Ford Launches Huge Sale Despite Hot Market

Justin Hyde
·Managing Editor

For the first time since the great recession, Ford will launch a massive sale Tuesday offering deep discounts across its car and truck models, despite sales that have been running at their highest level in years.

The Ford “Friends and Neighbors” program running through Jan. 3 will offer discounts equal to those Ford gives suppliers and just slightly less generous than those for employees, according to a copy of the plan Ford sent to dealers that was obtained by Yahoo Autos. The discounts will run on all Ford cars and trucks with a few exceptions like the Shelby GT Mustang, and could slash up to $10,000 off the cost of some vehicles like high-end versions of the Ford F-Series pickups.

Combined with a massive advertising push by Ford and extra dealer promotions, the plan recalls moves like General Motors’ “employee pricing” that Detroit automakers relied on to boost sales ahead of the 2008 recession. (Mark LaNeve, GM’s sales chief in 2008, now holds a similar title at Ford.)

But since the collapse and bankruptcies of GM and Chrysler, automakers both domestic and foreign have been far less willing to push huge price cuts to maintain volume, focusing on profits instead. Those strategies have been bolstered by record-low interest rates, shrinking unemployment and loans of five years or more. This year, new-vehicle sales may top 17.6 million, while the average price of a new vehicle grows to nearly $34,000.

The boom has not been spread evenly; much of the gains have gone to trucks and SUVs, as small cars and sedans have suffered. TrueCar estimates the average incentive in October will hit $3,100, some 14 percent higher than a year earlier. And should the Federal Reserve hike interest rates this fall, many of the zero-percent for five- or six-year loans some automakers are pitching would become far more expensive.

For much of the past year, Detroit executives have proclaimed the old way of chasing sales was dead in favor of profits; even Ford CEO Mark Fields touted his company’s “sustained pricing power” to Wall Street last week on the backs of new models like the aluminum-bodied F-150 and revamped Ford Edge. The next few weeks may test just how dedicated Detroit is to the new way of doing business—or whether new-vehicle shoppers should expect even more bidding for their business.