DETROIT - Ford Motor Co. warned on Thursday that its goal of holding U.S. prices steady for its Ford, Lincoln and Mercury brands this year was at risk as industry discounts keep escalating.
Ford said it could cut costs to offset any drop in prices and stuck to its earnings forecasts for the second quarter and full-year 2003. Ford's ability to hold prices steady even as auto industry incentives reached record highs has been a highly praised part of its year-old turnaround plan.
Shares in the world's second-largest automaker soared in April after it reported a surprisingly strong profit, thanks in part to a 0.2 increase in U.S. net prices -- the average price of its vehicles adjusted for incentive costs.
By comparison, General Motors said its net prices fell 3 percent in the quarter, while DaimlerChrysler AG's Chrysler arm said its prices fell 1.5 percent.
But by the time it announced earnings, Ford also was pushing $3,000 rebates and five-year, interest-free loans on much of its lineup, following the lead set by GM. Ford also was pitching $5-a-day leases on base model Mustangs and Rangers.
As a result, Ford's average incentive rose to $3,198 per vehicle in April, up 13 percent from March and 45 percent from April 2002, according to industry research firm Autodata. Both Ford and GM have extended their offers through May, and analysts expect little change in incentives from April's levels due to a shaky U.S. economy.
In a quarterly filing with the U.S. Securities and Exchange Commission, Ford said it expected incentives "to remain high for the balance of the second quarter and perhaps beyond."
"We expect to continue to accelerate our cost reduction efforts for the remainder of the year and thereby mitigate the effect of any risk to our net pricing assumptions for 2003," Ford said in the filing.
Ford spokeswoman Marcey Evans said CFO Allan Gilmour mentioned pressure on pricing during the earnings conference call with analysts April 16.