Ford Earnings: Higher Profits Mean Fewer Deals For Car Buyers
 

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Ford Motor Co.’s second-quarter profit of $2.6 billion was driven in part by a 20% percent rise in sales. But the results also reflected higher prices for the company’s vehicles and fewer of the discounts, rebates and other incentives that made it easy for consumers to get big deals for the past several years.

Ford also has benefited from CEO Alan Mulally’s long-term overhaul of its vehicle lineup. The company has generated a steady flow of popular new models like the Fusion hybrid and redesigned Taurus and Mustang over the past year or so. Consumers have been willing to pay higher prices for the fresh models. Analysts say buyers are also spending more on extras like leather upholstery, heated seats and electronic gadgets.

Mulally is driving prices higher in part by focusing on styling, quality, fuel economy and high-tech features like its Sync voice and data communications system. Mulally, who left aircraft maker Boeing to join Ford in late 2006, has tried to redefine Ford as a higher-end brand without alienating traditional customers seeking value.

To keep prices relatively high, the car maker continues to bank on new, highly-anticipated models arriving soon, like the redesigned Explorer SUV, which Ford will unveil Monday. Ford is also rolling out its new Focus small car later this year. Like the Taurus that came out last year and the subcompact Fiesta that recently went on sale, the upcoming Focus and Explorer are meant to project an upscale image compared with previous models.

Mulally has also been a stickler about limiting production to avoid the inventory buildups that in the past left too many new models languishing on dealer lots and eventually being sold at a loss. He isn’t alone, as the trend toward tightly controlling production has across the industry. For that reason consumers will find deals increasingly difficult to find. However, intensifying competition will result in a broader range of better-looking, better-equipped cars among which to choose.

Personally I will pay for good/great product as will most.

^^^^ x 2. I was just going to say that. I like the direction Ford has been taking.

I agree,but at the sametime you can't forget the average working guy/gal that makes this world turn.

I would have thought lower prices meant more cars sold-lose the incentives you might lose buyers? There's always those people that are sitting on the fence as to whether or not they can afford a new car. Good news either way, a real change from goverment bail outs.

But if they aren't making any money on selling extra units because of too many incentives being offered, then long-term profitability suffers, as does the resale value of the cars. Mulally is trying to steer them away from giving away the cars at a loss or little profit.


cheers
Ed N.

Which is totally understandable,but at the sametime,if they want to continue selling vehicles,i think they need to hold off a bit.The economy is still fragile.They need to keep it reasonable for those looking to buy,or i feel they will learn the hard way like some others have.Ford has played their cards wisely so far,they shouldn't push it because they are now finally seeing some profit.

Exactly where I was going - sales are up, so why blow it by getting greedy with the profits. Seems like it's one extreme or another - too many incentives and sell at a loss, or full pop with no incentives. Find the middle ground somewhere - Ford's in business to sell cars, not have them sit on the lot.

In the olden days people would start with a Focus as an example and work their way up to a Lincoln, today people want the Lincoln to start with. The same goes for homes as people want the 2500 sq ft home with a dowble garage to start instead of the 1000 sq ft bung. Just an observation.

You don't mean "Keeping up with the Jones" do you LMAO!
It's so true.I know this is a little side tracked,but,that is what is hurting us today,people want everything big now,no starting point,middle building part,just right to the big kahuna,and to get there,they live on a bunch of credit this,and credit that.:suicide: