Ford's LaNeve: 'Friends' promo won't hike cost of spiffs

Ford's average transaction price rose $740 from September and $1,800 from a year ago to $34,600 in October, closing what had been nearly a $2,000 gap with General Motors. Photo credit: BLOOMBERG

DETROIT -- Ford Motor Co.’s “Friends & Neighbors” sale, which runs today through Jan. 4, does not discount vehicles more than the average consumer already was paying for them, the automaker’s U.S. sales chief said today.

Instead, it’s designed to help Ford stand out from the rest of the industry during an intensely competitive time of year, said Mark LaNeve, Ford’s vice president for U.S. marketing, sales and service.

“The Friends & Neighbors event does not escalate our incentive spending,” LaNeve said on a conference call to discuss Ford’s October sales, which rose 13 percent from a year ago.

“We’re not going to be out there with Santa Claus and bows on the car,” LaNeve said. “We’re going to have a simple, compelling consumer offer that we know from history is highly valued by the consumer.”

The promotion offers cars and trucks at a no-haggle price that’s within about $200 of the dealer invoice. Ford’s website lists discounts of $3,238 on a 2016 Explorer XLT, $5,145 on a 2016 Fusion SE and $10,388 on a 2015 F-150 XLT SuperCrew.

The deal gives a higher-than-usual payout to dealers, who can’t go above the “Friends & Neighbors” price but are free to add their own discounts. Some dealers already are advertising that they will beat the promotional price.

“We’re in a strong market, but it’s a very competitive market with a lot of activity out there,” LaNeve said. “We anticipate that this holiday season we’re going to see considerable ad spending, we’re going to have a lot of clutter in the marketplace and a myriad of incentive offers for customers to try to figure out.”

Ford said its total U.S. sales and retail sales increased 13 percent last month from October 2014. At the same time, its average transaction price rose $740 from September and $1,800 from a year ago to $34,600, closing what had been nearly a $2,000 gap with General Motors. GM said its average transaction price fell $130 from October 2014 to $34,600.

Car sales rise most

In a change from recent trends, sales grew faster for Ford’s cars than its bigger vehicles. Its sales rose 16 percent for cars, 14 percent for trucks and 11 percent for utilities.

Mustang sales more than doubled, to 10,096. Sales jumped 39 percent for the newly redesigned Edge and 26 percent for the refreshed Explorer. F-series sales rose 3.3 percent in October and are now up 1.5 percent on the year.

On top of those gains, Ford said transaction prices increased $2,300 from a year ago for the F series, $2,800 for the Explorer and $4,300 for the Edge.

The Fusion, up 3.6 percent, had its best October ever at 23,668 units. The Focus, up 20 percent, broke a four-month streak of declines.

The Lincoln brand had its first year-over-year decline since March, down 4.5 percent. The MKC, which was introduced in May 2014, declined for the first time, and sales of the Navigator, which were up 49 percent this year through September, fell 25 percent.

Stair-steps staying

LaNeve said Ford will continue to run its stair-step program, known as the Volume Growth Bonus plan, throughout the “Friends & Neighbors” promotion. Ford began giving dealers stair-step bonuses in March.

“We feel like it’s really worked for us in the market in terms of our performance in that time frame,” he said. “The fear with stair-step programs with dealers has always been will it cause huge discounting, and we just have not seen it. Dealer profitability in the Ford franchise is at all-time record levels.”

You can reach Nick Bunkley at nbunkley@crain.com -- Follow Nick on Twitter: @nickbunkley

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