Magazine article Marketing

Ford Takes a Radical Option

Magazine article Marketing

Ford Takes a Radical Option

Article excerpt

It's been nail biting time at Ford recently. So far, each month's sales figures have shown Ford just, but just, managing to beat off arch-rival Vauxhall's assault on its market leadership. Only last minute sales spurts each month have kept Ford from the humiliation (and marketing damage) of becoming |number two'. But not Ford hopes it has come up with a long-term answer. If it is successful, it will have succeeded in transforming the way we go about our car buying.

Options, Ford's revolutionary new car buying scheme, undermines the traditional notion of car ownership. It is the nearest private car buyers have come to leasing, allowing them to drive out of a dealership in a new car, having paid around half list price.

At the end of two years' driving the buyer has three "options": pay the remainder and buy the car outright, sell it privately and pay the remainder, or return the car, without penalty, provided you've treated it "reasonably" (go steady on mileage, good servicing).

The simple but radical concept behind the scheme is to subtract the second-hand sale value of the car two years down the line from the initial |buying' price. If you divide the remainder between 24 monthly re-payments, add on interest and add to that interest on the second-hand value, you have "one of the most customer-friendly deals around". A 9580 [pounds] Sierra Azure, for example, could cost "less than 200 [pounds] a month".

If Options succeeds Ford will have found a marketing holy grail. it will have overcome the common car buyer fear of not getting a competitive value for the second hand car: the price is fixed with the dealer from the outset.

More importantly, it will be making a dramatic price offer which cannot be instantly copied by competitors. Why not? Because the whole scheme rests on high degrees of dealer training and a new selling culture, which just can't be replicated over night.

The scheme has been tested in the UK over two years. "It's taken that long to get the training in place, because training is the key to success. The dealers must look further than the immediate urge to "shift metal", says Udo Kaul, Ford GB's marketing director. "They have to see Options as more than a purely price-led promotion".

The incentive to change is high. Dealers get a very high turnover of new car sales-the aim is to have customers signed up immediately on a new Options scheme once they've returned their old car-as well as a flourishing used car business. …

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