I have a unique perspective on Ford Motor Company (NYSE:F)‘s upcoming 2015 model Mustang. As you can see from the personal photo below, I drive a mustang and I love it. On the other hand, I’m also a Ford investor and understand the need to make the next Mustang part of a global platform to expand sales. This design change will likely be the biggest challenge the Mustang has faced in its lifetime. It also faces another challenge – General Motors Company (NYSE:GM)‘ Camaro. The Camaro has topped the Mustang the last three years in U.S. unit sales and sports a flashy redesign. Let’s look at these two issues and see what Ford Motor Company (NYSE:F) has in mind for the secretive 2015 Mustang.
Photo credit: Author
Global or bust
The driver in me cringes when I imagine the style change that the Mustang would need to attract a much different European consumer. It just wouldn’t be the same bold, iconic muscle car, because that strategy doesn’t work outside of the U.S. market. It would likely take the muscle car and make it smaller and more modern — the opposite of the retro look it has now. Ford Motor Company (NYSE:F) also has to make sure its model isn’t too different so that it can take back the sales lead in the U.S. market from General Motors Company (NYSE:GM)’s Camaro. If it goes with a more European style in its design, it risks losing even more ground. As an investor I cringe at the thought of alienating the cult following that the Mustang has had for decades.
I cringe even more at the idea of alienating both markets by creating something too big and inefficient for Europe, and too Euro-inspired for the U.S. market. Martin Smith, chief of Ford Europe design, admitted that the challenge represents a fine line to walk. “That is a really interesting challenge,” Smith said at the Geneva auto show. “What will emerge from that whole process is one of the best sports cars in the world and one that is still affordable.”
Evolution
The current retro look is appealing to the Baby Boomers and the Generation X crowd, but the millennials have taken to it less enthusiastically. I guess that makes me an oddity, but that’s the market information Ford Motor Company (NYSE:F) has collected and it has to act on it. If they ignore the millennial generation, they risk giving the Mustang a slow but sure death. The millennial generation will soon be the top-spending age group — the 2015 Mustang will have the difficult job of attracting all three generations with its design.
Speaking of evolution, this represents a drastic change in fuel efficiency expectations for the Mustang. My 2010 GT gets a meager 18-19 miles per gallon, which makes it difficult to attract a more fuel-conscious consumer — a trend that is quickly gaining momentum. Ford might be taking steps to resolve its Mustang fuel-efficiency problem with the rumor of an EcoBoost 2.7-liter, four-cylinder engine that would produce over 300 horsepower and bring highway fuel use near 30 miles per gallon. I must admit, it’s a very intriguing option, but it certainly won’t replace the V8 option right away, as Ford Motor Company (NYSE:F) will try and appease the core Mustang fan base.
Investor vs. driver
Ford Motor Company (NYSE:F) is at a fork in the road when it comes to its next-generation model. The Mustang alone outsold the entire Lincoln brand last year, and represents immense value to Ford’s iconic brand image. As both a driver and investor, one thing I feel reassured about is the amount of options Ford has before it and the flexibility the company exhibits. It can offer a smaller EcoBoost engine to Europe, while maintaining the muscle car V8 style in the U.S.
Investors will have to watch this evolution unfold because it will have effects on multiple fronts. It will redefine the iconic Mustang versus Camaro feud that has existed for decades. It could catapult Mustang sales much higher globally. It all comes down to management and marketing being able to walk a very fine line between very different consumers. But you know what, if Ford has proven one thing since the recession, it’s proven that it has solid management and marketing. Let’s hope that doesn’t change, for your sake and mine – as investors and drivers.
The article Ford’s 2015 Mustang Is Risky originally appeared on Fool.com is written by Daniel Miller.
Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.
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