Ford bows to free financing
Ford Motor Co., responding to rival General Motors Corp.'s price-slashing brinkmanship, expanded its discount offers Wednesday with free financing rates on most 2002 models.
Ford originally announced a less aggressive package of third-quarter incentives but went back to the drawing board after GM and DaimlerChrysler AG's Chrysler unit unveiled no-interest loan deals on most 2002 cars and trucks.
"One thing that's certain is that Ford will be competitive," said Steve Lyons, Ford Division president. "As the competitive landscape changes, we will answer."
Ford dealers -- gearing up for a holiday weekend selling blitz -- cheered the decision.
"This is going to keep us selling cars and trucks," said Ralph Seekins, chairman of Ford's National Dealer Council and a dealer in Fairbanks, Alaska. "I want to have the best program out there."
Ford's sales dropped 11 percent in June, compared with the same period last year, well below an industry-wide drop of 1.7 percent. GM's sales rose 4.4 percent, while demand for Chrysler's lineup slipped 3.7 percent.
The latest deals should help dealers move the metal but could slice into Ford's profits. Ford has said it will make a small profit this year after losing $5.45 billion last year. The company lost $800 million in the first quarter and will report second quarter results in mid-July.
Some Wall Street analysts are warning investors that the expensive discounts could stall Ford's planned recovery in the second half.
Ford spokesman George Pipas said the company has no choice but to remain competitive.
"If you don't deliver to customers what they want, you won't have to worry about shareholders," Pipas said.
Ford first offered financing rates as low as 0.9 percent on most models. The new deals announced Tuesday, offer zero-percent financing for 60 months on a number of Ford models including the Taurus until Sept. 3.
All models have free financing for 36 months except the Thunderbird, Escape and SVT models until Sept. 3, 2002.
Ford is still offering $1,500 to $3,000 rebates on most vehicles. Lease loyalty bonuses of $1,000 to $1,500 still are available until Sept. 30 on most models, which can be combined with cash rebates or financing rates being offered.