Expedition Lease Payment Lower than Lease on Smaller Explorer

09/26/96

The Detroit Free Press reported that lease payments for a full-size Ford Expedition sport-utility vehicle could cost $15 to $20 less per month than lease payments on a comparably equipped Ford Explorer compact sport-utility. That information came from dealers, but Ford officials were quick to dispute it, saying that a lease on an Expedition should cost about $50 a month more than what a consumer would pay to lease a comparable Explorer.

The Expedition's low lease payment is responsible for the convergence of lease prices, and arises because the larger vehicle has an extraordinarily high anticipated trade-in value. Ford's first full-size, four-door sport-utility had a sensational debut amid raving automotive journalists and industry analysts, a combination that influenced the Automotive Lease Guide's guesswork--which dealers use to establish lease terms on new cars. The lease guide put the trade-in value of a two-year old, 24,000 mile Expedition at 72 percent of its original cost.

A two-year lease, then, would cover 28 percent of the retail price of an Expedition, putting monthly payments below $500. A fully equipped Expedition could cost something in the high $30,000 range.

Lloyd Hansen, controller of sales operations for Ford and Lincoln-Mercury said he was pleased with the listing the Expedition got in the lease guide: "I think that's the highest average of any vehicle sold in America."

The low lease price of the Expedition is one more challenge the full-size sport ute will pose for the compact Explorer. Ford already expected Expedition sales to cannibalize some of the Explorer's market share. The compact sport ute also faces increased competition from smaller Honda and Toyota sport-utility vehicles.

On September 9, Ford gave Explorer lessees a $35 a month break on interest rates. The move will support to Explorer leases, offset interest rate increases since January, and keep some distance between Expedition and Explorer lease rates.

Ford officials said earlier this year that they expected Expedition sales to cut into Explorer sales by about 15 percent. Ford offered the Mercury Mountaineer--an Explorer with minor changes--to keep the orders for compact sport-utilities constant in 1997.

The current wait for a typical Expedition model ordered from the factory is eight to 12 weeks. Ford recently said it had orders for 60,000 Expeditions, keeping workers at the Michigan Truck Plant in Wayne busy. Three shifts in Wayne produce Expeditions 20 hours a day.

Paul Dever -- The Auto Channel