Cars and Drivers
Ford F-150 Gets 0% for 60 Months Financing
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Ford Motor Co.’s (NYSE: F) F-150 is the top-selling vehicle in the United States. For some reason, the number two car company in America has started to offer 0% APR for 60 months on it. While this is not as aggressive as some 72-month or 84-month loans, it is extremely aggressive for a vehicle with sales of 395,244 in the first half of the year.
The F-150’s sales for June were 70,937, up 28.6% from the same month in 2015. This was quite a distance above the second best selling vehicle last month — General Motors Co.’s (NYSE: GM) Chevy Silverado. The Chevy full-sized pick-up, the primary rival to the F-150, sold 49,662 down 3.7%. For the first half its sales were 273,652, down .8% Chevy is offering heavy discounts on the Silverado as a means to close the gap.
The F-150 deal, which according to Ford was “just announced” is part of Ford’s “Freedom Sales Event” and joins new discounts on a number of Ford’s cars which include the Explorer, Expedition, Escape, Edge, Flex, Mustang, Taurus, Focus, Fusion, and Fiesta.
The F-150 promotion reads:
0% APR / 60mos[3] +$1000 Ford Smart Bonus. 3. Not all buyers qualify for Ford Credit financing. 60 months at $16.67 per month per $1,000 financed regardless of down payment.
In other words, the buyer needs to use Ford’s finance arm, and might not clear credit hurdles at all.
The promotion begs two questions. The first is whether Ford has an oversupply of the F-150, and has felt the heat from a Chevy Silverado promotion. The F-150 is about a fifth of all Ford’s U.S. sales, so discounts undermine Ford’s margins in its home market
The second is whether Ford’s offer has become part of the army of deal which have such long term financing that it risks whether the buyers can pay their loans, particularly in the outer years. A five year old truck sold for $25,000 new, will be worth a small fraction of that in 2021. Some dad debt? Most certainly
Ford needs to discount the F-150. It is open to why, and what the eventual effects may be
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