Ford (F, Financial) Explorer is one of the most popular sport utility vehicles. The company has sold more than 7 million units of this popular vehicle in the domestic market. To maintain its popularity at the same level, Ford has given the car a refreshed look and unveiled the new 2016 Ford Explorer at the Los Angeles Auto Show. Apart from making the vehicle more sleek, the other major update given to the vehicle is the big EcoBoost four-cylinder engine. Can the latest Ford Explorer create ripples in the market and benefit the Blue Oval?
The changes in the car
The refreshed car sports a 2.3 liter EcoBoost engine that helps reduce fuel consumption, replacing the last generation Explorer 2.0 liter EcoBoost engine. However, it should be noted that this is a refreshed version of the Explorer, not a major redesign. The company has given it a stronger looking front LED lighting. Ford has not yet disclosed the mileage of the car and doesn’t plan to do so until the middle of next year when the car will be on the market.
By introducing the high-end version, Ford is tapping customers who don't just want a full-sized SUV, but are looking for luxurious treatment as well. This year’s luxury SUV sales are up 11.8%, which is more than twice of auto sales rise of 5.5% in the current year. Mercedes Benz GLK sales were up 18.9% while BMW X3 sales climbed by a staggering 25.9%. No wonder why Ford’s shown such keen interest in unraveling the premium SUV.
Monetizing on the opportunity
Ford’s move of upgrading the Explorer should benefit the company considerably. Currently, the buying preferences of American are in favor of SUVs. So the automaker’s decision to redesign the car to give it a fresher look should pay off quite well. Ford also has a high-end platinum edition of the vehicle.
The carmaker has not yet revealed the price of the redesigned vehicle. The car is slated to hit the showroom in the coming year. Analysts estimate that the platinum edition of the car could cost more than $50,000. While this might look like a big amount, Explorer’s brand manager Matt Zeuhlk says that numerous customers have demanded for a high-end version of the car. This model would sport the latest package and refinement such as the Nirvana leather used all through the vehicle.
Ford decided to introduce a premium version after the success of the Summit edition of Jeep’s Grand Cherokee and GMC Yukon Denali. The Summit version of Grand Cherokee costs $48,595 and Yukon Denali costs $63,770. According to the findings of Truecar.com, the average transaction price of SUVs have gone up by 6.8% over last year. Rising demand and increasingly popularity of the premium edition of SUVs has escalated the average transaction price to $48,137. In contrast, the average price of vehicles dispatched in the month of October were up 1.1%. Also, the high-end version of the car is of special interest to automakers as they fetch greater profits.
Demand for SUVs are also being fueled by lower gas prices. This is one of the most essential factors that has re-ignited the demand for these vehicles. Currently, gas prices are at a four-year low and unemployment rate has plunged to less than 6%. These factors have improved consumer confidence who are willing to enjoy a bigger luxurious car. It would be interesting to see whether Ford manages to impress customers with Explorer’s new look after the car starts selling next year. Until then, let’s wait and watch.
