Monday, August 29, 2005

Fusion launches with incentives as a result of Family Plan pricing

The new Fusion is set to arrive in Ford dealers any day now and will be one of the most important cars for Ford in the last 20 years. The Fusion which will be positioned between the FiveHundred and the Focus, as a replacement (with FiveHundred) for the venerable Taurus.

Now with all the buzz around the Fusion, because of the new NASCAR version, you wouldn't think that Ford would introduce a new model and slap incentives down right away. But because of the summer's Family Plan pricing, the Fusion will indeed need token incentives. While the Family Plan will not include the Fusion, they will be offering a matching down payment of up to $500, with an additional $500 bonus if the car is financed through Ford Motor Credit.

According to the article linked above, Ford is debating on extending the Family Plan beyond it's September 6 deadline. In my humble opinion, Ford, GM and Chrysler need to end the promotions and focus on the new year. Endless incentives and programs should not sell cars, quality and inovative design should.


Anonymous said...

I fully agree that quality and style will sell and Ford seems to be coming up short on both HOWEVER...
I wonder about the "Family Plan". I have been away for a while, so to speak, but not too long ago Ford was all in favor of one price, no hassle, Saturn-style selling. Dealers opposed it mostly even though some did sell that way. Also, I tend to feel that maybe "Friends and Family" plan pricing did in fact generate a profit to Ford (or they would not have such a program associated with A-X plan participants). Furthermore, maybe the dealers are the ones who suffer the most and who really pick up the tab for such plans?? No "holdback or finance charges right? And just about any half way savy buyer could come close to getting a price near these plan prices in the current market anyhow, this plan may have simply formalized what was going on in the market and actually adds little "cost" to Ford. With interest rates potentially on the rise to a level that the low rate programs might not be affordable AND with consumers worn out on "just plain rebates"...maybe this is not such a bad move after all. I know there are folks out there with a better ability to figure this out...what do you think?

Big Ford Fan said...

Anonymous, you raise a lot of points, not sure if I can get them all. As for Ford in favor of "Saturn" style no haggle, no hassle pricing, I hadn't heard that, but it may be a trend.

In my opinion, you have two types of buyers, those that agonize over the process and those that see it as a game where they're trying to win a lower price by negotiation and research. Some would love this type of pricing, others would feel cheated.

A recent article on states that Ford loses about $130 on each car they sell, regardless of the discounts. GM fares much worse, at $1200 per car. Read the article on their site.

Dealer profits are a mystery to me, but I know one or two readers that if they felt inclined could shed some light on the question. Anyone feel like handling this one? But my short response is that dealers make profits on the aftersale of extended service plans and dealer installed options.

I think you have some great observations and comments, but I don't have the ability to answer, so I'm hoping some other readers may.

Anonymous said...

Maybe part of the answer would be in knowing if Ford is paying a commission to the dealer for all "Family" plan sales. The normal "Friends and Family" plan was 4% over "A" plan price, right? I'm not sure if they paid any additional "commission" before the plan was opened to everyone or not. Buy the way, it's a bit untrue to say it's the same as "employee" plan price because under "employee" plan, additional "Documentation fees" or "processing fees" are not allowed, but under the "anybody is eligible" version, those fees ARE allowed. Come to think of it, I don't think Ford actually says it "employee price", but there is an assumption it is and I think that's the way GM defines their plan. I did see an item today in which some Ford exec indicated they did not favor a continuation of this plan but as I recall he added they wanted to focus on product for 2006 and get away from costly incentives. OK, will they have product for 2006 that will sell without incentives? Personally, I think not.

Big Ford Fan said...

Can anyone shed light on Anonymous' questions? I don't know anything about what dealers get under the current plan.