Ford's 2014 Escape. Photo: Ford.
If you spend any time on the road, you've probably noticed a huge increase in the number of FordEscapes driving around. The Escape is one of Ford's many huge wins in the U.S. market since the Great Recession, and it's been an absolute hit with critics and consumers alike. It's on pace to top 300,000 in vehicle sales this year, which hasn't been done since the late '90s and early 2000s, when Americans were in love with gas-guzzling massive SUVs. This time, with a popular EcoBoost option and MPG that ranges between 22 in the city and 33 on the highway -- depending on which trim and engine you buy -- it's a night-and-day difference between the SUVs of old.
Here are the details on the Ford Escape, why it's winning over consumers, and why happy consumers equal happy investors.
Revving up
As the old saying goes, "if it aint broke, don't fix it" -- and that applies very well to the 2014 Escape. Sales have absolutely taken off and Ford figures this trend will continue.
Information from Automotive News DataCenter. 2013 is projected from sales through May.
The Escape has set monthly records almost all year, including its best March and April months in its entire history.
For the new model year, the Escape has a few small tweaks, including a backup camera and SYNC infotainment system on all trim levels. The price on its premium trim, the Titanium, has been dropped slightly, which is good, because if you load up on options, the Escape can become one of the more expensive models in the SUV segment -- although consumers willingly pay the price in droves.
Through May, the Escape was the best-selling SUV in the U.S. market and was a very impressive 29.7% increase over last year. Edmunds.com -- a great place to review vehicles -- calls it one of their favorite standouts in a segment full of worthy competitors.
Its exterior has an aggressive look to it, with a unique grille and sleek styling. "The Ford Escape combines outstanding fuel economy, versatility and helpful, intuitive technology in a sleek package to make it the 'smarter utility vehicle,'" said Ford group VP Raj Nair in a press release. "This is a hot and competitive segment, and we've added more reasons for customers to consider Escape."
It's a surprisingly agile ride, and its specially engineered torque converter and revised gear ratios give it a balanced feel in any driving situation. That basically means it delivers incredible handling on pavement as well as off-road -- not that many consumers will be trekking the mountainside with their new ride.
The Escape also has a handful of safety features that have been a hit with consumers. Its Blind Spot Information System, or BLIS, displays an alert in the mirror if a vehicle is detected. It also has a parallel parking feature, with which, at the press of a button, it steers itself into the space while you control the gas and brake.
Also, according to Edmunds.com, in government crash tests the Escape performed well and received four out of five stars for frontal-impact crash protection and five stars for side impact protection.
All the hype isn't limited to the Escape's safety and exterior. The interior is impressive as well.
Interior of Ford's 2014 Fusion. Photo: Ford.
Its dash and interior are made with great materials and have an excellent finished look. When you step in, you really get a sporty and modern impression.
One of the only knocks on the Escape, as pointed out in a recent study by J.D. Power & Associates, is the MyFord Touch system. While the 8-inch display has a nice look, it still has many tweaks to be made for it to quit frustrating consumers. This is to be expected and is often the case with new infotainment technology; expect it to improve over the next couple of years.
Investing takeaway
The Escape is part of a huge push in what Ford calls the "Super Segment." It's basically four segments that Ford expects to surge in the coming years, represented by the Fusion, Focus, Fiesta, and Escape. In this case, a happy consumer equals happy investors, because the Escape brings in a higher transaction price than standard cars, and with premium options, it brings in better margins as well.
Ford is also years ahead of rival General Motors in consolidating its global platforms, which is partially why Ford's margins in North America came in at 11% last quarter compared with GM's 6.2%. The Escape also represents a push by Ford to change consumer perception -- this is no longer the same Ford that produced poor-quality vehicles for years and years. It will take time to change that stereotype, but it is clear that the Escape is the best-selling SUV this year, and Ford's best SUV since the Explorer dominated a decade ago.
America still has plenty of room for growth with its annual sales rate well below what we saw before the recession and the average age of vehicles at record highs. As our economy continues to grow and access to credit is available, expect sales for Ford's popular vehicles to drive top-line revenues and bottom-line profits -- a huge win for savvy investors.
Ford share sits at a decent price today, nowhere near as undervalued as it was six months ago, but still a great opportunity for investors who are patient to watch its developments improve in Europe and China. I believe we could see Ford's net income improve 50% by late 2015, and that would send the share price soaring -- only time will tell, but Ford deserves to be on any investor watchlist.
Just how big is Ford's opportunity in China? It's huge -- China is already the world's largest auto market - and it's set to grow even bigger in coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free - just click here for instant access.
