Faster development drives Ford sale prices

Ford Motor Co (F.N) aims to introduce new versions of its vehicles every three to four years, a faster turnover than competitors that has already led to higher transaction prices, the automaker's head of product development said on Monday.

Ford also plans to cut vehicle weight across its lineup with targets ranging from 200 pounds in small vehicles to 700 pounds in its largest vehicles to meet increasingly stringent fuel-economy standards, Ford global product development chief Derrick Kuzak told Reuters Global Autos Summit.

Ford shares reached a more than 8-year high on Monday, and analysts have begun to set higher price targets after assessing its results and the automaker's worth relative to rival General Motors Co GM.UL ahead of GM's initial public offering expected this week.

"When we looked at what drives revenue and share, one of the highest correlates was average age of your showroom," Kuzak said at the summit in Detroit.

The average age of vehicles in Ford dealer showrooms worldwide is among the youngest, if not the youngest, compared with global competitors such as Volkswagen (VOWG.DE) and Toyota Motor Corp (7203.T) (TM.N), he said.

"We were selling at a discount versus some of the volume competitors so part of our strategy was to reduce that discount and to do that through value to customers," Kuzak said.

Ford has seen sharp increases in average transaction prices with the introduction of new versions of its Taurus full-size sedan and the Fiesta small car that went on sale this year in the United States.

The broad acceptance of its new vehicles has allowed Ford to reduce incentives needed to complete sales. Customers also have opted for more expensive versions of the cars and options, increasing transaction prices.

The top line strength also has landed on the bottom line, with Ford expecting solid 2010 profits after reporting a profitable 2009 in the worst U.S. auto sales market in more than a quarter century.

The average transaction price on a Fiesta has overtaken all similarly sized cars such as the Toyota Yaris and Honda Fit and in many instances has been competitive with vehicles one size larger, Kuzak said.

The Toyota Corolla and Honda Civic dominate the compact car segment in the United States, one step up from the Fiesta.

Ford hopes for similar success on transaction prices with a new version of its Focus compact car planned to reach U.S. and European markets in late 2010 or early 2011.

The weight reduction effort, part of a larger program under way for several years, will begin to work its way through the vehicle lineup from 2013 and beyond, Kuzak said.

Weight reduction is one of several areas Ford has focused on to improve fuel economy across its lineup. Lighter vehicles allow Ford to use smaller turbocharged engines under its EcoBoost technology, Kuzak said.

It also is expected to generate some proprietary technology, Kuzak said, noting that Ford's work on adopting turbocharger technology for its EcoBoost program has led to more than 125 patents.

"We have conducted a large number of workshops with our suppliers around weight reduction over the past six months, engaging them in that process also," he said. "We will continue to do that because they have a lot of great ideas not just on features and technology, but also on improving weight."

Ford shares rose as high as $17.40, before closing up 70 cents, or 4.3 percent, at $17 on the New York Stock Exchange. The stock is up 70 percent so far in 2010 while the Standard & Poor's 500 index has risen 7.4 percent.