2010 Ford Flex with EcoBoost

Price has been a common theme of late in Ford product reviews. While impressions are generally positive (or even better, in many cases), The Press as a Whole just can’t seem to wrap their collective heads around how much these cars cost. Whether it’s the upscale new Taurus or the (apparently) stratospherically-expensive EcoBoost-equipped Flex, nearly every evaluation ends on the same note:

“This is a great car, but are buyers willing to spend this much for a Ford?”

In the world off loss-leader Escorts and Cavaliers (and even Focuses and Cobalts), that question may not be entirely out of line. But when you start dealing with family haulers of the tall and wide variety, the premise is not so solid. So how ’bout it? Are Americans willing to shell out $36k+ for a barebones twin-turbo Flex?

The short answer is yes.

 So why is everybody so dubious?

There are two issues at hand. First is the public’s lingering memory of loss-leader products and competitive-in-value-only (also known as “Please, for the love of all things holy, buy these so we don’t have to sell them to Enterprise and Hertz for pennies on the dollar!”) offerings that plagued domestic showrooms for the better part of the 1990s and early 2000s. the idea of a domestic selling on a feature (or features) other than the stack of money placed on the hood is entirely alien to some buyers, and they typically come in three flavors. The first group is made up of casual consumers. These are the buyers who look no further than a consumer ratings guide for their purchasing decisions. They buy something that is known to work and work well with limited intervention. They want, to settle for a cliché, appliances. The second group is made up of people who don’t consider a domestic because they’ve either been burned by one personally or grew up around bad examples of the breed and thus rule them out entirely. The third group is primarily made up of European- and Asian-car fans. They may be snobs of the highest degree or they may simply be casual enthusiasts. These guys don’t necessarily hate domestics (though they may) but they just don’t think they’re missing anything by writing them off.

And the second issue? It’s the economy, stupid. Buyers (and to an extent, journalists) don’t have a good frame of reference for the state of the marketplace right now. Between gas prices, the recession and the resultant shifts in car buying habits, it’s hard to pin down what consumers think a given vehicle is worth. But in order to make my case, I’m going to have to do just that. And to do so, I enlisted the help of AutoTrader.com Media Relations Manager (And S:S:L acquaintance/drinking buddy) Brian Gluckman. Brian’s buddies over in the AutoTrader.com #2 pencil and spreadsheet department (I’m sure they go by something more glamorous) churned out some great midsize SUV/CUV statistics for me to pour over.

Now, there are a couple of things to keep in mind. The first and most obvious is that MSRP is not an absolute indicator of a given vehicle’s average transaction price. Unless you’re looking at a very desirable (or very new) vehicle, like a brand-new Camaro for instance, MSRP is essentially meaningless in this economy. It should come as no shock that, as a rule, big vehicles aren’t selling at sticker price.

The second point of fact is that AutoTrader.com’s prices aren’t mined from actual transaction records; they’re dealer asking prices. In other words, if you walked into a dealership and saw a car with a $39,990 MSRP on the window sticker and a big pink tag with “Dealer Price: $36,985!!!!” hanging from the mirror, AutoTrader.com’s prices would reflect the latter. Since these prices often include cash incentives and other discounts (all the better to draw you into the dealership), it stands to reason that the margin between AutoTrader.com’s listed prices and the final transaction price is much smaller than the margin between MSRP and final transaction price. In other words, while these prices aren’t the final word on new vehicle values, they’re not far off, either. Ya dig? Excellent.

The prices discussed here are averaged from 2007 though June of this year (obviously, cars that weren’t introduced until later in this time frame are reported for their availability period only). There will be no cherry-picking of pre-carpocalyptic SUV prices just to suit the case being made here.  

So let’s get back to our question. Are Americans willing to pay $35k+ for a domestic mid-size crossover or SUV? Well, if the short answer was yes, the long answer is abso-freakin’-lutely.

When it comes to domestic manufacturers’ mid-sized SUVs and Crossovers, $35,000 U.S. is essentially the cost of entry. Ford’s own dimensionally-similar (but far less efficient and significantly less refined) Explorer fetched an average asking price of $34,245 in June, and an average just shy of $32,000 over the last two years.

But, you’ll object, they’re buying these SUVs for the utility — something these new CUVs don’t offer to the degree that the old body-on-frame SUVs did. How can we expect buyers to shell out the same money for less capability? But let’s be realistic. People buying SUVs to tow aren’t buying mid-size SUVs; they’re buying their long-wheelbase platform mates. And if they’re really serious about towing, they’re not buying SUVs at all. There is no replacement for a real truck when it comes to safely and effectively hauling large loads. A Flex will tow a couple of jet-skis or a small fishing boat just as effectively as an Explorer, but no Explorer (or Expedition, for that matter, as evidenced by Ford’s omission of TowCommand from even the top-of-the-line model) would ever replace a true tow vehicle. The Flex doesn’t have to either.

And proof that said utility is irrelevant is right in the sales figures. Flex sales were equivalent to 89% of Explorer sales in August and have been hovering between 3,000 and 5,000 a month for much of 2009, and this carried in both the pre- and post-cash-for-clunkers environment.

Fact: The domestic share of the mid-size SUV/CUV segment is between 50,000 and 70,000 units a month; that’s a 600,000-unit slice of the annual auto sales pie. More than half a million domestic automobiles are leaving showrooms every year for a mean/median price of $35k. That is not an inconsequential number. Keep in mind, these numbers don’t include the cheaper Escape, Edge, Equinox, Journey and the handful of other compact, 5-passenger CUVs, many of which have prices creeping into the mid-$30k range with options.

And even if you set all of that aside and pretend none of it is relevant, the Flex still speaks for itself. Since its debut, it has seen an average listing price of $35,431. You’re reading that correctly; buyers are walking into showrooms (to the tune of over 3,000 units per month average in 2009, on pace for more than 40,000 units by year end) for non-turbo Flexes with asking prices just a hair over the $~36k intro price announced for the EcoBoost models.

So, are people willing to spend that much for a Ford? Of course they are. They’ve been doing it for years. Why stop now?

Big thanks to Brian and the AutoTrader.com number crunching team for the background info. One day your service will land me on the couch for a week or two, but for now I can look at E39 M5 listings and daydream in relative safety.

                     

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Byron Hurd

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