any validation on that. If that's true it would seem a refreshed chassis could support either a modular or a different block (H/Boss?) :spiteful: I've gotta hand it to Ford for keeping the leaks plugged -- even if it's driving me nuts! <lol>

 

 

OK, lets assume they are planning on 2010 model for the Boss. And assuming the recent news from Jeff at SVT saying no for a 09 GT500 is true. What will be the new model for 09 as the new specialty Mustang?

 

Perhaps a production version of a GT350? Replace the hood, maybe throw on some factory side scoops, lose the SC and pump out 10K - 15K for 09 as a GT350 with 350HP - 400HP?

 

Or maybe a Mach 1, although I would think they would want more than a one year run on this model which would scrap this as an 09 model with a new design coming out for 2010.

 

Then of course if they did a mass run of a GT350 then I suspect SAI would offer up a package for those like they have with the 40th and SS on the GT500.

 

Since Ford and SAI are working together now, I would suspect a GT350 version to be built by Ford like the GT500 so they can make their cut on this as well.

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OK, lets assume they are planning on 2010 model for the Boss. And assuming the recent news from Jeff at SVT saying no for a 09 GT500 is true. What will be the new model for 09 as the new specialty Mustang?

 

Perhaps a production version of a GT350? Replace the hood, maybe throw on some factory side scoops, lose the SC and pump out 10K - 15K for 09 as a GT350 with 350HP - 400HP?

 

Or maybe a Mach 1, although I would think they would want more than a one year run on this model which would scrap this as an 09 model with a new design coming out for 2010.

 

Then of course if they did a mass run of a GT350 then I suspect SAI would offer up a package for those like they have with the 40th and SS on the GT500.

 

Since Ford and SAI are working together now, I would suspect a GT350 version to be built by Ford like the GT500 so they can make their cut on this as well.

 

...or the Boss is Ford's version and the GT350 is SA's version.

 

...the Mach could be a one-year tape & sticker on the GT500 base, but I agree that'd be an odd staging and the GT500 motor would still need ahome for at leat two more years (assuming a minimum 5-year run).

 

...or Evolution knows someting about the GT500 in '09. After then came back from the seance at Ford WHQ, Fred had some interesting insights... could this be one of them? The Mach could be the '10/'11 incarnation of the GT500 motor?

 

...or the GT500 motor carries into a Super Cobra Jet Mach or the new top dog becomes on the new chassis is a 6.2 or 7.0L Shelby King Cobra or ???

 

The names sort of get in the way... I think the refresh date is key and the next motor is key. How they get packaged is likely a combination of history du jour given competition and planned engine development.

 

Ford did strongly imply they're on a two track plan: Ford and SA-modded Ford. If the GT350 is an SA build off the Ford Boss, a King Cobra could be the build off a H/Boss-based Mach on the refreshed chassis starting in MY '10 ...dunno.

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Let's take a look at your assumptions. The invoice to the dealers for the GT-500 is no more than $39,000. If you piece out the parts of the 500...$20,000 motor, Tremec Tranny etc. there isn't much room for profit margin.

 

Completely flawed logic. If this were the case, every car would be loser. If you were to build any car from scratch using the pricing of individual parts, it would cost you probably 3x as much as the one sitting on the lot. Ford certainly didn't realize the amount of profit it could have if it had priced the car more in line with what the market is bringing (including the ADM), but a money loser? - no way.

 

 

The problem with the Halo thing is the fact that it backfired in a way where the dealerships screwed so many customers they laid the ground work for their competitors success...although for now the Shelby still brings customers in and the customer buys a GT etc. because they want a Mustang and they feel like they are close to the Shelby world in a GT. So the dealers are making a few dollars on the Shelby and at the same time loosing their customer base because of their failure to work with long time customers. I heard of one guy who went to his dealership where he buys fleets of F-150's for his business. When he confronted his longtime fleet manager about a reasonable ADM on a Shelby, the dealer wouldn't budge from $25,000 over. That customer went elsewhere and purchased his Shelby at a decent price and will now be buying his fleet of trucks from this new dealer. Sometimes you really have to wonder about what is going on in peoples minds...

 

There's this myth that somehow Ford is losing large swaths of its customer base over Shelby ADM's. BS!! Your case-in-point does a great job of disproving the myth - a guy bought his Shelby elsewhere and took his fleet business with it. Well, I can only assume that if he bought a GT500, that he bought it from another Ford dealer and gave this new dealer his fleet business. The net effect on Ford is zero. It may hurt the dealer that lost the fleet business, but he's still buying Fords, just from another dealer - so what? The reality is that the intensity of the religion people have concerning the GT500 and what if any effect it has on how they view Ford, doesn't go far beyond the circle of the most rabid forum members. The fact is that the GT500 is of interest to only a very very small minority of Ford customers. Most of them who get turned off by any given dealers' attitude take their business to another Ford dealer, not another brand. 99% of Ford's customers have no interest in the Shelby (Shelby who?) and are more interested in getting their [ordinary] car or truck at the best possible price and nothing more. The bulk of Ford's profits (if any) still come from the sale of trucks and SUV's.

 

The decision to build a third year will ultimately rest on how well it fits or doesn't fit within the longer range plan. At the end of the day, the GT500 is just another number on some beancounter's spreadsheet, and if the math doesn't justify itself, then it doesn't get the green light. The GT500 may be profitable, but if it consumes a disproportionate amount of resources that could be used to make something else more profitable, then it will most likely be put aside. More than likely, it will be looked at with an eye towards how it hinders or enhances the Mustang line and any other special editions. It's actually a win-win for Ford. Current GT500 owners will not complain if a 3rd year isn't built. Those holding their breath for year-3 will either go to the used market or wait to buy the next special edition Mustang.

 

As for the Camaro, no matter how powerful the car is, it will be priced accordingly. It will not appreciably affect Ford's pricing in a third year of GT500 production. Think about it. Assuming 2009 is the last of the GT500's, it'll be get'em now before they really are gone for good. The biggest mistake in people's analysis of how the Camaro may change the dynamic on sales of the GT500 is that they are really comparing apples and oranges. The GT500 is a limited production vehicle that will, at best, not be produced beyond 2009. That in itself carries a lot of pricing power. The Camaro will be a mass-produced vehicle like the Mustang GT. Even the SS version will be produced long into the future so there's not quite the pressure on the consumer to get'em while they can like there is with the GT500.

 

If we want to talk about the Camaro and how it may affect Ford, the more valid comparison will be on how it affects the Mustang and Mustang GT. This has been and always will be the classic battle. Only if Chevy were able to somehow resurrect the Yenko name and follow with a limited run could a comparison be made between the Camaro and GT500. But even then, by the time a Yenko were to come about, if at all, GT500 production will have long since ended. That's the key here - the GT500 will effectively not have to share the market with any of the new pony cars from Chevy or Chrysler, so any comparison is moot.

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The head of Ford marketing was one of the guest speakers at this years Mid-America Ford Performace and Shelby Meet in Tulsa. He talked about the coming Chevy Camaro and Dodge Challenger and said that Ford has made a commitment that everytime one of the other brands introduce a Camaro or Challenger with more horsepower than the Mustang that Ford will introduce a Mustang model that will have more horsepower and top them. He said the Mustang will not be out horsepowered.

We will just have to wait and see. I hope he is right.

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This was echoed by CS in a number of interviews. If april 09 is the drop date then they would have to end 2008 my production early. Being that its produced on the same line, I doubt they will shut down early to retool. It would make no sense to do an SE for one year. Too much cost involved unless its a tape and sticker package or Shelby auto absorbs the cost/production. That being said, they have so many projects going on, I don't think they have room for one more. I am still hearing 09 gt500 but we will see.

 

Roger

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Ford could also be moving the Mustang into a diff Ford-owned plant for the refresh -- one it may want the mustang to share with another new vehicle on a mustang chassis variant.

 

Mazda has expresed interest in acquiring Ford's interest in the AAI Flat Rock facility, and the refresh change-over may be the ideal time to release that capacity to them.

 

Also, Ford could do just one model on an offset schedule as they've done on several occasions in the past, e.g. the MY'10 Boss in April '09 with other models on the traditional schedule. That might work nicely, especially if the Boss may require special consideration as the first H/Boss in a new chassis (if it is), and might also be the basis for SA's GT350 build (the two-track plan).

 

Wish I knew more about the manufacturing- and tooling-specific considerations, but these are likely the kinds of considerations that are on the table based on the little we know (or think we know <lol>).

 

...no inside scoop here, just thinking out loud.

 

Dan

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I wasn't aware they were even looking at selling the space on the aai line. I hope they have carried over the same build quality in a new factory. Being that ford is in restructure you think they would wait a while.

 

Mazda reportedly expressed their interest last summer ...apparently AAI has easy rail and ship(??) access that makes it attractive for shipping abroad (dunno, but that was the context I heard) ...but have no idea if still under consideration.

 

Dan

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