Ford to replace U.S. models fastest through 2016, report says

Thought Leadership

DETROIT (Bloomberg) -- Ford Motor Co. will lead the industry in introducing new or refreshed vehicles in the U.S. at the fastest rate for model years 2013 through 2016, according to a Bank of America Merrill Lynch report today.

Ford will replace 26 percent of its lineup during the period, analysts led by John Murphy wrote in the annual "Car Wars" report. The analysts said replacement rates will be 25 percent for General Motors Co., 24 percent for Toyota Motor Corp. and 23 percent for Nissan Motor Co., which will match the industry average.

Automakers that revamp models faster tend to increase market share, according to Murphy, who is based in New York.

New-product introductions are accelerating from a "lull" during the last three years and will be led by the crossover, luxury-car and light-truck segments through model-year 2016, which may boost the sales mix for higher-priced models and increase industry profits, according to the report.

"As automakers emerge from the trough in the cycle, more are aiming to spur demand by launching fresh product rather than discounting stale models at the expense of margins," Murphy wrote.

Chrysler Group LLC, majority owned by Fiat S.p.A., and Honda Motor Co. will trail the industry average with replacement rates of 20 percent, according to the report. The industry is unlikely to see the large market-share shifts that occurred in previous decades, because U.S. automakers have "largely closed" the gap in product cycles compared with "foreign" competitors, Murphy wrote.

Ford's prospects

Bank of America sees Ford's U.S. market share rising to more than 16 percent from 15.3 percent so far in 2012, driven by new products such as the C-Max and Escape crossovers and Lincoln MKZ and Ford Fusion sedans in the 2013 model year, according to the report.

Ford will replace vehicles representing 46 percent of its volume in model-year 2015, Bank of America estimates, by introducing the new Ford Edge and Lincoln MKX crossovers, F- Series pickups and Mustang sports car, according to the report.

GM's U.S. market share may rebound to the "low 18 percent range" with 2013 model year vehicles including the Cadillac ATS and XTS sedans and Chevrolet Malibu and Spark cars, according to Bank of America estimates. GM will update vehicles accounting for 52 percent of its volume in the 2014 model year, with vehicles including the Chevy Silverado and GMC Sierra pickups and Cadillac CTS and Chevy Impala sedans.