Why Is Ford Adding Incentives for the F-150?

Ford Motor Co. (NYSE: F) just reported a 29% year-over-year sales gain on its F-Series pickups. The company sold 70,937 pickups in June, up from 67,412 in May. For the year to date, F-Series pickup sales are up 10.7%.

Truck sales comprised about 40% of all Ford sales in June, and the F-Series pickups accounted for nearly 30% of total sales in June. Ford’s marketing vice-president crowed, “Strong consumer demand has helped us continue growing our truck leadership position, further widening the gap with our nearest competitor versus last year.”

So why is the company offering a Smart Bonus Cash incentive of $1,000 and 0% financing for 60 months on a vehicle that is selling like hotcakes? Here’s the fine print:

$1,000 Ford Smart Bonus Cash (PGM #35614). Not all buyers will qualify for Ford Credit financing. 0% APR financing for 60 months at $16.67 per month per $1,000 financed regardless of down payment. Ford Smart Bonus Cash vehicle supply is limited. See dealer for availability. For all offers, take new retail delivery from dealer stock by 8/1/16. See dealer for qualifications and complete details.

We reckon that means pristine credit on some pickups that are not exactly flying off dealer lots. A couple of things may be at work here. The 2017 models will be coming to dealer showrooms in the fall, and although the F-Series will get only incremental updates for the most part, the company is bringing back the popular F-150 Raptor model to appeal to truck enthusiasts. Making room for new models is important both to Ford and to dealers.

Ford may also be a little more worried than the company wants to admit about recent attack ads from Chevy that have gone after the aluminum bed in the F-150, comparing it to the steel bed the Chevy Silverado. Chevy began running the ads in early June and the monthly sales figures appear to indicate that the ads had little impact on sales. Silverado’s sales actually fell 3.7% in June. Adding a $1,000 cash incentive may be Ford’s way of keeping up the pressure.

The company is also offering a total of $8,050 in incentives on the 2016 F-150 XLT SuperCab or SuperCrew. That includes $1,000 in Smart Bonus Cash on “specially tagged vehicles” and $500 if a customer finances the purchase with Ford Credit. The MSRP on that truck with the 2.7-liter Ecoboost engine and 2-wheel drive is more than $44,000 and the dealer invoice is $41,594 according to Kelley Blue Book. This is a pretty significant deal.