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Ford to bet on Canada-built crossovers after strong global sales

Ford’s Edge

Fernando Morales/The Globe and Mail

Ford Motor Co. expects a big jump in sales of crossover utility vehicles around the world – including the made-in-Canada Ford Edge – raising the stakes for the federal and Ontario governments as they weigh giving the company financial help to build the next generation of the vehicle.

The auto maker plans to more than double the number of countries where it sells the Edge to 40 by 2017 from 16 today, Ford officials said during a webcast Wednesday as crossovers become more popular in such big and growing markets as China and other parts of Asia.

"This is one of the major bets the company has made," Jim Farley, Ford's executive vice-president of global sales, marketing and service said on the webcast.

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Ottawa and Ontario have been asked to back up that bet by providing about $400-million of a $1.2-billion redevelopment of the plant in Oakville, Ont., to build the next generation of the Edge.

Much of Ford's expansion of sales to new markets would come after 2014, when the new vehicle is scheduled to begin production.

The project, which would solidify about 3,000 jobs for the better part of a decade, is "Canada's to lose," one industry source said Wednesday. Several sources have said the two governments are still assessing Ford's request.

The next generation of the Edge will be built on Ford's CD4 platform – or basic underbody – which also serves as the base for the Ford Fusion and Lincoln MKZ sedans that are assembled in Flat Rock, Mich., and Hermosillo, Mexico.

Brazil and China are among the countries where current versions of the Edge are exported now, but the biggest market is the United States.

Workers in Oakville put together 214,000 Edge vehicles and its Lincoln sister, the MKX, last year.

The Ford Flex and Lincoln MKT, also made in Oakville, were not mentioned in the Ford presentation Wednesday.

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The surge in gas prices in the United States in 2007 caused a transformation at Ford, which generated billions of dollars in profits from such sport utility vehicles as the Ford Explorer, which was built on a truck frame.

The auto maker spent billions of dollars to shift from a reliance on gas-guzzling SUVs to crossover utility vehicles that don't have a traditional frame and thus are lighter in weight and get better fuel economy than sport utilities.

"The death of utilities was kind of premature," Mr. Farley said.

"People around the world are falling in love with this body style."

The real breakthrough for crossovers was when fuel economy in the company's Escape model surpassed 30 miles per gallon, he said.

He noted that in Europe, where the auto market is mired in a massive slump, sales of utilities have risen 35 per cent since 2005.

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"That's a growth business," he said.

Small crossovers such as the Ford EcoSport and the Escape (known as the Kuga in Europe and other markets) are among the fastest-growing vehicles, partly because fuel economy has improved.

In addition, Mr. Farley said, empty-nest baby boomers want the utility of crossovers.

By 2017, Ford said, crossover sales are expected to represent 18 per cent of all vehicles sold globally, up from a little less than 14 per cent now.

Sales of small crossovers in China are forecast to soar 129 per cent by 2017.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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