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Ford sees 12 million sales rate in December; transaction prices rising

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Ford sees 12 million sales rate in December; transaction prices rising

Ford's Jim Farley: “One of the things that’s really helped our profitability and share growth in the U.S. has been the strength of the used-car market."

Automotive News -- December 15, 2010 - 4:11 pm ET

DETROIT -- Ford Motor Co. expects U.S. industry sales in December to match those of the past couple of months -- an annual sales rate of around 12 million vehicles.

But the average transaction prices are higher because of customer demand for pricey trim levels and features such as leather seats, said Jim Farley, Ford’s group vice president of global marketing, sales and service.

Typically, the bulk of sales in December happen at the end of holiday shopping during the last week of the month.

“One very different part of December 2010 and almost any month that I remember in my career is that Christmas and New Year’s fall on a Saturday, which is really quite a big challenge,” Farley said. “I wouldn’t be surprised if we see some headwinds on the traditional SAAR just because people will be busy two Saturdays, when in the last several years they’ve been shopping.”

But Farley expects the sales pace to recover in the first week of January.

Leather seats

Farley said Ford’s average transaction price remains “robust” because customers are buying expensive trim levels with lots of creature comforts and technology.

“As we execute the product better and we give them more choice, we’re clearly seeing them move up in range, and that’s not just with the Fiesta subcompact,” Farley said. “But we’re seeing it all the way up through the lineup, including F series.”

Farley said one of the fastest-selling Fiestas is the one with heated leather seats.

“That is really surprising to us because that’s a feature that’s not even available” on many compact cars, he said.

Dealer profits

This has been one of the best years in terms of dealer profitability, Farley said.

“One of the things that’s really helped our profitability and share growth in the U.S. has been the strength of the used-car market,” he said. “We’ve seen a huge growth in the used-car departments. That’s really helped their profitability, and so has our share growth.”

A rebound in full-sized trucks has helped a lot of Ford dealers in markets such as Texas and the Midwest, Farley said.

Ford’s U.S. market share is 16.4 percent, up 2.2 points from the year-ago period, said Mark Fields, Ford’s president of the Americas.

“It’s been a really strong year for the F series,” Fields said. “When we close the books on this year, we will be the best-selling truck for 34 straight years.”

Fields credits the new 2011 Fiesta for increasing Ford’s share among 18- to 25-year-olds by 1.5 points.

MyFord delivery time

Ford launched its MyFord Touch technology this fall on the Ford Edge and Lincoln MKX crossovers.

MyFord Touch allows drivers to control entertainment, interior temperature, navigation and phone calls with voice commands or on an 8-inch touch screen monitor in the center console.

Farley acknowledged that the product has suffered some early glitches, but Ford has addressed all problems. He said the biggest challenge has been the longer delivery times required to educate consumers on the system’s functions.

“The biggest issue we’ve had really has been the delivery time because it’s a different system using your voice or the five-position system using your finger, and frankly it’s really required us to do a lot more dealer education,” Farley said.

Lincoln margin

Ford is talking with Lincoln dealers about tweaking profit margins to allow dealers to hand out more bonuses to exceptional employees.

“We feel strongly that for those dealers who really deliver the kind of services that luxury customers expect, they should have the opportunity to have margin in the vehicle,” Farley said. “We’re working through that with our dealers now.”

Ford is rebuilding its only remaining luxury brand. It plans to eliminate at least 200 Lincoln franchises in the top 130 markets by next summer. Ford has told Lincoln dealers that if they want to stay, prepare to invest heavily in store improvements and maker customer service better.

“It’s very clear what the customers expect,” Farley said. “They expect carwashes, same-make loaner, really basic things now. The way the conversation has gone with Lincoln, Ford and our dealers is if you provide that kind of service, we should be able to give the dealers an opportunity to earn a margin. That is a conversation we’re having with our dealers.”

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20101215/RETAIL01/101219882/1448#ixzz18DtMLyny

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