Ford Motor Co. learned the hard way last month that car shoppers get more excited about no-interest financing than no-haggle pricing, especially during the annual holiday bargain-hunting frenzy.
Dealers and analysts say the “Friends & Neighbors” sale on Ford brand vehicles was a victim of bad timing and flawed execution. The automaker pulled the plug on it five weeks early, switching to holiday-themed offers of 0 percent loans and $1,000 cash back on some vehicles.
The brand is now giving buyers of some 2015 models interest-free loans of up to six years, similar to a promotion that generated big numbers over the summer. Customers understand and like that approach much better than the nebulous “insider deal” Ford was dangling in November, said O.C. Welch, owner of O.C. Welch Ford-Lincoln in Hardeeville, S.C.
“It was actually a great program -- one of the best programs they’ve done with dealers in a long time,” Welch said. “But it was a better deal for the dealer than it was for the consumer.”
And, Welch added: “It was the wrong time of year to do it. This is something you run in the summertime -- not when all the other manufacturers have a holiday message out there.”
The lackluster consumer reaction to “Friends & Neighbors” showed in Ford’s November results. The brand’s sales rose just 0.4 percent, even after the month ended on what Mark LaNeve, Ford’s vice president for U.S. marketing, sales and service, described as “one of our two or three best days in the last seven or eight years.”
An 18 percent increase in sales of Ford’s pickups and vans just barely overcame declines of 13 percent for cars and 9.7 percent for SUVs and crossovers. A 25 percent plunge for the Focus wasn’t surprising given low gasoline prices, but a 19 percent stumble for Ford’s top-selling crossover, the Escape, was notable, though Ford said a big cut in Escape fleet sales was mostly to blame.
Dealers told Ford that shoppers considering the Escape and several car nameplates were deterred by the lack of no-interest loans last month. They saw the discounted pricing as less appealing than free financing, even though the automaker was spending about the same overall amount on incentives as in previous months, LaNeve said.