Ford is moving to "rational pricing" for its cars and trucks in the US. The is auto company speak for lowering car prices to reflect what incentives and low financing do to pricing anyway.
It reminds some industry observers of Saturn’s no negotiation fair pricing. Consumers seem to like the idea. They just won’t buy Saturn’s cars.
The action by Ford means that the prices of some of its cars and trucks will actually drop but that incentive packages should be used much less often, if at all. A fair price should eliminate the reasons for additional discounts.
Right.
With Ford’s inventory at 105 days excluding fleet sales, moving cars is not a problem that is going to be solved by rolling discounts into the base price. For cannot sell cars with the discounts in place.Ford is offering incentives fast and furious to try to get cars off the dealer lots by the end of the year.
As Ford’s US market share sits at about 17%, down from 25% ten years ago, and projected by the company to move as low as 14%, the core problem is not pricing. It is product. Ford is even offering rebates on its crossover Freestyle, which is supposed to be part of the model line that will get the company out of the mud.
Eliminating incentives is not going to solve Ford’s problems. What for them to return in 2007. You can make book on it.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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