Ford’s Big Sale Failed Because People Don’t Have Cash For New Cars

A month ago, Ford kicked off a huge round of incentives that seemed unusual even by Detroit standards. Four weeks later, Ford’s “Friends and Neighbors” has been kicked to the curb after Ford found out a painful lesson: New-car buyers need to borrow money to actually buy cars.

While Ford’s overall sales were up 0.4 percent in November from a year earlier, all of that gain came from its F-Series pickup and van lines. Sport utility sales slid 10 percent, while car sales were down 13 percent, paced by a 25 percent drop in Ford Focus sales.

Yet Ford execs sounded upbeat when talking about the month, pointing to the money that came in the door. Despite the “Friends and Neighbors” push, the average total incentive was unchanged from the month before (about $3,360 per vehicle, according to TrueCar.) And the average selling price jumped by $3,700 from the month before, the most of any automaker.

Mark LaNeve, Ford’s sales chief, said the deal had given people reason to buy more expensive and fully-loaded models, but had also left some buyers out because it lacked the zero-percent loans that have become standard in the past year on many models. With 85 percent of all new-vehicle sales backed by a loan, that hit the buyers who needed the most help—i.e., Focus customers.

“Even if you’re getting to the same payment by other means, just the availability of low interest financing—it’s just a major component of the way customers are shopping now,” LaNeve told reporters and analysts Tuesday.

For this month, Ford will drop Friends & Neighbors for a simpler offer of $1,000 off plus a five-year, zero-percent loan. If that Fiesta or Mustang looked too expensive last month, your local dealer may be more generous just in time for Christmas.