Ford Motor Co. (NYSE: F) must have an inventory problem with some models of its F-150 pickup, the company’s flagship vehicle, which makes up as much as 20% of the manufacturer’s unit sales. It has an $8,000 offer on one version of the truck and price reductions on several others. Sharp discounts are almost sure signs that some lines of Ford’s business are operating on thin or no margins.
The 2016 F-150 XLT 2.7L V6 Ecoboost with either the Luxury Chrome or Sports package is available with $8,050 in “Total Savings” on vehicles with special tags. The savings are an amalgamation of three offers of over $1,000 and several smaller discounts.
Automotive News pointed out Ford’s worries at the end of July:
Executives said the automaker is spending more than anticipated on incentives as U.S. vehicle demand softens, generating less revenue than expected in China and facing at least a $1 billion hit over the next three years from the Brexit vote in Europe.
Many analysts have pointed out that 2016 may be the year U.S. car sales peak. If so, the largest car makers will be jockeying for market share of a shrinking pie. Traditionally, that means discounts will again become a significant part of how the industry.
At the very least, the F-150 discount shows Ford has a problem with some of its inventory. It will bear careful watching to see if the discounts spread. (Ford says it does not have an inventory problem.)