DETROIT -- Ford Motor Co., after posting a record third-quarter profit, will continue to boost net pricing on vehicles by adding content -- and wants to close the pricing gap with Asian competitors.
Strong net pricing and low incentive spending helped Ford post third-quarter net income of $1.7 billion, up $690 million from the year-earlier period, the company said today.
Ford's previous record for third-quarter net income was $1.13 billion in 1997.
For the first nine months, Ford's net income totaled $6.4 billion. That puts the company within range of the $7.2 billion mark for all of 1999, which was touted in press reports at the time as an annual record. (A $22.1 billion profit posted for 1998 stemmed primarily from the sale of the Associates finance unit.)
“A few years ago, we were a discount brand in the smaller and medium-sized vehicles,” Ford CEO Alan Mulally said during a conference call today. “The response we're getting now in the Mustang, the Taurus and the Fusion is that these are world-class, and people really want them. We're on a positive and stable path for (pricing) values in vehicles.”
For example the new Fiesta subcompact is fetching an average of $3,000 to $4,000 above its $13,995 base price as buyers load it with extra features such as heated leather seats, George Pipas, Ford's sales analyst, said earlier this month.
At an average price of $17,020, the Fiesta is commanding about the same average price as Honda Motor Co.'s Civic compact and Toyota Motor Corp.'s Corolla small car, but with considerably fewer incentives, according to data from Edmunds.com.
Through September, Ford has sold 10,742 Fiestas. It launched the car this summer. Of those, most are five-door models with high content, said CFO Lewis Booth.
“As we aim for world-class product, that does involve some additional content on them,” Booth said. “Our customers have demonstrated they're looking for fully contented products and are willing to pay for them.”
Pipas, in an interview with Bloomberg before the earnings were announced, said: "We're not buying share at the bottom of the food chain. People buying Fords today are generally more educated and affluent and they want and are willing to pay for nicer Fords."