Ford campaign to stress cars trade-in value
By Bernard Simon in Detroit
Published: December 18 2009
Ford Motor will soon add an unfamiliar dimension to its North American advertising campaigns by stressing a marked improvement in its vehicles trade-in values, driven by its ability to avoid a US government bailout.
The move marks the first time in years that a Detroit carmaker has been able to boast that its vehicles hold their value better than Asian and European rivals.
For much of the past two decades, Ford as well as General Motors and Chrysler sought to maintain market share by offering hefty discounts and selling large volumes to car-rental operators at slim margins.
These tactics kept plants running but impaired brand image and trade-in values. The ultimate statement of what customers think of your company is in your resale values, Jim Farley, Fords global marketing chief, said in an interview.
Based on Automotive Lease Guide and RL Polk data, Ford estimates that the average resale value of a three-year old 2010 car or truck will be $1,310 higher than a 2009 model.
The carmaker claims that the trade-in value of its most popular mid-size sedan, the Fusion, is now higher than a Toyota Camry for the first time since the early 90s.
Matt Traylen, economist at Automotive Lease Guide said that Ford is definitely closing the gap with the competition.
Mr Traylen cautioned that residual values are open to differing interpretations. Nonetheless, he said, Ford models are way up in public perception. Not taking government money has been a big thing for them.
Mr Farley ascribed the improvement to a combination of new fuel-efficient models and scaling back incentives.
But, he added, a lot of it had to do with the incremental customers we got [as a result of GMs and Chryslers financial woes ]. Part of it certainly was the positioning of Ford being different.
Mr Farley said that Ford was trying to take a balanced approach between pushing up prices and margins, and improving market share.
According to Edmunds.com , the average incentive on a Ford vehicle fell to $3,124 in November from $3,818 a year earlier.
By contrast, Toyotas average incentive grew from $1,704 to $2,005. South Koreas Hyundai, whose market share has boomed over the past year, has been even more aggressive.
Hyundai and some Japanese manufacturers, notably Nissan, have also sharply stepped up sales to car-rental operators.
Erich Merkle, who runs the autoconomy.com website, estimates that Fords US market share will grow to 16 per cent next year from 15.3 per cent in 2009 and 14.4 per cent in 2008, the first increase in 14 years.
According to Mr Merkle, few other automakers have the number of new products or the consistent quality of new product introductions that Ford has in cue.
They include Fords first two global models: the small Fiesta, to be introduced in North America next spring, and the larger Focus sedan, which will be unveiled at next months Detroit motor show.
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