Ford Motor Co. has launched a bonus program that offers its dealers a cash bounty for meeting sales targets. Ford’s Volume Growth Bonus Program offers dealers payments of between $100 and $600 per car sold, covering the C-Max, Fiesta, Focus, Fusion and Escape models, according to a Nov. 1 Ford memo to dealers obtained by Bloomberg News.
The bonus program will have Ford pay dealers more cash per model as soon as they meet sales targets. These bonus payments could prompt dealers to sell their stocks at much lower prices and even offer generous trade-ins – mainly because the cash they could get from the program could be more than enough to cover any deductions.
The program, however, has its cons despite allowing Ford to cut any loss in market share. Aside from being costly, also lower resale values on models sold on discounts. Likewise, such programs could customers who miss out on a generous deal. “It cheapens the product and it’s just a doggone shame,” dealer Jack Kain told Bloomberg.
He noted that since sales figures in October weren’t competitive, Ford had to do “something this drastic to change the picture.” Ford saw its car and truck sales drop 1.8 percent in the United States in October. It also saw its market share for the first 10 months of the year fall to 15.1 percent, from 16 percent in 2013.
Ford’s decline came as the overall US auto market surged 6.1 percent to 1.28 million in October. Ford chief executive Mark Fields is expected a drop in sales and profits this year, as the carmaker revamps two plant to build an aluminum-bodied version of the F-150 pickup.
Ford already commenced output of the new F-150 at a Michigan plant in October, but a full-blast production would not happen until the second quarter of 2015.’s second quarter.The dealer bonus program is not a stair-step incentive, Erich Merkle, Ford’s sales analyst, said in an interview. The bonus program will end on Jan. 2, 2015.