Failing students: Avoidable or not?
This is a very philosophical question involving the overall education system, the area you are living in, the selection process of your students, the culture in your university, and, and, and. Therefore I assume the question will be closed, soon, even though this is a common problem which needs to be discussed.

Sometimes I feel we are in a similar situation at our university since we are accepting candidates with lower grades as incoming students. Some of them are not really qualified for studying at all, and it is just helpful for them to reflect this as early as possible, e.g. by early tests etc. Last year I had two students which quit after three weeks "because they did not expect they have to invest so much time in studying". 

The only thing you can do is to decide to work with the students you have. Changing the selection process is difficult, the application behaviour can not be influenced too much, and sometimes the students with bad grades in school can show a great performance in their studies! So don't invest too much time in improving the incoming student's quality. 

The next important step is: You are having a curriculum (and later on job profile) whcih requires certain pre-requisites in later courses. As a faculty, you should discuss which is the minimum level the students should have after your course - and this should set the level for passing the exam. It could lead to a reduction of the material, or you can classify some material as "advanced" and other material as "must have". Do not go below this level - the students will like it in the beginning, but they will have trouble in their later studies and in their working place. It's better to force them to do the course again. Be clear about this from the beginning, and if possible tell everyone in advance your expectations and - more importantly - whatfor the material is needed afterwards. 

Regarding material and teaching methods I would like to reference to the field of didactics - many universities are having courses for improving the teaching style - take as many of them as you need! It helps a lot, and you are meeting local peers which are in a similar situation.