Incentives Around the Corner for the Ford Explorer?

09/09/96

Reuters has reported that Ford Motor Company's Explorer may well be headed for its first ever sales incentives. The Explorer has been the best-selling four-door vehicle in the country for nearly two years, but now faces the stiffest competition its seen since it debuted six years ago.

Some of the Explorer's competition will come from Ford's own Expedition, the company's new full-sized sport utility vehicle, but it also has to meet subsidized leases that make Chrysler's Cherokees available for as little as $199 per month.

Analyst Wesley Brown of CSM Forecasting said, "we expect by the end of the year, they will most likely have begun some type of national program on the Explorer." Another analyst, Jack Kirnan of Salomon Brothers, wrote in a research report published last week that he expects Ford to launch lease incentives and other marketing support on the Explorer in the next 60 days.

"We strongly suspect that the all-new Expedition full-size sport utility will begin to cannibalize some sales from the Explorer, which alone should force Ford to implement incentives on the vehicle," said Kirnan.

Ford executives have said they expect the Expedition to steal 10 to 15 percent of the Explorer's sales. The Expedition is based on a modified platform of the new F-150 pickup truck, while the Explorer is smaller. Some analysts believe Ford's internal projections have underestimated the Expedition's effects. Explorer sales are already being hurt by Mercury's new Mountaineer, which is taking production capacity away from its sister Ford Division vehicle.

Taking into account recently announced August sales, Explorer sales have dropped for five consecutive months. August Explorer sales were down 10.7 percent to 27,615, although year-to-date Explorer sales, at 264,996, were 3.5 percent ahead of where they were last year.

Ford spokesman Jim Bright declined to discuss the possibility of Explorer incentives. He did underscore the fact that the Explorer had never had incentives before: "we've never had a penny of incentive money on Explorer. People keep coming after us. To date, we have not had to take that action."

Paul Dever -- The Auto Channel