Cars and Drivers

Ford Gets No Sales, Ditches Promotion

courtesy of Ford Motor Co.

Ford Motor Co. (NYSE: F) thought it had a winner back in October when it announced a two-month promotion called “Friends & Neighbors.” Essentially the offer included a no-haggle sales price of around $200 above dealer invoice on most models. Apparently it turned out to be an offer that customers could refuse.

The problem seems to be that the offer was confusing because it did not compare well with buyers’ expectations of cash back and all the other price and financing offers consumers are used to.

Another problem may be the size of the incentive. TrueCar.com reported earlier this week that Ford’s incentive spending per vehicle in November totaled $3,360 compared with a per vehicle incentive of $3,573 at Fiat Chrysler Autombiles NV (NYSE: FCAU) and a $3,739 per vehicle incentive from General Motors Co. (NYSE: GM). Ford dealers were allowed to discount their eventual sales price below the no-haggle price and, according to a report at Automotive News, many were doing just that.

Automotive News also cited a Ford spokeswoman’s email explaining the change:

Starting Tuesday [December 1], Ford is moving to a new Holiday Sales Event in December. Dealers offered insights on the kinds of offers resonating most with customers in-market, and we are updating our plan based on their feedback. We will continue to be competitive yet disciplined on incentives and offers for customers.

On Friday, some dealers were adding a “Black Friday cash back bonus” of $500 according to a report in The Wall Street Journal.

The “Friends & Neighbors” promotion was aimed at recovering market share, not at chopping prices, and Ford maintained that it did not increase the company’s promotional spending, a matter of concern to analysts. Ford had success with just such a promotion about 10 years ago, but it seems that times have changed. A flat, no-haggle price does not appear to compete well with cash-back offers and zero-percent financing.

Details of Ford’s new December promotion plan haven’t been released yet.

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