Ford plans to pump up incentives Ford Motor Co. will sharply increase incentive spending this year to counter aggressive pricing by competitors and ensure that demand for older vehicles like the Ford F-150 and Mercury Milan remains strong as the automaker prepares to launch newer versions later this year.
Senior Ford executives told key dealers about the plan during a meeting in Dearborn earlier this month, according to people who attended the session. Many dealers have chafed at Ford's push to reduce profit-sapping incentive spending, even at the expense of market share.
The exact cost of the new incentives is not clear, but dealers said it would amount to several hundred million dollars.
Cutting Ford's reliance on discounts and deals has been an important part of CEO Alan Mulally's turnaround strategy, which is aimed at transforming Ford into a smaller but profitable company.
Ford sources say the decision to increase incentive spending does not represent a shift in that strategy.
Ford will use the money selectively to support specific models in specific markets, and local dealer organizations will have more say in where and how the money is spent, sources familiar with the plan said. Moreover, instead of across-the-board bonuses designed to lure consumers into showrooms, Ford will target specific areas of the market where it has a chance of stealing share from competitors.
"This is all Jim Farley," said Art Spinella, president of CNW Marketing Research in Bandon, Ore., referring to the new sales and marketing czar Ford recently hired away from arch-rival Toyota Motor Corp. "It's something that has worked extremely well for Toyota, and there's no reason it can't work just as well for Ford." More at Detroit News