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Ford Motor's Next Midsize Is Coming From Hiroshima: Doron Levin
By Doron Levin

Southfield, Michigan, April 24 (Bloomberg) -- Ford Motor Co., like much of the U.S. auto industry, has nursed a long love-hate relationship with Japan.

Thirty years ago, the late Henry Ford II famously rejected an offer to install Honda engines in Fords by scoffing, according to Lee Iacocca: ``No car with my name on the hood is going to have a Jap engine inside.''

Now, struggling to regain profitability just two months shy of its centennial, the No. 2 U.S. automaker behind General Motors Corp. is turning to Japan for help in developing the Mazda6, a car to be sold by both automakers from a city once incinerated by the atomic bomb.

At last week's press preview to the New York auto show, Ford announced that the midsize Mazda6 sedan will be the foundation for the Ford Futura, scheduled for 2005, and eventually for up to nine other Ford, Lincoln and Mercury models, accounting for as many as 800,000 vehicles a year.

Mazda Motor Corp., one-third owned by Ford, began selling the midsize Mazda6 sedan in the U.S. in December. It was designed to compete against the dominant Honda Accord, Toyota Camry and Nissan Altima. Last month, U.S. dealers sold 4,014 Mazda6s, compared with 3,877 Mazda 626s, the model it replaced, a year ago.

Among Top 10

Car and Driver magazine named Mazda 6 one of its 10 best 2003 vehicle models. Edmunds.com, an automotive Web site, gave the model high marks for handling and features, though it said the interior's rear was a bit cramped.

Supervising integration of the Mazda6 into the Ford Motor fleet will be Phil Martens. On March 26, Ford named Martens, 43, vice president in charge of North American vehicle development. From 1999 to 2002 he was Mazda's managing director for product planning at the automaker's headquarters in Hiroshima.

The midsize Futura (slightly stretching the Mazda6's dimensions to give more room to rear passengers) will be larger than Ford's compact Focus and smaller than its planned full-size Five Hundred sedan. Futura ultimately could replace the Ford Taurus and the Mercury Sable, stalwarts dating back to the 1980s that now carry discounts of $3,000 cash.

`Hank the Deuce'

Through the 1990s, Ford Motor was exceptionally profitable because of the popularity of its larger, heavier vehicles based on truck platforms, notably the F-150 pickups, the Ford Explorer, Ford Expedition and Lincoln Navigator. By contrast, the Ford Contour and Mercury Mystique car models -- designed by Ford engineers to contend with Accord and Camry -- flopped.

During the past two years, Ford has posted a cumulative net loss of $6.43 billion, fired a chief executive, and suffered a decline in credit ratings and a 67 percent drop in stock price.

``Hank the Deuce,'' as the grandson of the automaker's founder was nicknamed, was ``prejudiced against Japanese cars,'' said David Lewis, a professor of business history at the University of Michigan. ``He didn't like that their cars were sold in the United States but Japan was virtually closed to Ford and other U.S. automakers.''

The rising popularity of Japanese-built autos in the U.S. contributed to a large trade deficit in the 1980s, which the countries tried to redress with a voluntary limit on imports as a way to soften the effect on U.S. producers. Iacocca, as chairman of Chrysler Corp., and the United Auto Workers union often spoke out harshly against Japanese economic policies.

Mazda Benefits Ford

A proud man, Henry Ford II vowed that the plucky Ford Pinto would push ``Japanese cars back into the sea,'' Lewis said.

Ha. Ford respected Japanese manufacturing techniques and hoped to learn from Mazda. Thus, in 1979, the automaker bought 24.5 percent of Mazda, and increased its stake to the current one- third in 1996. The two automakers jointly own an assembly plant in Flat Rock, Michigan.

Ford Motor warmed up to Mazda's models gradually, first turning down the chance to sell a version of the Mazda Miata sports coupe, but then employing the architecture of the 626 sedan as the basis for the sporty Ford Probe, sold in the U.S. between 1989 and 1997.

Ford's Escape, a compact sport utility vehicle built on a car rather than a pickup-truck chassis, is based on the nearly identical Mazda Tribute; both were introduced in the U.S. in 2000.

Ford Gets Savings

The Mazda equity stake is saving Ford untold hundreds of millions, if not billions, in engineering and development costs at a time when companies can't afford duplication. The arrangement, moreover, has allowed both automakers to save on the purchase of tools, parts and materials through larger economies of scale.

Global partnerships such as Ford's with Mazda have become commonplace, and hardly an offense to corporate or national pride. Suzuki Motor Corp., 20 percent-owned by General Motors, intends to expand in the U.S. with new car models built in South Korea. The Mini Cooper is a front-wheel-drive BMW built in Great Britain.

I doubt the ghost of Henry Ford II is spinning in his grave. He's probably too busy wondering what the many Mazda6 variants will be named, how much to charge for each, and whether the revenue derived will save his grandfather's company.