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Ford expands no-interest financing

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Ford expands no-interest financing

Move raises profitability concerns



Ford’s first quarter profits could be held back by an incentive war with Toyota and General Motors, one Wall Street analyst said in a report today.

Last week Toyota announced 0% financing for 60 months on 10 models. GM quickly followed with its own 0% financing deals.

Ford is offering 0% financing for 60 months on some models, including the Focus, Fusion, Milan, Edge, Escape and Mariner, or cash back options.

“What is troubling is that Ford is increasing incentives on some of the core cars that have seen improved pricing over the last year — posing a risk to its overall positive pricing trend,” Johnson said.

Ford has worked diligently for years to reduce both its inventory and incentives. In February, Ford’s average incentive was $2,816, or 13.9% lower than the same month last year, according to Autodata Corp.

“Our incentive strategy hasn’t changed,” said Ford spokesman Steve Kinkade. “We are continuing to take a very sound, fundamental approach to our incentive strategy.”

Despite his concerns, Johnson said the issue shouldn’t scare investors away from Ford’s stock, as the automaker has been on a roll of successes.

In January, the company reported its first profit, of $2.7 billion, in five years. In February, sales of Ford’s cars and trucks increased 43.4%.

On Friday, Ford’s stock also hit $13.04 — its highest mark since Feb. 17 2005 — but opened slightly lower, at $12.94, today.

“We believe a negative view on its stock would likely be premature, as positive momentum may continue as investors focus more on the overall industry sales boost,” Johnson said in his report.



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there are so many variables in the auto business

add in manipulating your stock price so it doesn't heat-up too fast. . .

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