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http://247wallst.com/autos/2015/10/28/ford-set-to-kick-off-massive-price-promotion-next-week/
Ford Set to Kick-Off Massive Price Promotion Next Week
By Paul Ausick October 28, 2015 3:03 pm EDT
For two months beginning on November 3rd, Ford Motor Co. (NYSE: F) will be offering most of its vehicles at a price around $200 above dealer invoice. Dubbed the “Friends & Neighbors Pricing Event,” the promotion runs through January 4, 2016.
The best part of promotion is that all the other incentives from Ford are still available. Both Bloomberg and Automotive News claim to have received copies of the guide that Ford sent out to dealers. Bloomberg noted that the promotional pricing will be available for 2014, 2015, and 2016 models with a few exceptions.
Ford is going after market share not only with added incentives, but also spending heavily on advertising. The promotion makes sense given that Ford’s market share has dipped from 15.9% in the U.S. at the end of 2013 and has dwindled to 15.1% at the end of the third quarter of this year. A lot of the share loss is down to the redesigned F-150 and the new Edge, both of which took vehicles out of inventory as the design changes were being implemented. U.S. sales finally broke loose in September, up 23% year-over-year.
According to Automotive News, the dealer guide indicates that discounts of up to 10% may be combined with other incentives and that dealers could earn up to $471 more for every 2015 F-150 that they sell. Here’s how the pricing—Ford’s so-called “X-plan pricing”—works according to Automotive News:
The sale sets a maximum price that consumers would pay, though dealers can agree to sell vehicles for less. The maximum price is 99.6 percent of invoice plus a $275 administrative fee, minus any vehicle-specific incentives. That’s the same way X-plan pricing usually works, though it normally requires consumers to provide a unique personal identification number linked to a particular employee at a supplier, business partner, fleet partner or other Ford partner.
For example, a 2015 F-150 SuperCrew with four-wheel drive and a short bed has a factory invoice price of $38,273 in the Chicago area according to TrueCar.com and the Ford formula yields a maximum price plus the admin fee of $38,395. Ford is currently offering $7,050 in incentives on the truck, along with some special savings for military veterans and police veterans. Assuming just the incentives apply, that pickup will cost $31,345. Special 0% financing packages are replaced with the new promotion.
Ford’s margin on the 2015 F-150s has been estimated at more than $13,000, more than enough to absorb the coming promotion. Right now, regaining market share, not just for the F-150, but for all its vehicles takes precedence over margins. Besides, fourth quarter margins were going to be lighter anyway, so hiding the promotional costs can be easier to explain.
Ford’s shares traded up about 0.5% late in the afternoon on Wednesday at $14.81 in a 52-week range of $10.44 to $16.74.
Ford Set to Kick-Off Massive Price Promotion Next Week
By Paul Ausick October 28, 2015 3:03 pm EDT
For two months beginning on November 3rd, Ford Motor Co. (NYSE: F) will be offering most of its vehicles at a price around $200 above dealer invoice. Dubbed the “Friends & Neighbors Pricing Event,” the promotion runs through January 4, 2016.
The best part of promotion is that all the other incentives from Ford are still available. Both Bloomberg and Automotive News claim to have received copies of the guide that Ford sent out to dealers. Bloomberg noted that the promotional pricing will be available for 2014, 2015, and 2016 models with a few exceptions.
Ford is going after market share not only with added incentives, but also spending heavily on advertising. The promotion makes sense given that Ford’s market share has dipped from 15.9% in the U.S. at the end of 2013 and has dwindled to 15.1% at the end of the third quarter of this year. A lot of the share loss is down to the redesigned F-150 and the new Edge, both of which took vehicles out of inventory as the design changes were being implemented. U.S. sales finally broke loose in September, up 23% year-over-year.
According to Automotive News, the dealer guide indicates that discounts of up to 10% may be combined with other incentives and that dealers could earn up to $471 more for every 2015 F-150 that they sell. Here’s how the pricing—Ford’s so-called “X-plan pricing”—works according to Automotive News:
The sale sets a maximum price that consumers would pay, though dealers can agree to sell vehicles for less. The maximum price is 99.6 percent of invoice plus a $275 administrative fee, minus any vehicle-specific incentives. That’s the same way X-plan pricing usually works, though it normally requires consumers to provide a unique personal identification number linked to a particular employee at a supplier, business partner, fleet partner or other Ford partner.
For example, a 2015 F-150 SuperCrew with four-wheel drive and a short bed has a factory invoice price of $38,273 in the Chicago area according to TrueCar.com and the Ford formula yields a maximum price plus the admin fee of $38,395. Ford is currently offering $7,050 in incentives on the truck, along with some special savings for military veterans and police veterans. Assuming just the incentives apply, that pickup will cost $31,345. Special 0% financing packages are replaced with the new promotion.
Ford’s margin on the 2015 F-150s has been estimated at more than $13,000, more than enough to absorb the coming promotion. Right now, regaining market share, not just for the F-150, but for all its vehicles takes precedence over margins. Besides, fourth quarter margins were going to be lighter anyway, so hiding the promotional costs can be easier to explain.
Ford’s shares traded up about 0.5% late in the afternoon on Wednesday at $14.81 in a 52-week range of $10.44 to $16.74.
