Ford Drops 'Friends & Neighbors' Sales Promotion
28 November 2015 - 7:00AM
Dow Jones News
Ford Motor Co. is ditching its "Friends & Neighbors"
campaign after the insider-pricing failed to live up to
expectations.
The No. 2 U.S. auto maker by sales launched the deal in early
November with expectations to run it until early January. Customers
and dealers, however, gave it a lukewarm reception and Ford will
move to a more-conventional merchandising "bonus cash" strategy for
December, according to several dealers briefed on the plan.
A Ford spokesman confirmed the move away from Friends &
Neighbors, but didn't outline any specific details of the next
campaign—which is set to launch Tuesday.
"We're always in regular contact with our dealers," the
spokesman said. "We often make adjustments to our marketing
programs based on their feedback."
Ford's market share has slipped modestly in 2015 despite the
introduction of a lighter-weight version of its F-150 pickup, the
best-selling vehicle in the U.S.
Ford's Friends & Neighbors extended the discount rate given
to suppliers and other business partners to all customers. The
effort—billed as a no-haggle approach that could stand out among
other industry efforts—was reminiscent of the campaigns from a
decade ago that aimed to spark sales by offering employee pricing
for all.
Dealers say some customers were confused by the new approach
because they have grown accustomed to seeing cash rebates and other
bonuses advertised up front. Buyers didn't always feel like they
were getting a good enough deal, especially when stacked up against
rival offers.
The switch to a new plan comes as most auto makers prepare for a
late-year push heading into Christmas. The pace of U.S. auto sales
is at the highest level since at least 2001.
Some analysts, including Fitch Ratings, have in recent weeks
expressed concern that moves like the Friends & Neighbors
program that Ford initiated in early November might signal a return
to the deep discounting popular a decade ago.
Even before this campaign, Autodata Corp. reported an increase
in total-industry spending on incentives in the month of October
even as underlying demand remains strong because of low gasoline
prices, attractive financing terms and stable economic
conditions.
Ford executives had stressed in recent weeks that Friends &
Neighbors discounts wouldn't cost the auto maker any more than
other incentive campaigns typically do.
Ford Chief Financial Officer Bob Shanks, speaking to analysts
last week in New York, said the company's incentive spending in the
first half of November was actually tracking lower than in October
and was about flat compared with November 2014.
"Nothing has changed," Mr. Shanks said. "We're continuing to be
very disciplined in terms of production, demand and
incentives."
Ford, now at one of its profitable points in history, has been
booking record quarterly earnings in North America this year. Along
with strong demand for its high-margin pickups, the company is
getting greater transaction prices on vehicles across its
lineup.
The auto maker, however, has struggled to maintain U.S. market
share with sales taking a hit in the first part of the year due to
a lengthy factory overhaul for the new F-150 truck.
As Ford worked to restore full pickup production, dealers were
left with not enough inventory to sell, a shortage that dented
earnings and opened the door for rivals General Motors Co. and Fiat
Chrysler Automobiles NV to gain momentum.
Through the first 10 months this year, Ford's U.S. sales were up
5.5% compared with the same year-ago period, slightly behind the
5.8% growth posted overall by the industry.
Write to Christina Rogers at christina.rogers@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 27, 2015 14:45 ET (19:45 GMT)
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