Ford offers dealer bonuses
Ford Motor Co. this month began offering its dealers bonuses if they sell certain vehicles to help meet year-end sales targets.
According to a memo sent to dealers and obtained by The Detroit News, the automaker is testing out a pilot “Volume Growth Bonus Program” that will offer dealers between $100-$600 per vehicle if they meet certain sales goals. It is available for the C-MAX, Fiesta, Focus, Fusion and Escape. The bonus program runs from Nov. 1 to Jan. 2.
Such dealer bonuses are commonplace in the automotive industry and are often used to help clear out high inventory or provide a boost to lagging sales, industry analysts say. Consumers shopping for the vehicles involved can expect big discounts as dealers try to move as many as possible to unlock the highest bonus.
“It’s kind of standard fare, but customers aren’t necessarily supposed to know about it,” said Kelley Blue Book senior analyst Karl Brauer. “It gives the dealer full control over what they want to do, and they often communicate that through price reductions.”
Ford’s pilot program differs from traditional dealer bonus programs in that it offers dealers the ability to make up monthly sales shortfalls within the two-month period. So if a dealer doesn’t reach a November sales target to earn a certain bonus, they can make it up in December and still receive the extra money.
“The volume-based growth program we’ve put in place for the next couple months is really our way at looking for collaborative ways to work with our dealers to enhance sales,” Erich Merkle, Ford’s sales analyst, said in an interview. “We have worked with our dealers, including our national Dealer Council on the plan, to ensure a collaborative approach that is beneficial for Ford, our dealers and our customers.”
Most of the vehicles involved in the program aren’t selling well.
C-MAX sales were down 22.5 percent last month compared to last year; Fiesta sales were down 16.3 percent; and Focus sales were down 9.1 percent, according to Autodata, but those declines aren’t unique to Ford. Thanks to the lowest gas prices in years, most automakers are struggling to sell fuel-efficient small cars.
Sales of Ford’s Fusion and Escape are up 5.1 percent and 12 percent, respectively, compared to last year.
Overall, Ford’s sales were down 1.8 percent last month compared to a year ago. The automaker warned that it expected a lull in sales as it manages truck inventory to prepare for the launch of its aluminum-bodied F-150 pickup.
“I think this particular instance probably reflects some Ford volume frustrations that go beyond the standard end-of-year thing,” Brauer said. “If sales are up, you wouldn’t feel the need to utilize these techniques.”
Despite the sales dip, only the Fiesta has a higher days supply than this time last year, according to Ward’s Auto data.
Brauer said the bonus program should be a win for customers.
“If I were in the market for any of those models,” Brauer said, “I’d see what the were prices and I’d try to low-ball that much further and let the dealer know I knew about it.”