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Why Ford's Next Fusion Will Take On Subaru's Outback

John Rosevear, The Motley Fool

Ford Motor Company (NYSE: F) isn't killing the Fusion sedan after all. The Fusion name will be applied to an all-new sport wagon that Ford is developing to replace the once-popular sedan after it departs in a few years, Bloomberg reported.

What's a "sport wagon"? Let's put it this way: Ford appears to have Subaru's (NASDAQOTH: FUJHY) popular Outback in its sights.

Here's what we know.

A crossover-ized Fusion to follow a similar Focus?

According to the Bloomberg report, which cites two people familiar with Ford's plans, the Fusion will be replaced by a higher-roofed hatchback that's about the same size and built on the same underpinnings. Ford hasn't said when that will happen, but it's giving the current Fusion a mild facelift for 2019; 2021 is probably a reasonable guess for the all-new model.

It's a plan that sounds a lot like what Ford will soon do with its Focus compact. Ford is in the process of launching an all-new Focus in Europe, but that new Focus won't be built in North America. Instead, Ford will import one version of the all-new Focus, a crossover-like vehicle called the Focus Active, from China.

The 2019 Ford Focus Active as sold in Europe. It's a white hatchback with extra ground clearance and black fender flares.

The all-new Ford Focus Active, a version of the Focus with a Subaru-like treatment, will be the only Focus offered in the United States. The next U.S.-bound Fusion could follow the same path. Image source: Ford Motor Company.

(We should note that no American jobs were lost as a result of that decision. The Michigan factory that built the outgoing Focus for the U.S. is being retooled to build the new Ranger pickup instead. It'll be busy.)

I suspect that Ford's plan for the Fusion is similar. Like the Focus, the Fusion is an important part of Ford's lineup in both Europe and China. (It's called the Mondeo in those markets, but it's the same vehicle.) It could be that Ford is developing an all-new Fusion/Mondeo that it will build in several different versions for different markets.

Why Ford wants to give the next Fusion the Outback treatment

It wouldn't be unprecedented for Ford to build the Fusion/Mondeo in several different versions for different markets. Ford has only ever offered the current Fusion as a sedan in the U.S., but in Europe, the Mondeo is also offered in wagon and hatchback versions.

Two Ford Mondeos: A red five-door and a blue station wagon. Aside from the body-style changes, they look almost exactly like the Fusion sedan sold in the United States.

In Europe, the Ford Fusion is called the Mondeo -- and Ford offers hatchback-like "five-door" and wagon versions alongside the familiar sedan. Image source: Ford Motor Company.

Take a look at that wagon and imagine it with a Subaru Outback-like treatment, with a robust all-wheel-drive system and updated styling and interior. I think a vehicle like that -- maybe called "Fusion Active" -- would find plenty of buyers here in the United States.

I think there's a good chance that it will, if Ford delivers a good product with a robust all-wheel-drive system and a well-thought-out interior. And if it's not yet clear why Ford might be targeting the Outback, consider this: Over the last few years, sales of the Fusion and Outback have gone in rather different directions.

A chart showing annual U.S. sales of the Fusion and Outback from 2012 through estimated 2018 results. The Fusion far outsold the Outback earlier in the decade, but the Fusion's sales fell while the Outback's rose. The Outback is on track to out-sell the Fusion in the U.S. in 2018.

Data source: Automotive News. Chart shows annual U.S. sales for the years 2012 through 2017, and estimated sales for 2018. 2018 full-year figures are estimates based on the sales pace of each vehicle through the first half of the year.

Not long ago, the Fusion outsold the Outback by a huge margin, so huge that comparing the two might have seemed absurd. But things have changed for both: Based on results through the first half of the year, the Outback is on pace to actually outsell the Fusion in 2018.

Will Ford sedan fans go for a familiar-yet-different Fusion? 

Ford's decision to discontinue all of its sedan and hatchback models in the U.S. has been a controversial one. Longtime Ford-sedan loyalists -- and Ford's dealers -- have expressed concerns that the Blue Oval is walking away from a still-big market in order to chase the SUV trend.

Those concerns have some merit. But it looks like Ford is planning to hedge that bet in a way that could increase its sales and profits while keeping at least some of its sedan fans in the Ford fold.

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John Rosevear owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool has a disclosure policy.