Ford to cut prices on '07 models
Automaker eyes lower sticker prices as it tries to stem loss of market share, move buyers away from sales promotions, paper says.
NEW YORK (CNNMoney.com) - Ford Motor Co. is preparing to cut its sticker prices on 2007 models while increasing the standard options on vehicles, according to a published report.
The Detroit News reports the plans were laid out in a letter from Al Giombetti, president of marketing and sales for the Ford, Lincoln and Mercury brands, to dealers.
The report, which did not give many details on the price cuts, said Ford will drop the manufacturer's suggested retail price on its Ranger small pickup by $1,000 for super cab models and by $590 for regular cab models. It also will cut the sticker price on its Escape Hybrid SUV by $1,000 in an effort to shrink the gap between the hybrid and the standard versions of the compact SUV.
"Being competitive in today's marketplace requires competitive content and competitive pricing," Giombetti wrote in his letter to dealers, according to the News report. "We believe we have an outstanding plan to stabilize and regain sales and market share."
Ford, along with U.S. competitors General Motors and Chrysler Group, have been depending upon sales incentives such as cash rebates, employee pricing promotions and interest-free loans to move vehicles in recent years. But all have been trying to move buyers away from those incentives by cutting sticker prices.
One reason for cutting sticker prices is that when consumers comparison shop on the Internet, they might not be aware of all the sales incentive programs, which could make the U.S. models seem less competitive than they actually are.
But the sticker price cut efforts have so far not stemmed market share losses for Ford or GM.
Ford's U.S. sales in the first quarter were off 2.3 percent, while industry wide sales gained 1.1 percent. Sales tracker Edmunds.com forecasts Ford will report a 7 percent drop in April sales, on a daily sales rate basis, while industry wide sales are forecast to be down only 1 percent for the month. April sales are to be reported later Monday.
The market share losses have led to losses in the core North American automotive operations at both Ford and GM. In response, each has announced plans over the last six months to close about a dozen North American plants and facilities, with each trimming 30,000 jobs in the coming years. Charges related to those plant closings led Ford to report a $1.2 billion loss in the first quarter.
For more details on GM's price cuts, click here.