Dodge Nitro Forum banner

1 - 1 of 1 Posts

Super Moderator
23,119 Posts
Discussion Starter #1
Thursday, April 16, 2009

Ford banks on its rivals' misfortune

Ford Motor Co.'s newest idea is using the "B" word to undermine the competition, quietly.

Is it akin to kicking a brother while he's down, in this case Chrysler LLC? Of course it is. But it's also seizing a business opportunity -- yet one more example showing how Ford is driving an increasingly tight line between exploiting its advantage and joining a pile-on that could engulf the automaker if things economic don't go just right.

Rival General Motors Corp. could be weeks from bankruptcy, nationalization or both. Chrysler is rushing to complete an alliance with Fiat SpA of Italy. GM and Chrysler are living off a federal lifeline while Ford goes it alone, an advantage in bailout-weary Bailout Nation. And Ford, with two consecutive quarters of retail market share gains, is fielding its strongest lineup in a decade or more.

Why not step on the gas at the Glass House, despite a) the money it costs and b) the risk that Ford could find itself lobbying the feds for loans should the U.S. car market stay in the doldrums deep into this year? An answer can be found in an April 9 e-mail addressed to "New York Region Dealers and Managers."

Blue Oval dealers there now have $1,000 in "conquest cash" they can use to woo the owners of Chrysler, Dodge or Jeep vehicles out of their rides and into a Ford SUV, pickup or crossover -- but not a car -- between now and July 31. Would-be Denver and Phoenix customers are eligible, too.

"Domestic intenders for Chrysler and GM have been defecting to Ford and Lincoln Mercury products in great numbers since the beginning of the year," Amanda DeMouthe, marketing manager for Ford's Boston, New York, Philadelphia and Washington regions, wrote dealers in an internal memo.

"And as media continues to speculate on the possibility of bankruptcy, those defections will surely continue. Please be sure your teams are aware of this new incentive. It is stackable with Customer Cash, Bonus Cash and 0% APR!"

Like I said, Ford's driving a tight line -- exclamation point and all. This also is a company that lost $17.3 billion last year and is burning cash with the rest of them even as it has successfully restructured its debt, renegotiated its union agreements, cut production and has the share price appreciation to prove it.

"They could theoretically be in the same boat as us if things don't turn up in the next three to six months," Jonathan Grant, a principal in Central Avenue Chrysler Jeep in Yonkers, N.Y., told me Wednesday. "How can they be thumping their chest when they lost $17 billion? From my vantage point in New York, Ford is a non-entity. Our issue is the imports."

Maybe, maybe not. But it's a truism in business that there's opportunity and many potential beneficiaries in just about every crisis. The one bearing down on two of Detroit's three automakers should favor the opportunistic risk-takers, because points of market share theoretically are up for grabs and Ford is better positioned than any time in the past decade to claim some.

GM's Saab, Saturn, Hummer and Pontiac are likely to downsize or disappear from the U.S. market. Chrysler's Dodge and Chrysler cars likely would be winnowed or morphed into something completely different in a Fiat alliance.

For Ford, that's opportunity, as galling as that may be to folks in Auburn Hills or GM's RenCen (who'd be doing the same thing if the roles were reversed). It could be worse: An old Ford, populated by warriors of a different age, likely would have already used direct mail to contact GM and Chrysler owners because their company was "going bankrupt."

Which is a harbinger of the future should GM, Chrysler or both end up in the bankruptcy that seems increasingly likely. If so, the automotive cannibalism would intensify, eating away at already declining revenue. Just ask Grant, the New York dealer:

"Customers ask that question almost every day and they expect you to give the cars away because they say you're in bankruptcy or soon will be," he says. "This thing's like a cloud that is hanging over us."

LINK:Ford banks on its rivals' misfortune | | The Detroit News
1 - 1 of 1 Posts