Perhaps it is a sign that Ford Motor Co. (NYSE: F) wants to clear inventory as it exits 2018. Perhaps it has vehicles it needs to sell because they have been on dealer lots too long. Whatever the reason, Ford currently offers 0% annual percentage rate (APR) for 72 months, among the most aggressive discounts available, for three of its mainstream models.
The deals are available on 2018 models for the Escape, Edge and Explorer.
The offers, which also include $1,000 credit bonuses, need to be financed via Ford Credit and are only available to people screened for good credit ratings. Presumably, Ford makes some money through the use of its “in-house” financial operation. However, the deals remain extraordinary, particularly in a period just ahead of what economists believe will be years of rising interest rates
Through July, Edge sales were down 5.1% to 78,198. Escape sales were off 10.5% to 165,257. Explorer sales were down 4.5% to 131,048. Each is among Ford’s best-selling models.
Each of the three vehicles falls into Ford’s crossover and sport utility vehicle category. The category, in general, has done well across the industry, which makes the discounts hard to understand. The vehicles are spread across Ford’s models in terms of base prices. The Escape has a base price of $23,940, while the Edge’s base price is $29,315 and the Explorer’s base price is $32,140. Base price models usually have small engines, which makes them attractive to buyers who want good fuel economy.
Ford continues to struggle in the United States, which is among the reasons it has become unpopular with many investors. Its stock is down 25% this year, compared with rival GM, which is down 14%. Ford’s credit rating was chopped recently by Moody’s from Baa3 from Baa2 with a negative outlook. The credit rating agency is not only concerned about Ford’s current situation. It also is skeptical about a turnaround that is in early stages.
No car company wants to offer 0% APR financing. The fact that it is spread over 72 months is even more telling.