Ford Deals With Rebates

With United States automakers desperate to make a sell, they have been implanting an arsenal of incentives to get shoppers to lots to purchase their vehicles. Along with their 0% loan deals to get the part started companies such as Ford are also using enticing rebates to gain sales. While this super low financing and Ford Rebate deals did help move cars off the lots, it also hurt their profit margins big time. GM reported that their profits had been weakened after the prices on their cars dropped by 3.2%. Even while Ford was caught up in rebate deals it was a surprise in April when their prices had actually risen by a small .2% in the quarter. So how did they pull all of this off? Well one sneaky move made by the automaker was a $90 price increase on their Ford Taurus model. They also spent much of their resources to promote cars with high profit margins that weren't selling out without help, this includes the big F-150 pickup truck, and they made sure to promote options on their vehicles which were very profitable. This new smart pricing is part of a big plan to give this automaker a big turn around attempt, although in 2001 this smart pricing helped the company lose $6.4 billion over 2 years. But after those 2 years the plan started to show its true bright and beautiful colors as in 2002 their prices held steady while those at GM fell by a full 2%. Now the plan has also helped them pull in on average $1,400 more than GM pulls in per vehicle.

Ford uses sales data daily from its dealership network to make sure that it doesn't waste any money with its incentive programs. The information helps to show marketers which cars need to improve their sales in each particular regional market, and which cars are selling well on their own. For example, Ford offered a $1,000 rebate on their Escape model but when it came to the Explorer which was selling much slower they offered a much larger $3,000 incentive. This helps Ford spend about $300 less on incentives per vehicle then its big rival automaker General Motors.

Ford also uses sales data to launch special edition models for cars whose buyers are more likely to spend money on lucrative options. By pushing these options Ford is able to make a huge increase in its profit margin. They bank off of customers who are willing to pay for more luxury options.

GM's rebate deals are definitely squeezing Ford but its advanced smart pricing system is working well to keep them in the game. Competition from other foreign automakers are more able to rely on their much stronger car lineups instead of having to throw out large incentive deals which hurt their bottom line. American automakers really need to work on their image and quality of vehicles if they want to stay in the industry for the long term. The new emerging eco friendly auto market provides them with the chance to remake themselves but they are already falling behind the Japanese automakers in this area. Honestly, I hope another automaker such as Toyota buys them out and is able to restore these companies to their former glory. I know, I definitely hate the idea of a Japanese company owning one of our great American automakers but it may be the best way. Today's American automaker just doesn't seem to get how to play the game well enough anymore.