Ford's Resale Values Up, Up, And Away

Bertel Schmitt
by Bertel Schmitt

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.


Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Runfromcheney Runfromcheney on Apr 14, 2010

    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.

  • Accs Accs on May 04, 2010

    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.

  • ToolGuy This is the kind of thing you get when you give people faster internet.
  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
  • Carson D The UAW has succeeded in organizing a US VW plant before. There's a reason they don't teach history in the schools any longer. People wouldn't make the same mistakes.
  • B-BodyBuick84 Mitsubishi Pajero Sport of course, a 7 seater, 2.4 turbo-diesel I4 BOF SUV with Super-Select 4WD, centre and rear locking diffs standard of course.
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