Ford Drops 'Friends & Neighbors' Sales Promotion

Ford Motor Co. is ditching its "Friends & Neighbors" campaign after the insider-pricing failed to live up to expectations.

The No. 2 U.S. auto maker by sales launched the deal in early November with expectations to run it until early January. Customers and dealers, however, gave it a lukewarm reception and Ford will move to a more-conventional merchandising "bonus cash" strategy for December, according to several dealers briefed on the plan.

A Ford spokesman confirmed the move away from Friends & Neighbors, but didn't outline any specific details of the next campaign—which is set to launch Tuesday.

"We're always in regular contact with our dealers," the spokesman said. "We often make adjustments to our marketing programs based on their feedback."

Ford's market share has slipped modestly in 2015 despite the introduction of a lighter-weight version of its F-150 pickup, the best-selling vehicle in the U.S.

Ford's Friends & Neighbors extended the discount rate given to suppliers and other business partners to all customers. The effort—billed as a no-haggle approach that could stand out among other industry efforts—was reminiscent of the campaigns from a decade ago that aimed to spark sales by offering employee pricing for all.

Dealers say some customers were confused by the new approach because they have grown accustomed to seeing cash rebates and other bonuses advertised up front. Buyers didn't always feel like they were getting a good enough deal, especially when stacked up against rival offers.

The switch to a new plan comes as most auto makers prepare for a late-year push heading into Christmas. The pace of U.S. auto sales is at the highest level since at least 2001.

Some analysts, including Fitch Ratings, have in recent weeks expressed concern that moves like the Friends & Neighbors program that Ford initiated in early November might signal a return to the deep discounting popular a decade ago.

Even before this campaign, Autodata Corp. reported an increase in total-industry spending on incentives in the month of October even as underlying demand remains strong because of low gasoline prices, attractive financing terms and stable economic conditions.

Ford executives had stressed in recent weeks that Friends & Neighbors discounts wouldn't cost the auto maker any more than other incentive campaigns typically do.

Ford Chief Financial Officer Bob Shanks, speaking to analysts last week in New York, said the company's incentive spending in the first half of November was actually tracking lower than in October and was about flat compared with November 2014.

"Nothing has changed," Mr. Shanks said. "We're continuing to be very disciplined in terms of production, demand and incentives."

Ford, now at one of its profitable points in history, has been booking record quarterly earnings in North America this year. Along with strong demand for its high-margin pickups, the company is getting greater transaction prices on vehicles across its lineup.

The auto maker, however, has struggled to maintain U.S. market share with sales taking a hit in the first part of the year due to a lengthy factory overhaul for the new F-150 truck.

As Ford worked to restore full pickup production, dealers were left with not enough inventory to sell, a shortage that dented earnings and opened the door for rivals General Motors Co. and Fiat Chrysler Automobiles NV to gain momentum.

Through the first 10 months this year, Ford's U.S. sales were up 5.5% compared with the same year-ago period, slightly behind the 5.8% growth posted overall by the industry.

Write to Christina Rogers at [e-mail]

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(END) Dow Jones Newswires

November 27, 2015 14:45 ET (19:45 GMT)

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