Ford pushes price war, offers deferred payments
Reuters / September 12, 2002
DETROIT -- Taking Detroit's price wars to new heights, Ford Motor Co. announced on Thursday that it will allow customers to buy its 2002 model year Ford vehicles and make no payments until January.
Dubbed "Free Ride," the deferred payment plan can be used in conjunction with other incentives on Ford's 2002 vehicles, including no-interest loans and cash rebates of up to $3,500, Ford said.
Ford said the plan would become effective Thursday and run through Sept. 30.
Under the plan, customers with five-year or 60-month payment plans will be required to make their payments in 57 months beginning in January, a Ford spokeswoman said.
Offers of deferred payments are common from appliance and home electronics dealers, and department store furniture departments are rife with such deals. But they are rare in the U.S. auto industry where only Mitsubishi Motors Corp. and Mazda Motor Corp., a unit of Ford, are thought to have offered them in recent memory.
General Motors, the world's largest automaker, has taken the lead on popular sales incentives ever since it introduced zero-percent loans after the Sept. 11 attacks on the World Trade Center and the Pentagon.
But analysts said Ford, the No. 2 automaker, is tired of playing second fiddle to its cross-town rival.
"It's interesting they're doing this because GM has been the leader and I think Ford is feeling kind of left behind," said analyst David Bradley of JP Morgan Chase.
"Every incentives program that comes out it's GM leading and Ford matching. I think Ford is trying to get aggressive and show they can be first once in a while too," he said.
Ford followed in the footsteps of GM and the Chrysler side of DaimlerChrysler AG last week by offering zero-percent loans on some of its 2003 model Ford brand vehicles.
But Ford, whose sales have lagged behind its rivals this year, has the largest stockpile of 2002 models among Detroit's Big Three automakers and needs to clear them out quickly.
"They need to get rid of '02 inventories," Bradley said.
Incentives have bolstered U.S. auto sales to near-record levels this year, despite widespread fears about the economy and America's "jobless" economic recovery.
But the deals, and Detroit's cash war, have have been expensive to support, forcing automakers to slash costs elsewhere to protect already thin profit margins.
Ford's shares closed up 26 cents at $11.16 in trading on the New York Stock Exchange.
Ford said it did not announce the program on Wednesday out of respect for the Sept. 11 anniversary. It also said a national advertising campaign for the program will begin Thursday.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....