• by Karl Greenberg , Staff Writer, November 3, 2015

October was amazing for the car business. Take Ford. The company says it is enjoying its best retail numbers in 11 years: monthly sales were up 13%, with the F-150 pickup, the key vehicle, up by about that percentage. And sales of cars are up 17%. Same drill for SUVs and crossovers. So it is fair to wonder why Ford is launching a huge, year-end sales campaign, its biggest in years. What is Ford up to? It looks a lot like a pre-emptive strike? The sinking of the Lusitania? The “Friends and Neighbors” program, according to Automotive News, which cadged a document, offers no-haggle prices within about $200 of dealer invoice for the rest of the year. 

Think again, and think about the business in the U.S. As sophisticated as carmakers have become with auto technology, in-car connectivity, and marketing their products through rich websites, social and mobile, the retail model is still, for the most part, stuck in haggle mode. Yes, Ford’s market share has been fairly flat, even though its sales numbers have been admirable, and this new program is clearly an effort to grow that slice of the U.S. pie. But, more than anything, it is an effort to make the sales experience something younger car shoppers want, car shoppers who expect all retail experiences to be intuitive as a good app. In spite of the manufactured consternation in the press, what Ford is actually doing is building a transparent pricing model, where consumers know what they are paying. 

Karl Brauer, senior director for insights at Kelley Blue Book, explains that Ford's program is about clear and easy-to-understand pricing. “Ford is is experimenting with the concept of not only using low prices, but combining an aggressive and highly promoted incentive program with much more new thinking around transparent and set pricing, and I think they are wanting to see how well that works, how much more metal they can move by cutting prices through simplicity.”

Automotive consultant Jim Sanfilippo says Ford is not alone in moving toward this model. “They are very conscious of Toyota, and what they are doing, not just with Scion (which was designed around a no-haggle model), but also around transparent pricing on Toyotas,” he says, noting that Toyota's luxury brand Lexus has done the best job of making the transaction experience part of the brand platform. And then there's rival GM's "Shop, Click, Drive" program, which also aims to bring transparency to pricing. 

And consumers, especially younger car shoppers, expect to be able to find a vehicle and price it online, on mobile devices, and go buy it at that price. “It isn't about draconian pricing, like ‘Keep America Rolling’ in 2001,” notes Sanfilippo. Indeed, Ford is enjoying highest average transaction pricing in forever, and finally getting those F-150s in volume, and the products are in high demand, with an all-time October record for sales of the Fusion sedan. “Consumers want substance, where there is actually a difference when you get to dealerships.” 

It’s not easy to do. The auto business, after all, doesn't work like Subway. Dealerships are independent businesses, and the OEM/dealer relationship can, at its worst, look a bit like Britain versus the colonies. “You have to show [dealers] how well it works, and it has to deliver, it has to translate into throughput. That's what you can expect transparent pricing to deliver,” he says.

Brauer says, generally, incentives are higher than they were last year, but the ratio between industry sales and incentives is also large. “The sales numbers are about the highest they have ever been, rivaling record year 2000, the best sales ever,” he says. “Yet not with the highest incentive levels; automakers are selling more cars than they are using high incentives to sell them.”