Ford Pricing to Power Hybrid’s Sales
You may have heard someone, as we have, say after purchasing
a new car that they would have liked to have purchased a hybrid, but it was
just too much money compared to the standard version. Now, at least with one
model, Ford is about to take that objection away because the automaker is pricing
its hybrid and gas model at the same price.
The 2011 Lincoln MKZ sedan, with
a sticker of $35,180, will offer the same pricing on both versions of the car.
According
to a Detroit Free Press report, industry analysts are not
aware of any other car company doing the same. Despite the extra costs involved
in building a hybrid, the same analysts believe Ford can afford to offer
the deal on the new Lincoln because of the greater margins it gets on a luxury
model.
Jessica
Caldwell, an analyst for Edmunds.com, told the Free Press, "It’s
going to take moves like this one to break into the luxury market."
Jesse
Toprak, vice president of industry trends for TrueCar.com, told CNNMoney.com, "It’s
an unprecedented move and I think it’s very smart."
The Environmental Protection
Agency estimates the MKZ hybrid will get 39 miles per gallon in combined city
and highway driving compared to 21 mpg for the gas-powered model.
Discussion Questions: What do you think of Ford’s move offering the same price
on its hybrid and gas-powered 2011 Lincoln MKZ sedan? What is your reaction if
you’re a Lincoln dealer?
It was just a matter of time for this to happen. The minor ‘cynic’ in me thinks that they probably increased the price of the gas model somewhat (taking a bigger margin) to lessen the impact of offering the hybrid at the same price. That’s not a bad thing. Smart move on Ford’s part!
The BP oil spill in the gulf has not only caused a lot of anger toward BP and the federal government, it has finally gotten some US consumers to look in the mirror and reflect on their own contribution to the disaster. Ford’s timing couldn’t be better. It really looks like they get it.
I hope that Ford can take the timing and vision and make sure that it filters down to the dealerships. I just picked up a new C-300, which can run on E85. The sales guy didn’t bother to mention this to me and when I talked to a service technician about how to make the switch he warned me that even though E85 costs quite a bit less per gallon in our market, it won’t really save me any money because my fuel economy will be reduced. This particular Mercedes dealership clearly doesn’t get it.
Consumers need to be careful here. Smart shoppers can usually get car dealers to sell them a conventional auto at near cost (dealer invoice minus holdback and incentives). Jerks like me would never allow a dealer to make money on a car or a salesman to earn more than a minimum commission.
I’m guessing if you buy a Ford hybrid, you will have to pay sticker price and the dealer will make a profit. There is no way you will be able to go in, negotiate to buy a car at cost, and then tell the dealer to sell you the hybrid instead for the same price. This is a ploy intended towards people too lazy or unmotivated to negotiate.
Ford is executing so many things so well these days. Just this morning they announced Q2 earnings of $2.7 billion–their best quarter in six years. This latest announcement in pricing their luxury hybrids the same as standard gasoline models is a brilliant first-mover advantage, and the public will take notice.
Ford can withstand the cost pressure and hence, they may offer them at the same price as being discussed. However, what determines their success is their presence in semiurban areas and also their servicing units in a market place like India
This is a very positive move by Ford, and many indicators suggest this will be a success. Over the last few years, in just about all the market research, we learn that consumers want to do the right thing for the environment, but are reluctant to pay more. As a pricing strategy and a Ford Corporate Brand strategy, this should pay off now and in the longer term with loyalty.
The timing is right for the manufacturers of hybrids to lower the pricing to make it an acceptable competitor to the traditional models. We, the consumers, are being prodded to purchase hybrids, to buy green, etc. How are we to do this if pricing, during this still economic downturn, makes it prohibitive? This was not “build it and they will come” as most manufacturers thought. I still believe the hybrid models are experimental and continually developing. Prices should continue to decrease as the product improves.
Are they going to pay to replace the $5,000 battery system in 5 years that many Toyotas are now faced with?
Either way this is a smart idea.
This is a great idea. Soon the artificial mark-up added to the gas model to make this happen will be a tax to offset the additional pollution (similar to the air-conditioning tax in many locations). In ten years it will be normal for everyone to drive a hybrid.