Ford on Wednesday said it would offer zero-percent financing on almost all of vehicles it sells in the US and give buyers $US1,000 toward petrol purchases as part of its most aggressive sales incentive programme of the year.
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According to Reuters, Ford said that as part of its “Drive on Us” discount programme, which begins on 1 June and runs to the end of July, customers would be given either a prepaid debit card for $1,000 of petrol or an equivalent discount on the vehicle purchase price.
The news agency noted that Ford’s offer to subsidise petrol purchases for car buyers upped the ante for larger rival General Motors, which offered a similar but more limited programme earlier this month only in the states of Florida and California.
The report said that both promotions take aim at rising US consumer concern over high petrol prices, a factor seen hitting sales of the large sport-utility vehicles and trucks that are the most profitable models offered by both companies.
“I said Ford was going to be the first to blink when it comes to incentives this summer and it looks like that was the case,” Edmunds.com analyst Jesse Toprak told Reuters, describing the Ford discount offer as “one of the most generous programmes we’ve seen in a long time”.
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By GlobalDataThe news agency noted that sales incentives offered by automakers are closely tracked by analysts because the amount of discounting is read as an indication of how urgently the manufacturers need to move unsold inventory.
Ford’s position has been seen by many industry watchers as the weakest of the Detroit-based automakers because of the lack of new vehicles in its line-up to compete against GM’s revamped line of full-size SUVs known as the GMT-900 series, Reuters said, adding that Ford sales fell almost 4% in the first four months of the year from a year earlier.
Analysts expect that the second largest US auto maker will post a sales decline of up to 11% when it reports results for May on 1 June.
Ford reportedly said it was extending the zero-percent financing and $1,000 gas credit to some of its most popular vehicles, including the Fusion sedan and the top-selling F-150 pickups, which are also backed by an additional $2,500 “customer cash” discount.
Reuters said Ford executives, including chief executive Bill Ford Jr, have vowed to protect the company’s pickup truck franchise in the face of intensifying competition and steep discounting from rivals.
Toprak reportedly said Ford’s latest discounts would raise the pressure on GM and Chrysler Group to offer deeper price and financing concessions on their competing truck lines. But he said that he expected GM would hold the line on pricing for its 2007 SUVs.
“I think they’re going to be selective, especially from GM’s perspective since they have new products,” he said.
Reuters said Chryslerhas already spent heavily on sales incentives this year, including an offer of zero-percent financing in May.
GM’s offer of employee pricing for any car buyer last year succeeded in boosting sales but touched off a price war that GM executives pledged to avoid this summer in order to protect margins and avoid volatile swings in sales volumes, the news agency noted.
