Visteon: Buy a Ford, get a $1,000 bonus
The cash-strapped supplier asks workers to help in its sales war against Chevrolet.
By Ed Garsten / The Detroit News
DETROIT - A ploy to help Ford Motor Co.'s Ford brand win a tight sales race against General Motors Corp.'s Chevrolet could cost financially strapped auto parts maker Visteon Corp. more than $8 million.
Visteon CEO Michael Johnston e-mailed the supplier's approximately 8,100 U.S. salaried workers Wednesday offering them a $1,000 cash bonus on top of their existing employee discounts if they buy or lease a 2004 Ford, Lincoln, Mercury or Mazda model. The offer begins today and runs through Dec. 31. Visteon employees who take advantage of the deal will receive the $1,000, minus applicable taxes, in their paycheck.
The offer follows recent moves by Ford and Chrysler to entice workers and their family and friends to purchase more vehicles through employee discount programs.
Last week, Ford informed more than 200,000 employees and retirees that they can now share special discounts with six people, up from four. The Ford and Visteon employee discount is 4 percent below the invoice price dealers pay for a vehicle. DaimlerChrysler AG's Chrysler Group also gave its workers an additional vehicle discount to pass out to friends.
Troy supplier Delphi Corp. launched a similar employee discount arrangement with GM a year ago. Employees receive vouchers they can redeem for additional company discounts, said Delphi spokeswoman Luce Rubio. The program will be extended for another year, starting today.
The note to Visteon employees followed a rally at the supplier's new Van Buren Township headquarters, where Johnston and Ford Executive Vice President Greg Smith formally announced the offer - called "One Grand Plan."
"This program ... is aimed at helping Ford sell more vehicles than Chevrolet for the 2004 calendar year," Johnston said in the memo, which was obtained by The Detroit News. "It's a great way for Visteon employees to show their support for our largest customer and benefit from outstanding savings."
Visteon will pay for the cost of the bonuses, said company spokesman Jim Fisher.
"We have a lot of content in Ford vehicles," he said. "If Ford vehicles sell, it's good for Visteon."
Ford's U.S. sales - including domestic and European brands - are down 5.2 percent through September.
Its share of the U.S. auto market has dropped to 19.4 percent, from 20.7 percent a year ago, according to Ward's, an automotive data service.
The Ford brand's U.S. sales are off 5 percent this year and its market share has declined more than 1 percentage point to 16.1 percent.
Brett Hoselton, an analyst at KeyBanc Capital Markets in Cleveland, Ohio, said he is skeptical that Visteon is footing the entire bill for a promotion to sell Ford vehicles.
"Theoretically, it might come out of Visteon's coffers, but, then again, Ford might reimburse them in the form of lower price cuts or any number of things Ford can do to flow cash to Visteon," Hoselton said.
Ford spokesman David Reuter denies there is such a deal.
He said the automaker encouraged its biggest supplier to go ahead with the bonus program as a way to reward employees for work performed on Ford's newest models, including the Ford Mustang sports car, Five Hundred sedan and Free-style wagon.
"We wanted to work with them to offer them an opportunity to have their employees share in the new products in the form of a purchase deal," Reuter said.
The cash giveaway comes as Chevrolet threatens to surpass Ford as the No. 1 auto brand in America for the first time in 18 years, based on annual sales. Through September, Chevy had pushed ahead of Ford by about 31,000 vehicles, according to Ward's.
Autodata Corp., which tallies sales slightly differently, still has Ford ahead by a thin margin. Either way, the race for sales supremacy between America's two largest auto brands will come down to the final two months of the year.
The program could cost Visteon $8.1 million if all of its U.S. salaried workers take advantage of the deal, and more if employees purchase multiple vehicles because they'll receive $1,000 for every one they buy.
Visteon, reeling from rising raw material prices and production cuts at Ford, reported a third-quarter loss of $1.36 billion and is weighing several downsizing moves, including job reductions, to restore profits.
Ford, Visteon's former parent company, is the parts maker's biggest customer, accounting for about two-thirds of annual sales, which totaled $17.7 billion in 2003. Visteon provides an average of $3,000 in parts for every Ford vehicle.
Since The Detroit News first reported in late September that Chevy could surpass Ford this year, the automaker has downplayed the importance of the sales crown.
Last week, Ford sales analyst George Pipas told Bloomberg News, "The idea of pulling out all the stops to save a sales leadership, that's just not on our radar screen."
But the Visteon deal and Ford's own expanded employee discounts suggest the automaker is not going down without a fight.
Ford has used its position as America's No. 1 car brand in advertisements and as a way to rally its large dealer body.
KeyBanc's Hoselton said Chevy could surpass Ford this year, but in the big scheme of things, it won't mean much.
"Increasingly, the battles between the domestics are becoming less and less important as the Asian manufacturers continue to gain market share," he said.
Indeed, through September, the combined U.S. market share for Detroit's Big Three automakers - GM, Ford and Chrysler - slipped to 60.5 percent, from 61.6 percent last year.
At the same time, the share of the U.S. market held by Asian manufacturers - including Toyota Motor Co.p., Honda Motor Co. and Nissan Motor Co.- increased to 34.4 percent, from 33 percent.