DETROIT -- Its U.S. market share down in 13 of the past 15 months, Ford Motor Co. has dug up one of the old-school, sales-boosting tricks it had seemingly buried: stair-step incentives.
The move comes as other automakers swear off stair-steps and dealers criticize such a strategy as profit-eroding, confusing and ineffective long term. It signals frustration within Ford at lackluster results dating to the start of 2014, even as executives downplay the slide as a temporary lull linked to a flurry of ongoing product launches.
Ford started testing stair-steps -- it calls them the Volume Growth Bonus Program -- on a limited number of nameplates in November then expanded the bonuses across the Ford division lineup in March. Ford has told dealers the bonuses, currently worth up to $800 per vehicle, are planned to continue at least through June. That's about when CEO Mark Fields has said the company will start to feel the full benefit of the redesigned F-150 and other new vehicles still being ramped up.
Brian Godfrey, who chairs the Ford National Dealer Council, said it's "too early to tell" whether the program has been effective but said Ford has worked closely with dealers to fine-tune details and ensure it's mutually beneficial.
"They've been very transparent about the setup of the program and the methodology. They've listened to a lot of dealer feedback and concerns," said Godfrey, president of Pat Milliken Ford in Redford, Mich. "I don't see that this is changing the culture of Ford Motor Co. or that this is changing the relationship between Ford and the dealers."
Stair-steps -- per-vehicle bonuses that increase as dealers hit individualized volume thresholds -- can potentially leave tens of thousands of dollars hanging on whether stores can close enough deals in the final days of a month, sometimes by dangling huge discounts as the deadline ticks closer.
Aside from a brief experiment on a few Lincoln nameplates in 2013, it had been a long time since Ford used the tactic, dealers say.
"It's important to keep our dealers competitive while still managing for operating margin and profitability. That's what we are doing," Ford spokeswoman Elizabeth Weigandt wrote in an email. "Our program construct is unique to Ford and designed to help our dealers meet their objectives and reward them accordingly."