DETROIT - Ford Motor Co. will stick with high incentives to help sell its struggling minivans.
The automaker had contemplated cutting the list prices of the Ford Freestar and Mercury Monterey minivans. But executives decided to stick with current prices, saying Ford's incentives are working and that lower priced competitors also are raising their own incentives.
"We'll continue to use rebates as we have to use them to get our share," Ford Division President Steve Lyons says.
Since their introduction last fall, the Freestar and Monterey have been slow sellers. Inventory piled up, incentives soared, and Ford has idled its minivan plant for several extra weeks this year.
The cash rebate on the 2004 Freestar and Monterey is $4,500 to $5,000, with an additional $1,000 available for financing through Ford Credit. Ford has a $1,000 rebate or cut-rate financing on the 2005 Freestar.
Total incentives for the 2004 Freestar, including rebates, cut-rate financing and other discounts, averaged $5,237 in July, according to
Edmunds.com. Total Monterey incentives averaged $6,107.
With the high rebates and an extra-long summer shutdown, Ford has trimmed stocks of the Freestar and Monterey dramatically. Stocks for both nameplates as of Aug. 1 were around a 70-day level, down from as high as 432 days for the Monterey on Feb. 1.
For the first seven months of 2004, Ford Division sold 68,944 Freestars and outgoing Windstar minivans, a 15.7 percent decline from Windstar sales for the year-ago period.
Ford marketers say the higher incentives are doing the job, without cutting prices.
"Look, it's driving traffic," says Ben Poore, Ford Division's car marketing manager. "And if it's driving traffic and moving it, I think it was the right decision."
Ford considered dropping the minivans' list price after competitors introduced new models with lower prices. The Chrysler group, for instance, rolled back prices on its re-engineered 2005 minivans by an average of $3,000. That means Dodge could undercut the Freestar's $24,600 base price by around $5,600.
But despite its lower list price, the Chrysler group still is spending on incentives. The average incentive on the Dodge Grand Caravan was $2,277 in July, according to Edmunds. That figure includes higher rebates for remaining 2004 models.
According to Edmunds, July incentives for other minivans include $4,718 for the Chevrolet Venture, $1,204 for the Honda Odyssey and $311 for the Toyota Sienna.