In a year when forecasts call for U.S. auto sales to drop by 500,000 to 1 million vehicles, Ford's Jim O'Connor doesn't expect to increase incentives.
O'Connor, president of Ford Division, has a clear prescription for Ford: Adjust production to meet demand, offer vehicles that provide clear value - and don't get dragged into an incentive war.
Contributor Frank S. Washington interviewed O'Connor at the North American International Auto Show last month in Detroit.
Given that every forecaster says the market is going to be down this year, do you see incentives becoming even more intensified?
Ford division is the market leader. Very frankly, I would like to think that our incentives would stay the same this year. We're going to build 100,000 more Escapes in '01 than we did last year to fill demand. We're going to build a new Thunderbird and a new Explorer. You have to keep competitive in the industry, but the market leader isn't going to lead an incentive war. Why would we want to cut our margins?
If it's an incentive-fueled market, doesn't that impact your marketing?
We've always had incentives. When you have new fresh product, as we do, you don't have to incentivize. We (decided on production cuts in December) to get more balance in supply and demand, and not have an incentive war.
Do you expect to see more 'zero down, zero interest and zero payments for one year' deals like the one offered by Oldsmobile?
You will never see me ever, ever go to the zero payments for 12 months. You know what that was? It was a $700 a month at 11 percent interest (monthly note when payments started). Who are we kidding? You have to be sure you're contenting your vehicles right. We're trying to make more simplified product offerings so that the customer can see real value for the price.
Is the Thunderbird the first in a new product line that pumps some excitement into Ford's car lineup?
Most people think of us as being the sales leader in trucks. We're also the leader for the last nine years in car sales by over 200,000 units annually. We try to look at all emerging segments, and certainly the Thunderbird is a new segment for us. The Forty-Nine product is a concept, but are there any cues in that for future products? We want to see what the buzz is. We've also recently done the Mustang Bullet to get some murmur out there in the market.
You sell more cars than anybody else, but you don't get credit for it. Why?
We sell more than 1 million cars a year, but people think of us as trucks. But when 65 percent to 70 percent of the people who bought an Escape sport-utility come out of cars, we inside the company don't spend as much time as people outside the company thinking about whether the vehicle ought to be a car or a truck. Look at the PT Cruiser. It's registered as a truck, but it was named North American Car of the Year.
When does Ford's move to warranty its tires kick in?
It's on the 2001 model year from Jan. 1 on. Owners can take defective tires back to a Ford dealership or the tire dealership. It's sort of a one-stop service. It also gives us early warning. We were missing that because as the claims came back on defective Firestone tires, we never saw the information. Now we have the ability to see the data and understand we are having problems with workmanship or quality. Then we have to talk to the manufacturer.
What's your sales forecast for this year?
It's 16 million to 16.5 million, and its too hard to call.