Thursday, December 3, 2015

Ford Withdraws Friends and Neighbors Pricing

Ford logo

Ford brought its Friends and Neighbors sales promotion to a close on the final day of November. The company had originally announced the sale would extend into the first week of January, but has already replaced it with its Holiday Sales Event. The new Holiday Sales Event replaces the specially discounted, no-negotiation pricing featured in the Friends and Neighbors promotion with more traditional incentives.

The new Holiday Sales Event matches the prevailing industry-wide incentive trend focused on special financing rates and rebates, rather than discounted pricing.

Specifically, Ford is offering 0 percent APR for 72 months, or 0 percent APR for 60 months plus a $1,000 rebate on most models.

Despite reports to the contrary, the unique Friends and Family program was not an abject failure. It did not deliver the results Ford was seeking, but it drove significantly higher revenue in the month and decreased Ford’s average incentive spend. However, the promotion was not good for market share. The company posted the smallest sales gain among the Detroit Three in November and also trailed Toyota and Nissan in year-over-year growth.

See more in our November Sales Report.

The Friends and Family promotion was canceled due to the structure of the sales results. The program did not include special finance rates and thus, appealed primarily to cash, lease, and more affluent buyers. These customers took advantage and drove Ford’s average transaction price up $3,800 for the month, the largest gain of any manufacturer. The results were thus distorted, favoring trucks and highly contented SUVs, but costing the automaker market share and leaving dealers with fewer tools to assist more payment conscious buyers.

Ford indicated that dealer feedback was a significant factor in the program’s replacement.

*Seth Parks is an auto industry veteran, entrepreneur, and Seattle Seahawks fan.
Follow him on Twitter: @mseth_parks

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