The Day After: Ford Rolls Out The Discounts
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.
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.
More by Bertel Schmitt
Comments
Join the conversation
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
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.