Ford's COO sees no letup in U.S. sales incentives

TOKYO, Oct 22, 2003; Michael Ellis writing for Reuters reported that Ford Chief Operating Officer Nick Scheele said on Wednesday he sees no letup in costly sales incentives in the U.S. market, even as the U.S. economy shows signs of strength.

"I don't see a reduction in the revenue wars taking place," Scheele told reporters at the Tokyo Motor Show. "We certainly don't forecast for it."

Automakers, particularly the U.S. car companies, have continually raised incentives such as cash rebates over the past two years to boost sales and revenues as they battle for market share to cover high fixed costs at their plants.

Scheele said Ford will fight for market share even as the economy strengthens. "We're not aiming to give up market share in a market that is continuing to show a lot of signs of strength," he said.

Ford holds about 20 percent of the U.S. market, excluding brands imported from its overseas plants. The top share of about 28 percent is held by General Motors Corp .

Despite the costs of incentives, Ford will look in other ares of the business to cut costs to achieve its stated goal of breaking even this year in its automotive business, Scheele said.

"We are going to make automotive breakeven, we are going to reach our goals, and we will take it out of costs. We'll just keep on doing that," he said.

Last week, Ford posted a less-than-expected loss for the July-September quarter, after strong gains from its finance arm Ford Credit partially offset steep losses in its automotive unit. The third quarter is traditionally the weakest for the automotive business.

One area where Ford hopes to cut costs is through sourcing of lower-cost parts from China. Ford aims to source $1 billion of parts and components from China on an annual basis in the future, a fraction of the annual $90 billion it spends around the world each year, Scheele said.

"We put a task force into China to look for a billion (dollars worth) of exports. We have found close to that," he said.