Ford Offers Lease Incentives
DEARBORN, Mich. January 15, 2003; Michael Ellis writing for Reuters reported that the Ford Motor Co. said on Wednesday it was offering new sales incentives that would waive up to eight months of current lease payments on four of its top-selling Ford brand vehicles if holders of the leases buy or lease a new Ford brand car or truck.
The incentive comes just a couple of weeks after U.S. vehicle makers Ford and General Motors Corp. scaled back consumer incentives, which averaged more than $3,000 a vehicle in December for the Big Three U.S. automakers.
Ford's new program, called the "Red Carpet Lease Early Bird Program," runs through the end of February and will be available to customers whose leases on Windstar minivans, Ranger pickups, Taurus sedans or Focus compacts end between March 1 and the end of August.
One Ford dealer said the so-called lease "pull ahead" program, which can cost Ford thousands of dollars, can also be combined with other Ford incentives, such as cash-back offers that run up to $4,000 on certain vehicles.
GM and Ford have offered lease pull-ahead programs before, but not as a regular feature and rarely covering as many months as Ford's new one.
"That sets a new high-water mark," John Smith, GM's head of North American sales, service and marketing, told Reuters on the sidelines of the Automotive News World Congress meeting here, referring to the waiver of eight monthly payments. He said such programs are hard to match since automakers can't selectively target their competitors' customers.
The dealer said the program could help boost January sales, which are off to a slow start for the U.S. automakers, and give his staff a sales incentive for customers.
"For the first part of the month, sales for the domestics (automakers) have not been very strong," he said. "The idea here is to retain the customers you currently have. That's easier than trying to conquest" new owners from competitors.
Ford spokesman Jim Cain said the new incentives would boost sales, but also would let it smooth out the number of vehicles that are coming off lease.
Despite the incentive price war waged by U.S. automakers last year, Ford suffered the sharpest drop in U.S. sales among all major car companies, losing about 1.6 percentage points to 21.5 percent.
With the popularity of interest-free financing incentives offered by the automotive industry, new car and truck buyers have tended to buy, rather than lease, said J Ferron, a partner with PricewaterhouseCoopers.
The automakers are now trying to add more lease customers, who are traditionally more loyal future customers, he said, noting: "There's upside again in lease."
Some automotive analysts have suggested that the zero percent financing incentives, which boosted U.S sales to their fourth-highest level ever last year, are losing their effectiveness.
GM's Smith said there was no indication that interest-free loans were no longer attractive to consumers.
However, earlier this month, GM began offering six-year loans, longer than the traditional five-year loan, at a rate of 1.9 percent on some lower-priced cars and trucks.