Ford to ask buyers to pay more for smaller engine in new Explorer

New Ford Explorer

When Ford Motor Co. starts selling its re-engineered Explorer sport-utility vehicle, it will ask U.S. buyers to do something unusual: Pay more for less.

Bucking an automotive tradition of charging extra for more horsepower, Ford will ask buyers of its redesigned 2011 Explorer to pay a premium for a small, 4-cylinder engine when the vehicle goes on sale in December. The Explorer's standard engine will be a 3.5-liter V-6 with 290 horsepower, 53 more ponies than the optional 4-cylinder.

The V-6 version of the new Explorer will have a base price of $28,995, including delivery, or about $1,000 below the current Explorer. The Limited model will have a starting price of $37,995. Pricing on the optional EcoBoost engine, which will be available in early 2011, has not been released.

Ford hopes to convince consumers they should spend to save when it unveils the Explorer at events in New York, Chicago and other locations today. The smaller engine has technology Ford said will give the seven-passenger SUV the same fuel economy as Toyota Motor Corp.'s Camry sedan that gets 19 mpg in city driving and 26 mpg on the highway. That's more than 30 percent better than the 2010 Explorer.

“We really want to make a statement that the old baggage on fuel economy with the Explorer is gone,” Jim Holland, the Explorer's chief engineer, said in an interview. “To get great fuel economy it takes technology, and it's our view that people will pay for that.”

The automaker will be challenged to command a premium for the more efficient engine because U.S. gasoline prices have fallen 34 percent from their peak of $4.11 per gallon two years ago, said Jim Hall, principal of automotive consulting firm 2953 Analytics in Birmingham, Mich.

“Why would you want to pay more for fuel economy when gas prices are going down?” said Hall. “People have very short memories.”

Smallest ever

Ford won't say how much extra it will charge for the smallest engine ever to power an Explorer. Ford charges a $3,000 to $6,000 premium on its Flex model for V-6 engines using the same direct-fuel-injection and turbo-charging technology as the 2.0-liter, 4-cylinder going into the Explorer, Hall said. The Explorer engine is likely to be less because it won't be packaged with all-wheel-drive like on the Flex, he said.

“The market will determine which really is the base engine,” Hall said. “If the market says, ‘Forget it,' they may have to lower the cost of this engine.”

The Explorer's 4-cylinder engine won't tow as much as the V-6, Ford said. The front-wheel-drive, 4-cylinder version that is most fuel efficient will have the least off-road capabilities, traditionally a key characteristic of the model.

Buyers of the Explorer will be willing to make those trade- offs for better fuel economy, Holland said. Ford says poor gas mileage is the No. 1 reason shoppers reject the Explorer, which saw sales fall 88 percent during the past decade, from 445,157 in 2000 to 52,190 last year.

‘More Responsible'

“The impact of rising gas prices has really stuck with people,” Holland said. “People now buy more expensive light bulbs to be more efficient. We're moving to a point where people make the choice to be more responsible.”

The Explorer's improved fuel economy will be central to a marketing campaign that will reach more than 50 million people through social media such as Facebook, said Jim Farley, Ford's global sales and marketing chief.

“Fuel economy is the core truth we have to get at,” Farley said at a recent media briefing on the Explorer. Many of the 140,000 Explorer owners who trade in their SUV annually are “disappointed and want more on fuel economy.”

Wind tunnel

To improve the Explorer's mileage, Ford cut its weight by about 100 pounds by switching the SUV from a heavy pickup-truck frame to the same chassis as the Taurus sedan. Designers also sculpted the shape in a wind tunnel to lower wind resistance.

The Explorer with the 4-cylinder engine will be the most fuel-efficient mid-sized SUV on the market, according to Derrick Kuzak, Ford's product-development chief.

In the 1990s, the Explorer was the top-selling utility vehicle in the U.S. market and earned as much as $10,000 per vehicle for the Dearborn, Mich.-based automaker.

“As goes the Explorer, to some extent, so goes Ford,” Farley said. “It's the backbone of the brand.”

Ford expects to sell more of the new model, especially with optional equipment such as the 4-cylinder engine, Farley said, while declining to reveal a sales goal. Analysts estimate annual sales for the new Explorer may top 100,000 units.

“What's more important than the number we sell is that people see the value and that they're willing to buy the better, more highly equipped versions,” Farley said. “That's the key for us.”