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In Troubling Sign, Ford Now Offers $10,000 Discounts On New F-150 Pickups
When oil priced tumbled last year it was supposed to be a major boon for car sales and, indeed, courtesy of car loans whose rejections rates have never been lower and with LTVs for loans on used cars sold to subprime borrowers now a record high 150%, some such as government-favorite GM benefited greatly, with sales of Chevy Silverado jumping a solid 18.4% June. Others, however, have been struggling: sales of Ford's top-selling and most profitable line, the aluminum-bodied F-150, were down 8.9% last month as Ford's market share of big-pickup trucks dropped to 28% from 33% one year ago.
Ford's response: a huge push to incentivize buyers, in the form of discounts that can exceed $10,000 on its new aluminum-bodied F-150 pickup, which has been losing sales and market share this year even, as Bloomberg reports, "the automaker works to build inventory on dealer lots."
As USA Today adds, "in a move that sometimes spells sales trouble, Ford has started offering discounts of up to $10,479 its most important vehicle, the F-150 pickup."
"The discounting is unusual because the highly revised 2015 F-150 is relatively new in the market. The current version has an aluminum body to save weight, and thus fuel. Not only is the F-150 the nation's best-selling vehicle, but it is also considered one of the most profitable, at least compared to cars."
Taking a page right out of the AAPL playbook, Ford officials have blamed tight supplies for sales droop, but analysts aren't so sure. "The truck hasn’t sold up to expectations for the most part,” Akshay Anand, an analyst at auto researcher Kelley Blue Book, said in an e-mail. “This may be a hint that in certain parts of the country, the issue might just be more than supply."
“What will be more telling is whether the incentives start to go out nationwide,” Kelley Blue Book’s Anand said. “If limited to higher end trims and packages, this may not have a huge effect for the moment, as a truck still makes plenty of profit.”
Earlier this year, Ford cut spending on marketing promotions per vehicle 16% to an average $2,736, according to Autodata, which found smaller increases by General Motors Co. to $3,427 and Fiat Chrysler Automobiles NV to $3,277.
What is surprising is that Ford has said it had only half its normal inventory of the F-150 on dealer lots in June and won’t have a full supply until the end of September: as such one would be led to believe the supply shortage would serve as an artificial stimulus, but the significant price cuts suggests lagging demand may be a bigger culprit.
Sure enough, as Bloomberg notes, "F-Series sales fell 2.4 percent in the first half and have dented Ford’s earnings. The trucks were the top-selling vehicle line in the U.S. for the 33rd straight year in 2014. The new F-150’s fuel economy increased as much as 29 percent, primarily because the use of aluminum trimmed the truck’s weight by about 700 pounds (318 kilograms)."
Hiking incentives would be a logical next step to support declining demand, even if the company is eager to dispel the impression that the US consumer, despite an overabundance of cheap credit, may have hit a saturation point (or simply refuses to spend more money even if funded with zero-cost debt):
Improving inventory of F-150 is allowing Ford to offer more competitive incentives as part of its Summer Sales Event promotion, Erich Merkle, the company’s sales analyst, said Wednesday. He said overall incentive spending is down from a year ago and that the truck is selling for $44,100 on average, the highest transaction price in the segment.
Asked July 1 about dealer ads touting $10,000 discounts on F-150, Ford’s top U.S. sales executive said those incentives were being offered by individual dealers.
“I can tell you that that number of $10,000 is commonly used by our competition,” said Mark LaNeve, vice president of U.S. marketing, sales and service. “So you’ve probably seen a competitive response by a given individual dealer.”
Perhaps, but that does not explain Ford's recent sales weakness which have not been seen elsewhere: its competitors continue to outperform with sales of Fiat Chrysler’s Ram pickup rising 4.3% in the first half, while GM's Silverado, as noted above, saw an 18% jump in sales last month.
And yet, it may not be Ford's flagging sales but GM's continued outperformance that is the outlier. For a clue as to what may be the catalyst, we go to GM's latest sales release in which we read that:
State and local government sales were up 6 percent in June, with full-size pickup and Tahoe PPV deliveries more than doubling. State and local government sales are up 19 percent calendar year to date.
So is the government the ultimate source of subsidies to GM's income statement? Well, why not: it was the government that "subsidized" GM's balance sheet in 2009 with a bankruptcy process that put traditional Chapter 11 on its head. Is it that difficult to imagine that the government will do everything in its power to keep its golden auto child thriving, even if it means being on of the primary sources of demand? Those who are skeptical are urged to read our article from April: "The "Mysterious" Source Of Surging Demand For GM Cars, Revealed", and for the time pressed, here is the punchline: the US government.
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Another here with Skateboarder. I've had the occasional audicity to say something that sounds suspiciously like optimism. Guess that warrants the death penalty. Let us all be banned together or surely we will be banned separately.
prolly a Gen Y that is new on staff at ZH----needs everyone on the same page--
What are you all talking about? How do you know someone was exiled?
call me when the sales price is $10k
1980?
in 2002, you could buy a brand new Ford F150 work truck (2wd) for 12,900.
I'll keep my little six banger ford ranger with 100,000 miles. should easily have another 100,000 to go...
Hold onto it until the body rots off the frame. It might nickel and dime you in parts here and there, still cheaper than a car payment!
Car loan rejections - or the lack there of - have nothing to do with the economy being bullish. I fact it is the opposite. Non-performing loans are a sign of desperation; that the economy is in free fall before a crash.
That was well stated, you are a true statesman.
Aluminum body and truck don't belong together and I just wonder if the drop is from people like farmers who buy a truck because they need a truck and not a shiny toy.....
Glad I wasn't the only one to catch that.
i read through the comments just to see who would be the first to say that. kudos.
yep, good luck getting a typical body shop to do aluminum panel repair... you have to find a certified aluminum repair center and even then they may tell you forget it, new panel... you'd think Ford would have learned that lesson with the the Expedition but noooooo... instead you have stuffed suit pinheads like Alan Mullaly stating that aluminum is stronger and tougher than steel... here's a tip Alan, leave metallurgy to the engineers and we'll leave the golfing tips to you, deal?
Try running them where Magcloride is used. It eats Aluminum like clorine eats stainless steel. I have to wonder if this is an attempt to gain (more) money off the rebuild cost. Why anyone would buy a new truck I do not know. I guess someone needs to have the status while taking the depreation.
1991 Jeep-210,000 looks like shit, but climbs telephone poles.
1996 Tahoe-134,00, lifted in order to get me to elk camp.
Looking at a VW Jetta for back and forth to work. Any feed back?
Ford trucks are still the best trucks.....the new silverados are still fucking garbage rebadged and bandaided 2013 silverados. Frames are the same, the only diff is better interior finally and an uglier front end. Ram trucks are nice however. The whole auto industry in america is like it was in 05-07 we had peak auto sales then boom......it's in a spiral downward.
No, Ford started making faggot eco-boost engines in house when they didn't renew with International and their 7.3L Diesels some years ago.
The 5.0s in them work better than Gm's outdated piece of shit 1950's pushrod technology. Ecoboost is fine but not for heavy duty. I agree about the 7.3.
Not even my silverado is good at doing anything but driving down the highway. Towed a trailer with furniture in it for 150 miles, tranny temp went over boiling 60% of the trip.
I had a 1991 Silverado back in the day and a 2011 that I sold recently......never again. Both were problematic after a few years, shit was falling off and my 2011's tranny had computer problems as well..Gm couldnt get me to buy anything from them ever again except that new SS which I think is made in Australia, the rest of their lineup minus the z06 is fucking garbage.
¡Ensamblado en Cuidad de Mexico alguien!
Your not supposed to work them, just look good
The new 6.7L diesels are excellent.
With their faggot DEF fluid.
The new 6.0 was a marvel when it came out too......just google 6.0 problems I'll leave it at that.
Wait a year or two when they start getting serious miles on them.
My kid bought a 2013 Ram. I drove it and was pretty impressed, never drove a Dodge before. Nice truck.
Dodge and Jeep are alot better now under Fiat believe it or not. I really like those new SRT Grand Cherokees but not for 60+k....but damn are they fast and nice.
I've found the Ram's dont ride as nice as the F150 on the highway.
Something about the suspension makes it wanky.
complete with all kinds of light up screens and warnings from the nanny state OnStar and facebook and wifi and thousands of other worthless pieces of shit that dont belong in a truck
Oh but for heavens sake dont use a phone while driving, use our shit instead!
For Instance,
I fishtailed out of a car wash with wet tires and OnStar dialed automatically, I told them to fuck off and hung up. Next day I pulled the fuse out of the box to disable that shit.
I expect to see at least two in the lot at work within a week. The people I work with buy new cars ALL THE TIME.
GM China Graveyard. Nope we won't see China subsidizing GM motors.
On the positive front ISIS are looking to trade in their pick-ups in IRAQ.
Make sure everyone of them can be filled with Horse Pee E85 to keep that scam going as well. Because who doesn't love 60% of their original MPG in a truck?
E15 is already cheaper in some spots in Texas
I bet some wildcatter has a new model one for sale..slightly used with a 7 year loan attached...somehwere in N Dakota
No worries. As soon as Greece exits the Euro, Smellin' Yellen will begin printing like only cheesepopes know how to print. Ford sales, particularly the F - 150 will be a hot item again. People will need them trucks to haul all the illegals around to do work that Americans won't do.
Don't youse guys know this?
I bet the new truck engines won't outlast the truck payments.
Problem is simple.
The discount is needed simply to bring the
list price back in line with reality.
Dear Ford. I'm not paying $50k for a truck. Suck it.
Aluminum bodies and chassis components should increase the residual value quite substantially. Aluminum doesn´t rust.
But perhaps aluminum bodies is a better idea in Europe where people drive less. Since people in Europe drive less, cars are scrapped when they are older. Therefore, rust is a probably a more important factor in Europe. Aluminum could probably stretch the life-span significantly for cars in some European countries. Unfortunately, Europeans usually buy economy-class cars which are more sensitive to the extra cost of an aluminum body. Another problem is that automakers probably don´t like the idea of cars that last for 50 years because that means less future sales.
But a consumer in Texas, New Mexico, Arizona or southern California who drives, let´s say, 30 000 miles per year doesn´t benefit very much from having an aluminum bodied vehicle. The dry climate makes rust a very small problem and if you drive 30 000 miles per year the driveline is worn out after 10-15 years.
Furthermore, people who buy full-size trucks probably don´t prioritize small gains in fuel economy (aluminum makes the truck lighter). I wouldn´t be surprise if a larger share of the truck buyers feel that value for money in terms of piston displacement is more important.
Aluminum is light weight and doesn't rust. But it's more costly than steel and there is no track record that it is durable to any kind of abuse.
Wait until you damage a fender or bend the frame.
Then you'll see how much more it costs to repair.
Bunghole:
"Wait until you damage a fender or bend the frame.Then you'll see how much more it costs to repair."
My comments:
I think that the problem is rather the fact that few body shops other than those operated by Ford, Audi and Jaguar dealerships can repair aluminum bodies.
On the other hand you don´t have to fix a slightly damaged fender of an alumimum car in order to prevent rust. That can save a lot of money for used car buyers who don´t think that their cars must look like they are brand new. That contributes to the higher residual value of aluminum bodied cars.
insanelysane
"[...] and there is no track record that it is durable to any kind of abuse." My comments: What do you think about the track record for the Audi A8 in this respect? Or up-market steel unitary bodied BMW:s with most of the chassis components made of aluminum?Coastal Texas it's a HUGE problem. And Aluminum DOES corrode especially in coastal climates and in a big hurry. Try and keep a set of aluminum mags nice here, not happening. Aluminum soffits and siding corrode big time. And, when fastened or next to a dissimilar material (steel for example) aluminum will corrode right through. Certainly not the answer to everything...
SmallerGovNow2:
"Coastal Texas it's a HUGE problem. And Aluminum DOES corrode especially in coastal climates and in a big hurry. Try and keep a set of aluminum mags nice here, not happening. Aluminum soffits and siding corrode big time. And, when fastened or next to a dissimilar material (steel for example) aluminum will corrode right through. Certainly not the answer to everything..."My comments: It seems as if you have mixed up aluminum with galvanized steel. But don´t attach steel directly to aluminum. There may be alloy steel suitable for that, but don´t do such experiments at home in your own garage on your new Audi A8.
>and if you drive 30 000 miles per year the driveline is worn out after 10-15 years.
Try 3 to 4 and you'd be closer to the mark.
cheeh_wizard:
">and if you drive 30 000 miles per year the driveline is worn out after 10-15 years.
Try 3 to 4 and you'd be closer to the mark"
My comments:
The 4-cylinder gasoline Volvos which were made up to the late 1990s had drivelines capable of 300 000-400 000 miles. These models were top sellers in Sweden. They were down market versions (usually no air condition or power windows) of the 940 and 740 models. Mercedes diesel engines lasted as long as these Volvo engines. It also seem as if the aluminum block 5-cylinder Volvo engines can last as long as the old cast iron 4-cylinder engines. The problem with the 5-cylinder Volvo models is the drivetrain. Front drive drive trains never last as long as manual rear drive drivetrains. One problem with American cars from a durability point of view is that they usually have automatic gearboxes and torqier engines than European cars. Automatic gearboxes can last very long, but usually not as long as an oversized manual gearbox connected to a naturally aspirated, low-revving 4-cylinder engine. Furthermore, car owners usually think that it´s too expensive to repair or replace an automatic transmission of car with, let´s say, 150 000 miles on the odometer.
My own comment:
"One problem with American cars from a durability point of view is that they usually have automatic gearboxes and torqier engines than European cars."
Additional comment:
At least that was the case in the past. Today, turbocharged diesel engines are a lot more common in Europe than in the US. And modern, small turbocharged diesel engines produce an incredible amount of torque. For instance, a European Ford Focus can now have a diesel engine with almost the same amount of torque as a 4.5-litre 1970s Mercedes-Benz 450 SE V-8.
Sometimes, if the torque does not exceed the official limits för the drivetrain components, automakers don´t give more powerful models beefed-up powertrains. And that can affect the durability.
what is the scrap value of the new F150?
My 2013 Ram diesel 3500 dually gets better mileage than my 2004 F-150 gas model, especially under a load.
Ford has always made junk engines - GMC 350/454 engines rock
They rocked in the 1970s. Now? They are fucking gas drinking outdated JUNK.
Mustang 302 and 351 Windsors, largest auto aftermarket in the world, for a reason.
Car companies keep strapping on uneeded things to keep the flair and appeal progressing, so the price can follow. Who really needs their seat to vibrate when getting to the edge of a lane, a drunk or texter. They need to recognize the market that needs 1 cd player, ac, nice trim, comfy seats, and a decent design. Go directly back to the 50s and 60s rods.
160k on my 2004 F150 original motor & trans, running great to this day, knock on wood. 2004-2008 used F150s aren't exactly cheap and the 3Vs have their share of problems but try finding a used engine with OVER 150k for less than $2,000, Probably not happening on the open market, they're holding their value and are in high demand. I plan on keeping my truck another ten years if possible and want a spare engine on a stand ready to swap in when the original one becomes too tired. You can maintain a 3v no problem with a shop manual and a few tools, if you know what you're doing. It's just an engine, not rocket science. The v6 ecoboost and aluminum bodies were designed and rolled out for one reason and one reason only: increased government mandated CAFE standards. Ford is an "early adopter" in this regard and is paying the price. The other companies will learn from Ford's lessons when they bite the bullet and have to up their fleet fuel efficincies as well. Stay away from turbos unless you have the funds to fuel a racing addiction. Really unnecessary for a gasoline burning daily driver.
Holy shit, I can't imagine spending $44,000 for a vehicle... or even $34,000 after discounts. That's just idiotic. Maybe they actually need a truck but just about every friend of mine driving around one of these boats doesn't need it. Hell, I walked off the dealership's lot when they told me the Elantra I wanted was $23,000. Didn't buy until they came down to $16,500. Even still, $300 a month for a car seems too damn much... it's a car...
The average new car payment is now $488/month, for 67 months.
This is the same average person who votes for pro-bank war maniacs such as Bush II, Obama, Clinton and Romney.
What's wrong with the American people?
I got mad at my 95 F-150 because the lumbar support bag finally gave out. I'm saving it for my kid because I get the feeling he's not going to want to ride a bike in his first Downtown Denver winter. That would be suicidal.
Denver has the worst drivers outside of Mexico City. No town for motorcycles.
Well....if you were ISIS, you could give him a gently used Iraqi Army surplus MRAP.
And the sad thing is, those trucks are still too damn high.
Exactly! I can only wonder if all the channel stuffing hasn't created artificially high prices for things that depreciate by a tenth as soon as you drive them off the lot.
Na ---it's cause cars and trucks are the new realestate---
I own a 2012 FX2 and when I saw this article checked out the new models. Holy crap! Mine listed out at $41k in 2012 and paid $32k for it. The new FX models are over $60k! What happened?
Ford's pricing exuberance got a little bit ahead of reality, irrational I say!
Ford just needs to market big pickups to Wall Street banksters - they are the only ones who can afford them!
60 grand for a freaking truck? For 60 grand I bought another ghetto rental that pays me every month. Like other posters, I am doing well with my elderly Toyota truck with over 200 K miles. If my Toyota dies, I may buy an older, well maintained Dodge Caravan. They are available fairly cheap and seem to hold up well.
If would pay 60 grand for a vehicle if it had an oral sex option that gave fantastic blow jobs. Otherwise, a good used vehicle and the local rub n tug will have to do.
How do you stop a woman from blowing you?
Marry the bitch!
I am here all week. Try the veal.
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