Ford wants to prove it’s not a discount brand by increasing prices

Article by Christian Andrei, on August 30, 2010

Ford Motor Co. is done with being perceived as a discount brand and will now cut incentives and raise pricing on upcoming vehicles based on fuel economy levels and added features in its vehicles.

 In an interview, Jim Farley, Ford's group vice president of global marketing, sales and services, said that in comparing average transaction prices on a Corolla vs. a Focus or a Fusion vs. a Camry, Ford is dramatically different because of the favorability."

He explained that Ford offered high incentives in the past because it had high awareness and low favorability. But in the last two years in North America, Farley believes that Ford was able to transform the top of the purchase funnel; by creating a reputation for fuel economy and quality.

Farley added that consumers like the company more and since sales are up, Ford can be more with who it sells to. Farley said that Ford was able to close the favorability gap with Toyota, allowing Ford to ring up sales with lower incentives.

Ford is also believed to have been able to leverage its pricing and raise revenues. Farley cited the 2010 Fusion sedan as an example of Ford efforts to improve the powertrain and its fuel economy.

Farley said that the Fusion proves that if its reputation around fuel economy is changed, then it can lower its incentives more dramatically, and then resell them and grow the share at the same time.He pointed out the resale value on the Fusion is higher than the Camry a feat that he didn't think was possible two years ago.

Farley said that consumers who buy the recently launched Ford Fiesta want the higher-content models. Proof of this is the fact that 20% of consumers who buy the subcompact are ordering it with leather seats, which cost an extra $715.

Topics: ford, price

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