Chrysler and Ford expand employee-discounts-for-all into Canada

http://www.canada.com/national/nationalpost/news/story.html?id=dd14451c-9a92-4b4d-ab0d-f6fe22345f9e

Chrysler and Ford expand employee-discounts-for-all into Canada
Rita Trichur
Canadian Press
Wednesday, July 06, 2005

TORONTO (CP) - Ford Motor Co. of Canada wasted little time Wednesday
to match rival DaimlerChrysler Canada by offering employee discounts
to all Canadian buyers.

The Ford Family Plan, which had been presented Tuesday to U.S.
consumers, will also include up to $5,000 in other discounts already
in place on 2005 Ford and Lincoln cars, trucks and SUVs. The offer
opens Friday and runs until the end of the month.

It excludes the Ford Mustang and Ford Escape Hybrid, already selling
strongly, as well as Ford trucks larger than the F-350.

The decision was an apparent about-face as a Ford spokesman had said
earlier Wednesday the company had no plans to expand the promotion
north of the border.

Ford's move followed an announcement by DaimlerChrysler Canada that it
is immediately extending employee discounts to all Canadian customers
on virtually all 2005 Chrysler, Jeep and Dodge vehicles.

Chrysler's Employee Pricing Plus program will also include up to
$5,500 in additional dealer discounts until the promotion expires Aug.
1.

The employee discount applies to most Chrysler models including -
unlike in the United States - the hot-selling Chrysler 300 series,
except the high-performance Chrysler 300C SRT8.

The discounts vary to as much as 2.5 per cent off the dealer invoice
price.

The moves in Canada came after Chrysler and Ford in the United States
on Tuesday followed the lead of General Motors, whose
employee-discounts-for-all program boosted its U.S. June sales to the
highest volume in almost two decades.

GM spokesman Richard James said the company has no plans to change its
Canadian strategy of offering a fuel discount that saves buyers 20
cents per litre up to a limit of 2,500 litres.

"The insanity continues," auto industry analyst Dennis DesRosiers
commented after the latest moves.

"The downside of these programs is that they do lower (profit)
margins, negatively impact residual (used-car) values and hurt brand
value - and how in the heck do these companies find a way to get out
of this game?"

DesRosiers said buyers have become "numb" to other incentives such as
low-interest financing, and he expects consumers to react positively
to the employee discounts.

Carlos Gomes, a Scotiabank economist specializing in the auto
industry, said the Chrysler and Ford discounting will spur July sales
and could force GM to act.

"It continues to mean significant improvements in vehicle
affordability for the average Canadian," Gomes said, noting that
overall Canadian auto sales in the first six months of this year were
up about two per cent over the first six months of 2004.

The announcement is also good news for vehicle production in the wake
of temporary layoffs at both Ford and GM because of slack sales, Gomes
added.

"It is reducing the inventory levels for industry quite significantly,
meaning that you won't have to go through these periodic layoffs as
we've experienced this year."