Speaking with the New York Times, Ford Marketing maven Jim Farley had some soothing words for Ford dealers: we’re not going to cap yo ass [paraphrasing]. Yet [extrapolating]. Farley’s also taking the opportunity to hammer home Ford’s mantra: we didn’t take government money, so we’re cool, right? This time, Farley went further, predicting that FoMoCo could benefit from the death of those Detroit automakers who did/do. “Mr. Farley was particularly critical of the Chrysler plan, noting how it would affect millions of consumers with little warning. ‘It seems very abrupt and unplanned,’ he said. ‘You don’t orphan four million customers overnight without some fallout.’ Some of those customers, primarily those in rural areas, will migrate to Ford dealerships, he said. ‘It really depends on how G.M. and Chrysler handle these orphan owners,’ he said. ‘If they don’t give them a lot of attention, it will result in consumers going to other brands.’” Hint. Hint. Of course, there be dragons. And Farley knows it.
“We are very concerned how they are going to handle those 44,000 units [from canceled ChryCo dealers],” he said. “It’s like a liquidation sale now, and the biggest issue is whether they will cut prices to move the inventory.”
And if they do, which they will, The Blue Oval Boyz can’t touch this. Farley said his employer isn’t going to match any Chrysler or GM fire sale prices. Do we believe Ford will stand fast on margins and lose share, should share be theirs for the losing? In a word, no.
Ford’s margins will get hammered. And just to prove that even Ford PR tells porky pies, Farley said his employer isn’t going to match any Chrysler or GM fire sale prices. Good luck with that.
Actually, there may be some crazy-like-a-fox aspect to Ford deciding not to match fire sale prices. Ford has worked hard to keep its image as the domestic automaker that is already on the right path and not crippled.
Everyone knows that the brand new $8000 PT Cruisers are, as the phrase goes, distressed merchandise. Target doesn’t try to match A.J. Wright’s prices on distressed merch and factory seconds. There may be value to Ford avoiding the stigma of discounted prices. While they may lose some sales to bargain hunters, I think they may protect brand equity.
Was the Chrysler plan all on Chrysler, though? Didn’t Obama tell Chrysler to shut some dealerships down before he’d allow them another trip to the bailout buffet? Or was that just GM? It does suck to watch Ford (and everyone else for that matter) get screwed because GM and Chrysler are able to do whatever they want on the seemingly unlimited bucks provided by you and I. Ford and the rest of the world have real budgets to work with while they bleed money. I get more and more pissed off about this by the day.
44,000 units can’t have too much impact by themselves. The larger issue is the much greater number of units on the lots of dealers that weren’t cut.
I agree with Ronnie Schreiber. It’s something of a gamble if it doesn’t pay off but if Ford gets some guts and brains they could pull it off.
“Of course that Sebring/Colbalt/whatever is cheap, you’re buying it from a company that’s going out of business!”
External shot of person standing in the lot of an abandoned dealership. Tumbleweed blows on by.
It would be counter productive for Ford to match fire sale pricing. People always neglect to notice that every time a new vehicle price is slashed, the value of a similar trade-in goes down right with it. The last thing Ford needs to do is to further trash the resale value of its product.
Chrysler’s product line actually doesn’t compete for Ford customers very much except for the pickup trucks, and even there a loyal Ford truck buyer isn’t likely to buy a Dodge Ram. Ford has no minivans, no Jeep competitor, and Chrysler’s car lineup is a freaking joke.
If I’m Ford right now I would hang tough, not price match, and wait for the dust to settle. Keep the powder dry.
My next vehicle will be purchased this fall. It will be some version of a Ford F150. I fully expect it to cost more than a comparable Chrysler or GM product. I will happily pay the difference because I will not support bailout companies if I have a choice in the matter.
Some of the excess Chrysler pax cars from dumped dealers will be sold to rental car companies…those guys love crappy cars sold at a huge discount!
Put yourself in the place of the “buyer who needs a new car/truck.”
“$10,000 off sticker, right off the bat over here, right here, right now, until we get out of the Chrysler business.” But when the new car/truck, which ranks lowest on the quality scale, needs warranty repairs, he’s gonna have to drive 40 miles or have it towed. And how many times have you returned to a dealer to fix the same thing, more than once?
On the other hand, the local Other Leading Brand dealer has what you want, and they’re not closing. So you won’t get $10,000 off, but you won’t get $15,000 worth of headaches, either.
Maybe just $5000 worth.
It’s really a no-brainer. The only way a lot of those soon-to-be de-frocked dealers will be able to sell their inventory is to other dealers. Or at auction.
As for the de-frocked dealers, it’s a safe bet that the smart ones have a robust used car business, and/or have been on the phone to one of the many Other Leading Brands.
I think fire sales on GM & Chrysler products will have a big impact on Hyundai & Kia sales since their core market is people who buy primarily on price.
Am I the only one who thinks Farley has more than a passing resemblance to Kenneth on 30 Rock. Also, great shot of him in front of Toyota. I thought he might have been Jim Press’ bastard child when I quickly looked at the picture but didn’t read the title.
At 10 mio Cars for the whole year, this is about 800.000 cars per month – why should 44.000 Chrysler cars matter in this? The buyer are buying from a defunct company. Even with the government guaranteeing the warranty, the headaches are sure to come. And there is just a limit to the amount of cars, just about 5% of the sale of a full month. No – in my view Ford will not match such firesale prices.
There may be value to Ford avoiding the stigma of discounted prices. .
Certainly, there is much merit to this line of reasoning …build the brand… hold the line… maintain margins, etc etc. All good and noble stuff.
But …. when the dog days of August and July and June and maybe even late May bring on the inevitable fire sales …and ChryCo dealers are throwing Aspens and Avengers overboard like so many Hueys into the South China Sea, FoMoCo is going to be hard-pressed to stand idly by and just watch.
At the end of the day their Regional Sales Managers get paid, and promoted, or not, to move metal.
Brand building – nice. Moving metal – mandatory.
….if I had to bet, I think they’ll (eventually) throw their own logs onto the fire sale….or ChryCo funeral pyre as the case may be.
I agree with Ron and Ronnie. Those who buy strictly on price will take up the firesales but let me tell you that having had Sebrings and PT Cruisers as rentals that they are crummy vehicles that will cost them in the long run. The PT Cruiser was so poorly designed that the side windows were covered by salty slush in winter severely reducing visibility.
Firesale pricing will affect KIA/Hyundai more than Ford as Ford is selling well designed, quality built vehicles. Their sales staff are competent and professional. Now if they could only fix their service departments, I get so tired of going in for an oil change and being sold hundreds of dollars of (must do) work that I find is unneccessary once I get home and check it out on the net. Thats why I now go to Goodyear for scheduled maintenance.
I don’t know the legal side of this but, if I’m Ford I’d be looking at Obama and saying “Now hold on there, Bubba Louie”. It seems that in this situation Ford is punished for not coming to the trough, when if anything, they should be rewarded. There must be some kind of legal recourse to avoid putting them in even more of a bind. And, quite frankly, ToyoHondaSan, too.
It is all academic. The Chrysler close out sale will be just that. Bottom fishers looking for cheap transportation will snap up half off Sebrings and PTs. But it will be over in a few weeks and a competitor will be closed forever.
current incentive spending :
#1 – Chrysler, managing to maintain market share, only just.
#2 – GM, increasing their spending, but _still_ losing share.
#3 – Ford, decreasing incentive spending, gaining share.
apparently Chrysler buyers are mostly price-driven, while (potential) GM buyers are still not convinced & are going elsewhere. making any sort of move to the bottom with either of the C11 twins is the farthest thing from a good idea.
for jkross22 – you do know that Farley used to work at Toyota, right ? so the pic in front of a Prius is probably from a few years ago when he was there. his haircut isn’t the best, but by all accounts he’s a really sharp guy. and yes, he is related to the late Chris Farley.
Ford is stupid for not lowering their prices…which are really too high anyway.
Ford does not realize that, with the HUGE competitive advantage GM and Chrysler will have out of C11, they will be stuck floundering. Why not take advantage of this opportunity to low prices and get more people into a Ford product.
CrownVic, I think you are assuming that Ford, GM and Chrysler are interchangeable. I would submit that they are not any more, if they ever were, after the recent “unpleasantness”.
cdnsfan27- just say no before they do the work. Go home, ask about it and come back if you really need the work done. Though I think you’re right about going to GoodYear (or any good independent), they’re usually better about customer service.
Plenty of poor (obnoxious and rude) sales staff at the Ford dealers as well.
There’s plenty of non-loyal truck buyers who will buy a Ram if it goes cheap anough. I’m disappointed that I can’t afford any car now because a Patriot, Liberty or Nitro would be cool to have. Maybe a 300 or Charger if I was in the mood for a sedan.
CrownVic, I think you are assuming that Ford, GM and Chrysler are interchangeable. I would submit that they are not any more, if they ever were, after the recent “unpleasantness”.
They are. The ONLY difference is that Ford has not taken federal loans…yet. They have taken loans…in 2005, where they mortgaged everything they own. And let’s not forget all the money that the Swedish government gave Volvo.
Ford has lackluster product with dime store quality and interiors like Chrysler and some of GM, they are on the brink of C11…just like GM, their sales are in the toilet…just like Chrysler and GM, and they are making very poor business decisions…just like GM and Chrysler.
And with all of the cash Ford has spent introducing useless vehicles like the Lincoln MKT, Ford Flex, etc, and re-skinning (and making uglier) the Mustang CD# cars, D3 cars, etc, Ford is in trouble. And anyone that says otherwise is blind to the facts.
TaurusGT500 :
But …. when the dog days of August and July and June and maybe even late May bring on the inevitable fire sales …and ChryCo dealers are throwing Aspens and Avengers overboard like so many Hueys into the South China Sea
That’s a great comment, and a lovely metaphore.
Don’t forget… in July it’s the new 2010’s. GM has the Cruze but it doesn’t look like anything else. Cryco has literally nothing. Ford has a complete new lineup. People always want the latest and greatest and in this economy, a bargain price might not be the best mover.
All Cryco can do is price and quite frankly, I doubt it’s enough. Most of the good stuff has been cherry picked over. Most of GM’s offerings, excepting the Camaro, look warmed over with the pickups looking the weakest in ages.
I think that Ford hangs tough, at least until Dec. If things haven’t gone their way by then, then they will batten down the hatches.
“People always want the latest and greatest and in this economy, ”
I say “people” want the exact opposite. We want stuff that is proven and long lived. The best selling cars have been on sale for decades.
GM and Chrysler cannot have fire sales forever. Ford only needs to ride out the storm. I’m sure Leyland had some excellent deals on its way out. No matter the outcome of the BK GM and Chrysler cannot sell what they have or better at Nano prices and make cash off of it. If this were the case then even the Japanese would be readying severe price drops and so far they don’t seem too worried about it.
Speaking as a Ford salesman, most of our customers aren’t cross-shopping us with GM and Chrysler. From talking to most customers they are shopping us against Toyota, Nissan, and Hyundai. The only real demographics we have people comparing us to the other domestics on are trucks and Lincoln buyers looking at Buick and Cadillac. Our biggest competition isn’t local GM and Chrysler stores, it’s the Ford store a county down.
Most people want to buy quality, and yes, the almost all new 2010 lineup with shiny new sheetmetal also helps a lot. The current lineup matches or exceeds the competition in price, performance, reliability, interior quality, and features with the possible exceptions of the Ranger and Focus, but both of those still sell well to fleets while we await the salvation from global platform replacements.
Recently I bought a small pickup. It was between the Dodge Dakota, Ford Ranger, Chevrolet Colorado, and Toyota Tacoma. I did my research, Dodge Dakota ranked far below the others for reliability, Chevrolet Colorado offered “nice” styling but no option for a manual V6 (or the I5 that was offered for that matter), the Toyota Tacoma was far more expensive and felt a lot more like a car than a truck to me, so Ford Ranger was the logical choice. Of the big 3 I feel that Ford has been working to improve reliability since the 90s when they were constantly putting out recalls, I don’t see Dodge doing anything intuitive, and Chevrolet’s quality seems to be declining to me.
I don’t think Chrysler is a large threat to Ford because they sell different vehicles and have a very different reputation. The F150 is a great selling truck (if I remember correctly it used to be the best selling vehicle in America), and around here you can’t drive a mile without seeing one, they simply sell like hot cakes. That’s not to say that their other vehicles don’t sell too, but it seems to be their #1 seller followed by perhaps the Mustang. What does Chrysler have? The Ram? I’d pass. GM has the Corvette and the over-hyped Camaro (Their trucks lost appeal to me in the 90s). Of course the “fire sales” will effect Ford, Hyundai, Kia but I see Chrysler as a bigger threat to GM (which is already bankrupt) and GM is a larger threat to Ford (not a big threat). Ford’s largest threat is probably Toyota. But then again I live in an area where the economy is pretty stable, so I could be entirely wrong.
Do I think that Ford should drop their prices? No, as long as the product justifies the price.
Ford has lackluster product with dime store quality and interiors like Chrysler and some of GM, they are on the brink of C11…just like GM, their sales are in the toilet…just like Chrysler and GM, and they are making very poor business decisions…just like GM and Chrysler.
I am sorry – I do not normally rise to these unfounded and poorly conceived statements, but let’s revist some facts rather than the planly out of touch comments above.
Quality – Ford is in a tie with Toyota and ahead of Honda – 3rd party evidence supports. GM and Chrysler do not even come close.
Sales – Ford market share has increased for 6 out of the last 7 months and their May performance is already stong.
Financial performance – hardly stellar, but somewhat better than GM, Chrysler and even Toyota – go figure
Brink of Chaper 11? Not even close! Ford has enough money to last well in to 2010 assuming cash burn at rates far in excess of the 1st quarter. They are miles away from C11 and the stock price reflects that (I bought at 1.54 just to really annoy you)
Poor business decisions? You mean like all the award-winning new product, new engine investment at an all-time high and fuel economy that is either the best or among the best in the industry.
I am sorry, but nothing about these comments stacks up.
Quality – Ford is in a tie with Toyota and ahead of Honda – 3rd party evidence supports.
You mean the quality “studys” that Ford pays for? And remember…that is ONLY initial quality…which really means nothing. The new Ram and 2007 GM Trucks STILL have a nicer interior than the F-150…and GMs Lambda have a nicer interior than the Flex, the Malibu kills the Fusion…in both quality and styling.
Sales – Ford market share has increased for 6 out of the last 7 months and their May performance is already stong.
And last month they were down how much???
Brink of Chaper 11? Not even close! Ford has enough money to last well in to 2010 assuming cash burn at rates far in excess of the 1st quarter. They are miles away from C11 and the stock price reflects that (I bought at 1.54 just to really annoy you)
Ford has said that they will be forced to go C11 if GM or Chrysler does. GM going C11 will tank the whole industry. Ford is on top of a bubble that is about to pop.
Poor business decisions? You mean like all the award-winning new product, new engine investment at an all-time high and fuel economy that is either the best or among the best in the industry.
New product??? You mean the mildly refreshed F-150…that STILL lags behind everyone in power and capability? The F-150 with an 11K towing rating really struggles with something that is 6K pounds.
New engines? You mean those silly “ECO” Boost engines. There is nothing “ECO” about them. Ford’s 3.5 V6 gets the same mileage as a PUSHROD, 6.0 V8 from GM. Hardly ECO.
Fuel economy???
The Flex has poor fuel economy and a price that is way too high.
The F-150 has a boat anchor engine and poor fuel economy.
The Edge has poor fuel economy.
The Focus is OK for FE…but the car has been abused by the bean counters.
The Mustang…specifically it’s unrefined, anemic 210 HP, 4.0 V6 has terrible FE.
The Ranger gets F-150 mileage…and it does not offer a V8.
The only vehicles that get good mileage are their hybrids…and even they are nothing to write home about.
Some quick fuel economy stats…
7 Seat Large Crossovers (V6 FWD, Flex, Traverse, Highlander, Journey, Pilot)
Ford Chevy Toyo Dodge Honda
City 17 mpg. 17 mpg. 18 mpg. 16 mpg. 17 mpg.
Highway 24 mpg. 24 mpg. 24 mpg. 23 mpg. 23 mpg.
5 Seat Medium Crossovers (V6, FWD, Edge, Venza, Equinox, Santa Fe)
Ford Toyo Chevy Hyundai
City 17 mpg. 19 mpg. 17 mpg. 17 mpg.
Highway 24 mpg. 26 mpg. 24 mpg. 24 mpg.
Sports Cars (Most powerful engine, manual transmission, Mustang GT, Camaro SS, Genesis Coupe 3.8, 370Z, Challenger R/T, * denotes requires premium fuel)
Ford Chevy* Hyundai Nissan* Dodge
City 16 mpg. 16 mpg. 17 mpg. 18 mpg. 16 mpg.
Highway 24 mpg. 24 mpg. 26 mpg. 26 mpg. 25 mpg.
Sports Cars (Most economic engine, manual transmission, Mustang V6, Camaro V6, Genesis 2.0T, Challenger V6)
Ford Chevy Hyundai Dodge
City 18 mpg. 17 mpg. 21 mpg. 17 mpg.
Highway 26 mpg. 29 mpg. 30 mpg. 25 mpg.
Pickups (Most economic engine, automatic, F150 4.6 3valve SFE, Tundra V6, Silverado XFE 5.3, Ram V6)
Ford Toyo Chevy Dodge
City 15 mpg. 15 mpg. 15 mpg. 14 mpg.
Highway 21 mpg. 19 mpg. 21 mpg. 20 mpg.
Compact Pickups (most economic engine, automatic, Ranger, Colorado, Frontier, Tacoma)
Ford Chevy Nissan Toyo
City 19 mpg. 18 mpg. 17 mpg. 19 mpg.
Highway 24 mpg. 24 mpg. 22 mpg. 25 mpg.
Mid Size Sedans (most economic non-hybrid engine, automatic, Fusion, Camry, Malibu, Avenger, Altima)
Ford Toyo Chevy Dodge Nissan
City 23 mpg. 22 mpg. 22 mpg. 21 mpg. 23 mpg.
Highway 34 mpg. 32 mpg. 33 mpg. 30 mpg. 31 mpg.
So, there, fuel economy is right with the rest of the pack in every type of car, the interior quality of the Flex is just as nice as the Traverse and it is priced right with all the other 7 seaters, the F150 has greater capability in every configuration than any other pickup, and it was a lot more than a light refresh, and the Ecoboost engines have been getting great reviews from those who have driven them, and equal the fuel economy of GMs NA V6 that doesn’t make anywhere near the amount of power. There is just too much misinformation in that post for me to even correct it coherently, I’m going to bed.
EDIT – I cheated the Tacoma out of 1 mpg, so I fixed it.
@Nullomodo:
Ford’s fuel economy might be in line, but look at the power levels on some of those motors.
The 210hp V6 in the Ford Mustang is against a 250hp V6 from Dodge and a 304hp V6 from GM.
The 315hp V8 in the Mustang GT is against a 376hp V8 from Dodge, a 332hp V6 from Nissan and a 426hp V8 from GM.
The 310hp V8 in the F-150 is against a 390hp V8 from Dodge, a 381hp V8 from Toyota, and a 403hp V8 from GM.
For the power deficiency that Ford runs in several segments, I would think that should be the big time leaders in fuel economy, not just midpack.
–
And, yes, the Ecoboost system will help the power numbers. However, Ford recommends the use of premium gas, the fuel economy isn’t amazing, and the price of entry is very high.
For example, compare the SHO to a Charger R/T AWD. The Charger has a more powerful engine, runs on regular gas, starts at $4K less, and only gets 1mpg combined worse.
And, although it’s a SUV versus crossover comparison, the MKT Ecoboost pricing puts into the territory of the GMT900 hybrids and GL320 BlueTEC. These should return the same combined fuel consumption number as the Lincoln.
Can’t we just dump these lousy cars in the ocean and make a reef? We could start with the Sebrings.
ajla – You are right that there are a few areas where the powertrains don’t stack up well in terms of power. The 2010 4.6 Mustang GT V8 is eclipsed by the LS3 Camaro bar-none in terms of acceleration, but still handles better, and beats out the more powerful Challenger in both 0 – 60 and handling numbers. Also, for those who want ultimate power, the 540 hp GT500 has nearly 100 more hp and lb/ft of torque at the cost of only 2mpg vs the Camaro SS.
The 5.4 in the F150 is underpowered compared to the competition, but due to the design of the truck it still has greater towing and payload capability than any of the rivals. I agree it needs a power boost, and thankfully that is coming in the form of the new 5.0 and 6.2 liter engines due sometime at the end of this year or beginning of next.
The 4.0 Mustang V6 is outdated, underpowered, and yeah, needs to go, but it’s cheap, and that alone drives a lot of sales for V6 Mustangs.
As far as the comparison between the MKT and the GMT900s – the Escalade Hybrid comes in at over $30,000 more than the MKT Ecoboost, that’s a lot of gas, and the Mercedes BlueTec has an 8,000 price premium, a hp deficiency, the added cost of diesel, and only 1mpg more.
The 2010 4.6 Mustang GT V8 is eclipsed by the LS3 Camaro bar-none in terms of acceleration, but still handles better
Uhh…no. Only the Mustang with the expensive ‘Track Pack’ (barely) outhandles the Camaro. Stock for Stock, the Camaro kills the Mustang.
The 5.4 in the F150 is underpowered compared to the competition, but due to the design of the truck it still has greater towing and payload capability than any of the rivals.
Ford’s fairy tale capability ratings for their trucks have been questioned for a long time. When an F-150 with an 11K tow rating really struggles towing something HALF that weight, that is a sign of weakness…and Ford has ALWAYS been behind in powertrain. This article sums it up nicely:
http://www.edmunds.com/insideline/do/Drives/Comparos/articleId=147067?tid=edmunds.il.home.photopanel..1.*
Perhaps it’s optimized for towing, we theorized. A mere 6,500-pound trailer should be a minor annoyance for a truck with an 11,200-pound tow rating, right?
Well, it didn’t work out that way. Simply put, the Ford got beaten on our 11.5-mile test grade, coming in dead last by 27 seconds in a test that should have stressed it least. It was the only truck to drop below 50 mph, sagging to 47.8 mph at one point, and it spent the most time at wide-open throttle.
And once again, EcoBoost is a joke…nothing ECO about it. When a 3.5 V6 gets the same mileage as a 6.0 V8…we have a problem. And, personally, I would rather take the simple GM small block that does not cost any more than a high strung, gas guzzling V6 that, knowing Ford, will have some major defect. Ford does not have a good track record when taking on such an ambitious project.