Cars and Drivers

Why Is Ford Discounting the F-Series?

Ford Motor Co.’s (NYSE: F) best-selling vehicle, the F-Series pickup, gets star billing at the car maker’s website. According to the number two U.S. car and light truck manufacturer, the F-Series has been the best-selling truck in America for 37 years. So why is Ford offering discounts on the pickup, which presumably hurts the company’s profits?

Ford’s current offer for the base F-150 is 0% financing for 60 months, plus a bonus of $1,500 for the trade-in of a limited number of vehicles. The five-year 0% deal may not hurt Ford badly, unless, perhaps, interest rates spike within the next few years.

The answer to the question of why Ford has moved to discount the F-Series may be due to the pressure from sales of General Motors Co.’s (NYSE: GM) Chevy Silverado and Chrysler’s Dodge Ram. Sales of the F-Series fell 4.2% in August to 68,109, and they are down 0.4% for the first eight months of the year to 497,174. The Silverado’s sales are up very modestly, by 12.8% in August to 49,201 and by 1.1% year-to-date to 331,977.

While the Ram has not threatened Ford for the top spot in pickup sales, it has taken a great deal of market share in 2014, and it could pass the Silverado in sales this year or in 2015. Sales of the Ram were up 32.6% to 43,775, and higher by 20.7% to 283,256 year-to-date. In August, it was the fifth best-selling vehicle in America.

Incentives are almost always a sign of flagging demand or an attempt to gain market share. Ford can argue that the F-Series is by far the leader in American vehicle sales. However, the company cannot argue that threats to its unit sales growth are creating great pressure, particularly from Dodge. The 0% financing offer for 60 months is a sign of weakness, no matter how it is postured.

ALSO READ: 9 Cars Most Likely to Be Dumped

ALERT: Take This Retirement Quiz Now  (Sponsored)

Take the quiz below to get matched with a financial advisor today.

Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future

Take the retirement quiz right here.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.