Ford Says It Boosted Incentives in May After April Cut

Ford Motor Co. (F), the second-largest U.S. automaker, said it raised incentives this month to boost domestic sales after cutting them about $300 a vehicle in April.

“We pulled back perhaps a little too much in the month of April, which is why we had a bit of a dip,” Erich Merkle, the company’s sales analyst, told reporters at a briefing today in Dearborn, Michigan. Ford boosted incentives to be in line with the industry, which remains “very disciplined” in its use of discounts, he said.

Ford, unable to keep up with rising demand, said it will lose U.S. market share this year after three consecutive annual gains. Sales in April slid 5.1 percent for Ford while gaining 2.3 percent industrywide. Its market share fell to 15.4 percent this year through April, from 16.2 percent last year, according to researcher Autodata Corp. of Woodcliff Lake, New Jersey.

Ford offered $2,637 a vehicle in incentives this month, up 7.1 percent from April and 8.4 percent from a year earlier, according to Santa Monica, California-based researcher TrueCar.com. The industry average was $2,392, TrueCar said.

TrueCar estimates that larger rival General Motors Co. (GM) is offering average incentives of $2,973 and that Chrysler Group LLC’s average is $3,104.

Jim Cain, a GM spokesman, said the Detroit-based automaker is offering smaller discounts than Ford or Chrysler.

“GM has been consistently below key domestic and some Asian competitors and that’s certainly going to be the case in May,” Cain said today in an interview. “We’ve been very disciplined.”

Holiday Weekend

Discounts increased during the Memorial Day holiday weekend, Merkle said.

“Memorial Day generally tends to be a time when automakers do a fair amount of activity,” he said. “We feel really good about our Memorial Day sales. We’re encouraged.”

Ford fell 1.7 percent to $10.66 at the close in New York. The shares have dropped 27 percent in the past 12 months.

The automaker earned $1.4 billion in the first quarter, a decline of 45 percent from $2.55 billion a year earlier as a higher tax rate and overseas losses ate into growing income in North America. The Dearborn-based company earned $29.5 billion in the past three years after $30.1 billion in losses from 2006 through 2008.

Ford this month reclaimed control of its blue oval logo and other assets put up as collateral to obtain $23.4 billion in loans in late 2006 that enabled it to avoid the bankruptcies that befell its U.S. competitors. Moody’s Investors Service and Fitch Ratings raised Ford’s credit to investment grade in the past two months. Both had rated it as junk since 2005.

To contact the reporter on this story: Keith Naughton in Dearborn, Michigan at knaughton3@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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