Dealers think that “stair step” incentives confuse consumers and hurt transparency, but Ford wants to sell out-of-date F-150s
2 hours ago
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- Ford’s stair step incentive offers dealers money for every 2023 F-150 they sell, if they meet a target, and offers them a larger amount if they exceed their target.
- Dealers say the tactic puts numbers ahead of customers, and leads to dissatisfaction.
- With sales of the F-Series dropping 10% this year, Ford is eager to get rid of old stock.
After witnessing a 10% decline in F-Series sales from 170,377 units in the first quarter of 2023 to 152,943 trucks this year, Ford is keen to clear out-of-date models from showrooms. As a result, the company has reinstated a controversial sales incentive scheme that dealers had previously believed was discontinued.
The Detroit company has initiated what the industry terms as “stair-step incentives” to stimulate sales. This approach involves offering dealers a bonus for each 2023 model year F-150 trucks they sell once they reach a specified target. Furthermore, the payout per vehicle increases if the dealership surpasses 120 percent of its sales goal.
Read: Ford EV Sales Nearly Double In Q1, Hybrids Up 42%, F-Series Down 10%
In February and March, dealers got $750 per truck when they matched their goal, and $1,500 when they exceeded it, according to a report from Autonews. Now, the incentive for exceeding a sales target has fallen to $1,000, but 2023 and 2024 Explorers have been added to the plan. Regardless of which vehicles are included, dealers are unhappy that Ford has reintroduced the strategy.
“Why cause confusion among the dealers and customers because they won’t know what the price will be week to week? That’s what it is with stair-steps,” Rhett Ricart, CEO of Ricart Automotive Group in Ohio, said. “If you want to sell a vehicle, just put the money on the hood and let the customer know what the money is, and they’ll buy it. I just want transparency.”
The National Automobile Dealers Association has long opposed stair-step incentives, and hoped that the pandemic might have killed them altogether. In recent years, a shortage of vehicles has meant that traditional sales tactics were unnecessary. However, now that production is once again approaching capacity, dealers have reintroduced incentives for buyers and, apparently, for dealers, too.
Not all dealers hate it, though. Nick Anderson, the general manager of Chuck Anderson Ford in Missouri, admits that customers can become dissatisfied when a dealer is working an angle they aren’t aware of. However, he says that when the scheme implemented well, stair step incentives can be helpful.
“I do like that they give the dealer the ability to have discretionary spending,” Anderson told Autonews. “In March, three of the trucks I sold I wouldn’t have gotten unless I [overpaid] on trades. So basically, I gave it back to those customers to get their business.”
