Ford's Explorer, Back from the Dead

As consumers seek more efficient features in their vehicles, can the drastic "America" redesign turn around the troubled SUV?

by Matt Vella

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Ford Motor (F) is trying to jump-start one of its most iconic models. On Jan. 13 at the North American International Auto Show (NAIAS), the embattled Detroit automaker took the wraps off an all-new concept, the Explorer America. The prototype vehicle is a tease of what the future might hold for a once popular SUV, sales of which have cratered thanks to rising fuel prices, safety problems, and buyers' growing environmental concerns.

Though designed to look like a rough-and-tumble SUV, the new Explorer America is built on a carlike unibody frame rather than a traditional truck frame. This setup, commonly referred to as a crossover, drastically improves fuel economy, drivability, and safety. Marisa Bradley, a Ford spokeswoman, says the new vehicle is also intended to serve as a "poster child" for the company's recently announced line of so-called EcoBoost engines, which further improve fuel economy via turbo boosting and direct injection technology. All told, the combination of smaller size and high-tech engine should give the Explorer America a 20% to 30% hike in fuel efficiency over today's version.

The current Explorer is in desperate need of an intervention (BusinessWeek.com, 9/1/06). Once a darling with the SUV-crazed American public, in recent years it has become an automotive pariah. In 2000, Ford sold more than 445,000 Explorers. In 2007, it sold just 137,813, down 23% from the preceding year, according to data provided by Automotive News. The Explorer has also suffered from a protracted rollover controversy that forced Ford to pay out millions of dollars in legal settlements.

Betting on Crossovers

The dramatic rise and fall of the Explorer's popularity since its release as a 1991 model echoes the mounting difficulties of Detroit's Big Three during the past decade. Over-reliant on 30 truck-based vehicles, General Motors (GM) and Chrysler, now owned by private equity giant Cerberus, have, like Ford, suffered drastic losses as consumer tastes shifted and buyers lost interest in gas-sucking heavy trucks and SUVs. Overall, combined light-vehicle sales for domestic automakers were down 7.1% in 2007. All three manufacturers are now pinning their hopes on new crossover models.

The crossover segment has taken off: About 2.7 million, or just under 17%, of the 16.1 million new vehicles sold in the U.S. in 2007 were crossovers, according to Erich Merkle, an analyst with the automotive forecasting firm IRN. Merkle expects sales of crossovers to increase to 3.4 million by 2011. The category itself has broadened to include a wide variety of vehicles, from the relatively small Toyota (TM) RAV4 to luxurious speed demons, like BMW's (BMW) new X6, also on display at NAIAS this year. Ford itself has already introduced other crossovers to cater to different price points, including last year's Edge and the Flex, which goes on sale this summer. If the Explorer America goes into production, the Expedition would likely be Ford's only remaining true SUV.

Carry the Load

But the new setup could cut into a key element of the Explorer's traditional appeal. Crossovers are not typically as adept off road or for towing loads as traditional 4x4s. For instance, the current Explorer is capable of towing more than 7,000 lb., whereas most crossovers can haul only about 3,500 lb. "A lot of traditionalists think this is a soft way to go," admits exterior design manager Stuart Jamieson of the carlike approach.