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Old 07-09-2003, 20:29   #1 (permalink)
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United States:Ford F-150 pricing key to launch

Conference call set for Thursday with details
By August Cole, CBS.MarketWatch

SAN FRANCISCO (CBS.MW) -- On Thursday morning, Ford Motor will let the automotive world know just how it plans to price one of its most important products, the 2004 F-150 full-size truck.

After getting the first good look at the new truck at the Detroit auto show in January, people have been trying to nail down just how much it will cost. A recent driving event in Texas just whetted the appetite because it appears to be a significant step forward for the No. 2 automaker.

Why all the fuss over a truck? This is the vehicle that symbolizes Ford's bet that it can rely on new products to help get its financial house in order.

After all the fireworks, food and fanfare, it comes down to this conference call at 11:30 a.m. Eastern on Thursday that will feature the head of Ford brands and the head of Ford trucks.

"Normally, you would never have a call on this," said Chris Struve, auto industry analyst at Fitch Ratings.

But this is anything but normal.

High stakes rollout

The launch of the F-150 has to be just right. Any product problems and Wall Street will jump all over the No. 2 automaker for blowing its big chance to authoritatively show that past issues are just history. Ford wants to use the production process for the truck as a model for the company.

Similar scrutiny is expected for the discounts and incentives during a period of economic weakness.

"It's going to be fascinating how they're going to position it," said Struve.

Too much of a discount and the company runs the risk of giving up valuable dollars when the trucks start driving off dealer lots this fall.

Too little a discount and sales could go soft if traditional Ford buyers stray to the growing list of full-size trucks out there from new entrant Nissan, as well as General Motors' established entrants. "The market is saturated," said Edmunds.com analyst Jesse Toprak.

For those eyeing demand during the second half of the year, the pricing will say more about industry trends ahead than optimistic industry executives who seem confident that the buyers will keep on coming.

If the truck carries $3,500 to $4,500 in discounts, Struve said that would be a very bad sign for the current pricing environment. For years, the industry has battled negative price pressure, which hurts all the more when the discounts are so aggressive and financing so cheap.

Right now, a loaded 2003 F-150 can run well over $30,000 and entry-level models start around $20,000. But dealers can be expected to discount their inventory to make way for the new truck and boost their allotment of the 2004 models.

Edmunds.com's Toprak said he doesn't expect too many changes to the pricing from 2003 levels. But he does foresee cash rebates and strong financing packages that may ramp up if initial sales disappoint in this weak economy. "They have the same problems as any other manufacturer," he said. At the same time, prices may quietly rise after the debut.

He expects discounts of up to 7 percent on the manufacturer's suggested retail price for the 2004 F-150 and up to 9 percent on the 2003-body styles still on sale. It also depends on who's buying. The F-150 design is a bet that different customers will want the same truck if it has different interior features in addition to the usual model difference. From price-conscious business users who seek true pickup utility to the more common driver who is looking for a car-like experience from a more expensive truck, Ford wants them all. And they all want deals.

On Wednesday, Ford extended its latest discounts until Sept. 2. The deals available include rebates of up to $4,000 and more free financing. With the exception of the four-door crew cab, the F-150 line has zero percent financing for up to five years or $3,000 cash back.

Company representatives were keeping mum ahead of the formal announcement but company executives in the past have not masked just how important the F-150 is. See full story.

High standards, high stakes

As Ford begins to roll out the new truck, it's worth acknowledging the current generation has set a high standard. On Tuesday, it captured the full-size truck segment in a J.D. Power reliability survey of model-year 2000 vehicles. See full story.

Historically, the F-series is among the most popular of Ford's products ever. Last year, Ford sold more than 800,000 F-series trucks vs. overall annual sales of just under 3 million vehicles.

If the new F-150 is to keep that spot within the blue-oval brand's line-up, pricing will be key to not just that legacy but Ford's turnaround.

"This is all about the future of the recovery this year," said Struve.

August Cole is spot news editor at CBS.MarketWatch.com in San Francisco.
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