By on April 14, 2010

TTAC readers must be a truly un-American bunch. Americans love a deal, or so the saying goes. TTAC readers hate deals, or so it seems. TTAC readers are up in arms whenever it rains generous discounts to prop up flagging car sales. “The resale value will suffer if they do that!” is the echo from our dear readers. If they would only drive Fords, they would change their minds.

“The resale value of newer Ford Motor Company vehicles rose 23 percent in the past year alone, the result of stronger demand for Ford’s new vehicle lineup and improved quality and durability ratings,” trumpets a press release of FoMoCo. As far as incentives go, someone has to help me out with full 2009 numbers. But if Ed Niedermeyer’s report on the first three quarters of 2009 is a guide, Ford wasn’t stingy when it came to incentives. As of October 1 2009,  Chrysler had spent an average of  $4,584, GM $3,796, and Ford coming in #3 position with $3,451 on the hood. All well above the industry average, which stood at $2,835 when the sample was taken.

So why the meteoric rise in Ford’s resale value?

On closer inspection, Ford’s increase is respectable, but not mind-boggling.Average resale values increased by 19 percent in 2009, according to National Automobile Dealers Association auction data. Ford is 4 percent ahead of the average.

Why? Ford says, it’s because their cars have improved in quality. According to their own data, “warranty repair rates on Ford vehicles have declined by an average of more than 40 percent globally in the past three years.” That, my friends, is huge. Warranty costs are the best metric for quality. Warranty costs can make an obscene dent into the bottom line of a car manufacturer, to the tune of figures which a signed Non Disclosure Agreement forbids me to release. All I can tell you is that if we would have reduced warranty costs by 40 percent, it would have been champagne and bonuses all around.

Ford says they have reduced their warranty repair costs by $1 billion in the past three years, and they hope to better that number as their new generation of vehicles hits the roads. If a 40 percent decrease only saved a billion worldwide, then Ford’s warranty costs already are low.

Resale values make the customer happy and increase sales through higher trade-ins. Savings in warranty costs go straight to the bottom line. Both are major drivers of customer satisfaction.

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11 Comments on “Ford’s Resale Values Up, Up, And Away...”


  • avatar
    ControlsGuy

    So true. Four years ago I bought a 2000 Focus with 50k miles for $4000. A similar 6 year old Focus now goes for about $7000 to $8000. I’m advising my new college grad to buy a new Focus that with a $3000 rebate costs $16,000 out the door.

    That 2000 Focus is going strong at 120k miles and feels like new.

    Go Ford.

  • avatar
    kkop

    Warranty claims have gone down.

    Is that because of higher quality, or because Ford just found ways to deny more of them? Curious TTAC writers should want to know…

  • avatar
    gasser

    A rising tide lifts all boats. The resale has gone up for reasons which may or may not be quality related. This time of year the tax refunds increase used car demand (per Steve Lang). Also Cash for Clunkers sucked a lot of product out of the used car pipeline. Third the economy for most folks still stinks and they can only afford used, not new car payments. (New car sales that include low interest rates are very sensitive to credit worthiness). I agree with poster kkop that the warranty claims can be artificially lowered by increasing the denial rate. In past years our local Ford dealer went out of his way to get authorization for warranty coverage and it went a long way to maintaining our loyalty to his store.

  • avatar

    I think it has more to do with the aura of not taking TARP money or being “government owned” more than anything else.

    Sitting in most current Ford vehicles the assembly and materials looks pretty much the same as they did years ago.

  • avatar
    educatordan

    I have not heard as much word-of-mouth complaints about Ford dealers denying claims as I have a few others. Remember what Hyundai executives said, “When we had the idea to introduce the 10 year warranty we knew we would either have to increase our quality or go bankrupt.”

    Way to go Ford! (BTW I give the same congrats to GM and Chrysler when they can announce similar things.)

  • avatar
    Sinistermisterman

    Interesting article.
    I too would be interested to see how GM and Chrysler are doing with their warranty repair rates. And barring the millions of pedal adjustments, it would also be interesting to see how Toyota have been doing over the past few years.

  • avatar
    cdnsfan27

    I have a 2005 Focus ST and a 2006 Freestyle L and both have been trouble free. We put a lot of mileage on our cars and remain extremely satisfied with our choices….Go Ford!!!

  • avatar
    Bunter1

    Ford’s reliability scores in CR have bumped up nicely in recent years.

    Sounds like they are reaping justly earned rewards.

    Currently the only domestic I would consider a vehicle from.

    Parallel to educatordan’s comment, I’ll consider the others when they earn it.

    Bunter

  • avatar
    Carzzi

    I bought my 94 5.0 Stang ‘vert for $3K ~2 years ago (peak summer gas prices). Sold it last week for $4K (and I had my inbox overflowing with interested parties).

  • avatar
    Runfromcheney

    I think it all has to do with demand. Ford’s new vehicles are class-competitive and are in high demand. Used-car values plummet on a certain model when that certain model starts flooding onto lots and can only be sold at exorbitantly low prices.

  • avatar
    Accazdatch

    1. Ford needs to stop TELLING people in THEIR cars in their ads that their quality is EQUAL with Honda and TOYOTA. Ya find that out through the vehicle itself.

    2. I dont buy a vehicle based on its rebate. Just like I don’t walk into the market.. and buy whatever is onsale. I buy what I need, with the price that it is and that’s it. Now.. If it happens to be onsale.. then its a win.. all around.

    3. Ive also learned… that resale value.. doesnt mean GOD DAMN THING.

    Like the bastards who buy Camries in the beige color with the 4 in the LTD package.. to turn them around and resale them for similar money. Its because there is a high market for THOSE CARS. If I walked into a stealership.. and wanted a Holden Commodore WAGON, or a Ford FALCON WAGON.. in BLUE with the V8 or V6, with the STICK AND THE WAGON.. Id probably be 1 out of 20 who wanted it.. and the resale wouldn’t be high.. cause people aren’t smart enough to be different (and DRIVE the DAMN CAR!)

    If they told me a similar car is being sold from Ford example, a U.S Fusion Wagon.. with the auto, the wagon.. in blue… and had rebates on it.. I wouldn’t buy it.

    Ya buy the car ya want.. at the price ya want.. and don’t let the rebates fool ya otherwise. Rebates are like… coconut mysteriously placed in chocolate. Ya don’t know they are there.. until ya bite.

    Id be happy to bite it.. but wouldn’t make me bite it first.

    And FORD hasnt done the best.

    I can count a DOZEN vehicle issues they have.. in product v product (of their own competition) that pisses me off. I think their ads are TOTALLY condescending, and don’t actually support the purpose of point for buying one vehicle over the other.

    I’m also po’ed at the weight differences between the Escape v Edge v Flex v Exploder. Same motor in 3 out of 4.. with same market intentions and purpose.

    Heck.. THE TAURUS SHOW ads also irk me.

    Then again.. FORD is still paying OUT THE ASS on Exploder rollover cases… and ya couldn’t get my dying corpse into that roving POS.

    SO.
    Place Ford against GM or Chrapsler.. and they look like geniuses, — lets just say.. (like a politician) they have the least (domestic automaker) issues that piss me off.


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