NOTE: I THINK WE’VE ALL BEEN WAITING FOR THIS TO HAPPEN. FORD SHOULD REAP THE BENEFITS OF PRO AMERICAN & ANTIBAILOUT BUYERS. FORD DEALERS HAVE BEEN DOING THEIR HOMEWORK AND ARE READY.=DP
Friday, May 22, 2009
Ford unveils programs to woo GM, Chrysler buyers
Financial problems of rivals gives Ford opportunity to lure new customers
Bryce G. Hoffman and Alisa Priddle / The Detroit News
As Chrysler LLC and General Motors Corp. move to dismantle brands and close dealerships, other automakers are moving in to pick up the pieces.
Analysts said it will take a couple more months to fully gauge consumer reaction to these moves, but Haig Stoddard of IHS Global Insight said one thing is already clear: “Ford is likely to be the big volume winner.”
While Chrysler touts the benefits of “quick-rinse” bankruptcy — something GM is expected to soon enter into as well — Ford Motor Co. is in the middle of one of its most aggressive new product roll-outs in years. And as the other automakers take tax dollars, Ford’s decision to mortgage its U.S. assets before the credit markets collapsed has allowed it to eschew federal aid, at least for now.
Now, the Dearborn automaker is unveiling pilot programs to give Chrysler customers more money to help pay off their loans so they can buy Ford models. If the strategy works, Ford may soon be doing the same thing for GM owners.
“We’re going to be aggressive,” said Ken Czubay, head of U.S. sales and marketing for Ford. “But we’re not going to be predatory.”
Ford dealers across the country are seeing more and more Chrysler and GM trade-ins, he said.
“There are a lot of people out there that don’t like the concept that government is running these companies,” Czubay said. “They’re also disillusioned by the resale value of their products.”
That is becoming a real problem for Chrysler owners, said IHS Global Insight’s George Magliano.
“Their prices are dropping 40 to 50 percent from what the residuals should be,” he said.
As a result, Ford dealers are finding that many Chrysler owners owe more on their vehicles than they are worth. That makes it difficult for them to afford a new car or truck, so Ford is making additional money available to dealers to help them bridge that gap.
Czubay would not give specifics, saying only that the amount varied by model and was less than $1,000.
Ford also is providing additional training to sales and service staff at its dealerships to help them “transition” Chrysler and GM customers to Ford products.
Long-term view ‘critical’
Michael Robinet of CSM Worldwide said Ford needs to be careful not to get greedy, particularly as Chrysler and GM increase the incentives on their vehicles to offset the negative publicity generated by their financial woes.
“Ford incentive action has gone down, and we applaud that,” he said, adding that it is critical that Ford maintain that disciplined approach. “The long-term view is still critical here. A fire sale doesn’t make a lot of sense.”
Though its sales remain down with the rest of the industry, Ford has gained retail market share in six of the last seven months, and seems poised to do it again in May. Ford is also boosting production as its cross-town rivals idle their factories to reduce excess inventories.
Magliano predicted that Ford’s factory output could actually begin exceeding last year’s levels by August.
Jesse Toprak of Edmunds.com has been tracking Ford’s conquests — customers who previously owned other brands — and says sales data shows that, since the beginning of the year, more GM and Chrysler customers are switching to Ford. That has accelerated in recent weeks, with the percentage of customers who trade their GM or Chrysler vehicle in for a Ford product increasing by 5 percent to 10 percent, depending on the brand.
“That is actually a big shift, because those patterns rarely change by more than a percent or two,” Toprak said, noting that his numbers are only beginning to reflect the impact of Chrysler’s bankruptcy filing. “They’re likely going to continue to gain even more momentum and steal more customers from Chrysler and GM in the coming weeks.”
Toprak said he believes Ford can sustain these gains, too, because it is investing more money in new products than GM or Chrysler.
“They’re making minimal investment in new products because they’re worried about their survival,” he said. “That gives Ford an additional advantage going forward.”
Asian carmakers benefit
Toprak said Korean automakers are also picking up some sales from GM and Chrysler, but he said most of those customers prefer to stick with an American brand. Toyota Motor Corp. and Honda Motor Co. have picked up some new customers, too.
With every automaker struggling to make it through one of the biggest downturns in the industry’s history, Magliano said no one can afford to pass on the opportunity to increase sales at the expense of the competition.
“Incentives are at record levels,” he said. “The Asians are aggressive. Toyota is pushing leases to try to take advantage of the weakness in Detroit.”
There have been internal debates at Ford about just how aggressive it should be.
On one extreme, some marketeers have advocated a no-holds-barred approach, including direct mailings to every GM and Chrysler owner in the United States noting the uncertain future those companies face and offering cash incentives to buy a Ford. Others are anxious to avoid the appearance of gloating at their rivals’ troubles.
Czubay said Ford has decided to focus on its new cars and trucks.
“We’re going to aggressively market the new products,” he said. “We still have some very capable Asian and European competitors.”