cvalue13
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I think there’s simply a misunderstanding of the described marketing strategy here.
Ultimately, one version of that marketing strategy requires consumers to believe they have a shot at a golden ticket, so that they both get in the already long line but also stay in that line. Meanwhile, the marketing strategy is not about and also does not require Ford to sell anything at a premium. The Starbucks unicorn frappachino and the most hype Nike sneaker drops are all regular MSRP products.
A car you are certain to sell quickly at MSRP is far more valuable than any car with risk of selling below MSRP or after any delay. Many ways to accomplish that base strategy.
What else do you think they’re going to say,m!? The opposite?!
Again, there’s here just a misunderstanding of the desired marketing strategy and outcomes.
Meanwhile BTW, plenty could disagree that “Ford has gone out of their way to keep it cheap as possible” - as instead it’s equally viable to realize that all Ford has done is the only thing they could do to be first to market when starting from behind. They then brand that outcome to you in a way most favorable. “We brought you a truck in the same platform to keep it cheap,” instead of “bringing you the truck in the same platform was the only way to bring you the truck first, because we still need at least 3 years before we can develop a stand-alone BEV platform”
I know you’re not saying this to agree with me on this thread @RickE (and at this point I don’t want to make you guilty by association), but to me your point is right and is another example of the contradictions in belief at play here.
In the same breath, people here say things like “I just don’t understand why Ford isn’t telling people how long it will be, is that so hard?!l” while next saying “I don’t think Ford is intentionally manipulating information to drive up demand and brand awareness.”
Or, similarly, saying: “Ford has made it point to to communicate that this is a truck for the common man, mass consumption”, during a discussion about how that obviously isn’t true (and so how we might explain that apparent contradiction).
Auto manufacturers are widely recognized to be doing it broadly across all their lines. See below
I have no idea why it’s so hard to believe they’re also doing it, and doing best, with their halo products.
Scarcity Tactics: Low on Inventory, Auto Dealers Cash In on Higher Prices (Car and Driver Nov ‘21)
“Not too bad for car dealers is one way to put it. Fantastic for car dealers is another," says Dan Hearsch, managing partner for automotive and industrial practices at Alix Partners. Dealers are benefiting in two ways: They can hike up the price on new cars, often selling them without a test drive to people willing to pay sticker price or more, and they're also getting a boost from used-car prices. It's such a sweet high for dealers, Hearsch says, that it will be difficult for them to readjust when inventory returns to normal levels, whenever that may be. This summer, in a second-quarter earnings call, Ford CEO Jim Farley said his company is committed to moving more toward an order-based system and keeping actual inventories lower than in the past. "I know we are wasting money on incentives," he said.”
Lower production is driving up new car prices — and automakers' profits (Axios Markets July ‘22)
“Car manufacturers and dealers are making more money by selling fewer vehicles at higher prices — and this could be a lasting transformation for the U.S. auto industry….
Making and selling fewer cars might seem to be a bad thing if your job is making and selling cars. But for vehicle makers and dealers, the new system is working out pretty well for a very simple reason: price. Prices of new and used cars are up roughly 30% since the end of 2019, according to consumer price index data…. "It works fine for automakers and dealers," said Michelle Krebs, an analyst with Cox Automotive. "They're not going to be in a rush to go back to the old way of doing things. And in fact, we don't think we'll ever go back." the old way of doing things. And in fact, we don't think we'll ever go back."
"The new car market has really become a luxury market," says Krebs. "A lot of Americans are frozen out of it."”
After Pandemic Carmakers Will Keep Production Low To Keep Profits High (MotorBiscuit Oct ‘21)
“Carmakers have found that less production means higher profits…. And that is all you need to know going into 2022 and beyond. “We’ll never go back to the level of inventories that we held pre-pandemic because we’ve learned we can be much more efficient,” GM CEO Mary Barra recently told reporters. GM’s Chief Financial Officer Paul Jacobson told KBB that internal GM data showed that average vehicle transaction prices grew 10 percent for pickups and over 20 percent for large SUVs…. Returning to those pre-pandemic days of high output only means going back to incentives if the product isn’t selling. While the common thought was always that selling more cars made more profits for carmakers, it took the pandemic for them to see that just the opposite is true. “
How automakers are earning a bundle while making fewer cars (Politico June ‘22)
“In 2021, the world’s 16 largest automakers increased their profits by 168 percent year-on-year from €50 billion to a record €134 billion, despite sales only increasing by 1.2 percent compared to historically poor 2020 levels, according to an analysis by the EYconsultancy. That trend is continuing into this year, with carmakers boosting profits by 19 percent in the first quarter — a record for the period — while overall sales slumped by 11 percent, according to EY. “Carmakers are currently not keeping up with production, so premium models are taking precedence because their margins are higher,” said Matthias Heck, an auto analyst at Moody’s.”
Automakers Plan to Build Fewer Cars to Keep Prices Higher (KBB May ‘21)
“Automakers posted strong quarterly sales results this week, even as they deal with shuttered factories in the face of a worldwide shortage of microchips. They are learning a lesson from the experience that may not be good for car shoppers. Among them: It’s better not to build so many cars, so you can charge more for the ones you do build. Higher inventories forced automakers to offer discounts in order to sell cars. Lower inventories mean that practice is fading. Through the first quarter of 2021, incentives spending has been tracking at 9.6% of ATP, the first time the measure has been below 10% since 2016, according to Cox Automotive. Only two brands – Infiniti and Mitsubishi – increased incentives in the first three months of the year.”
Chip-Threatened Automakers Sell Less, But Profit More (Forbes Sep ‘21)
“Bernstein Research pointed out the combination of the coronavirus pandemic and shortage of chips forced fewer vehicles to made and lifted pricing and second hand market prices, with first half margins the highest in automotive history. But the report pointed to some investors believing fundamental performance will deteriorate because the industry will quickly revert to chasing sales once bottlenecks disappear.
“We believe this is an overly cynical and depressing view on the industry and its management teams. Our boardroom conversations suggest that supply/demand and vehicle pricing are at the very top of (manufacturers) agenda,” the report, headlined “Premium Pricing – Can you please not mess this up!”… “Isn’t (the auto business) a funny industry – the fewer cars manufacturers sell, the more money they make,” said Bernstein Research analyst Arndt Ellinghorst in [the] report.”
Dealer Lots Have Fewer Cars—and the Industry Likes It That Way (WSJ Nov ‘20)
“As they scramble to rebuild inventories, makers and retailers discover unforeseen benefit of having less supply on hand…. Now both car companies and dealers are talking about carrying fewer on lots, permanently.“
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