By on May 15, 2010

Ford Europe will swallow a tried and trued antidote against flagging car sales: Heavy discounting. Yesterday, Ford had announced – in a rather roundabout way – that their European sales had dropped a breathtaking 17 percent in April. Putting cash on the hood is no surprising move. Wouldn’t there be another detail.

Yesterday, Ingvar Sviggum, Vice President, Marketing, Sales and Service, Ford of Europe had said that it had been Ford’s “conscious decision” to stay out of the incentive race, and that they had seen the drop coming. “While we will remain competitive in the market, we will not devalue our brand or hurt our residual values just to chase volume or share,” Sviggum said yesterday.

Today, Bloomberg reports Sviggum singing a different tune: Ford may offer discounts on options on some models rather than outright cash rebates “to protect as much profitable share as we can,” Sviggum said. “We’ll just have to watch that we have the right balance between share and volume and profitability and margins.”

Ford’s rivals such as Volkswagen and Opel are generous with the “Verkaufshilfen” or “sales aids” as incentives are euphemistically called internally. If Ford doesn’t want to fall further, they have to pay the piper.

Instead, Ford hopes for a Return of The Abwrackprämie. Honestly. “Governments should consider restarting programs that gave consumers financial incentives to trade in older vehicles,“ Sviggum said.

Methinks, European governments have other problems at the moment, what with talk of the Euro coming apart. Former European Central Bank chief Jean-Claude Trichet said to Der Spiegel, that “without doubt, Europe is in the most difficult situation since World War II, maybe even since World War I.” Europe will save, save, save, prodded by Germany which holds the largest share of the Greek bailout. It looks like one of the savings will be an elimination of aid to Opel, which will take some capacity out of the market, unless Detroit or rather DC steps in.

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7 Comments on “The Day After: Ford Rolls Out The Discounts...”

  • avatar

    Hasn’t GM already used my tax dollars to buy out union workers at a German plant they were closing? Now they’re using them to give everyday European consumers a discount on their cars- when their own governments won’t (but they give aid to Greece)? Help OUR unemployment- move small car design back here. Close Opel, We’ll thank you (it’ll be great PR for US taxpayers) & Europe will too.

  • avatar

    I thought the bail-out for Greece was the “neue Abwrackprämie”…

    OTOH, Auto Abwrackprämie won’t make a return until after a few bad quarters of falling auto-sales…

  • avatar

    Ford hoping for a new C4C program in Europe? Dream on. There’s no cash anymore. BTW: there are not enough clunkers anymore, too, and demand is low. The Drama of the Saturated Markets goes on stage now.

  • avatar
    Telegraph Road

    Ford is competently handling its own ups and downs in the markets. They will survive just fine, as they have for the last 107 years.

    • 0 avatar

      Ford does seem to be more than holding its own, and I hope it continues on its upward trend.

      A history of longevity, however, is hardly proof, or a guarantee, of a firms ability to adapt to changes in the present and to survive into the future; just ask PRR, New York Central, or Studebaker. (In the case of Ford, it could be argued that incompetent dynastic control almost extinguished its life 3 times in the last 100 years.)

  • avatar

    Not only EU governments melting down. Household Debt is swamping the EU just like USA.
    Debt to Income Ratio in percent:

    Germany 89
    France 75
    UK 153
    USA 133 (2007)

    Takes the Blue Ribbon:
    Denmark 266

  • avatar

    Mr. Schmitt, any truth to the rumors that Germans are buying lots of gold bars and Krugerrands with any excess cash that they have? Would seem to indicate a trend that would not include new car buying unless absolutely necessary.

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