By Michael Lodge, The Business Advisor - www.lodge-co.com: In last couple of years, the prices of Ford and Jeep vehicles have skyrocketed, causing concern among potential buyers and industry observers alike. The automotive market has seen a notable shift towards higher price tags, particularly in the pickup truck segment. As Ford attempts to address the issue by announcing price reductions, it is clear that more needs to be done to make these vehicles accessible to debt-ridden Americans. Additionally, the sluggish sales of electric vehicles (EVs) and growing inventory levels demand a comprehensive reevaluation of pricing strategies and incentives in the auto industry. But let's be truthful, like myself, most Americans see car prices way out of line. Those that bought new cars during the pandemic when government was handing out free money, now are in default of their auto loans and we are seeing more bank reposed cars up for auction.
What has helped the car industry is fleet sales. All the car rental and corporate cars that were sold off are now being replaced.
The Rising Costs: The escalating prices of Ford and Jeep vehicles, especially their popular pickup trucks, have raised eyebrows and left many potential buyers in disbelief. A $70,000 price tag for a pickup truck is undeniably stupid steep, and it's understandable why some would argue that pursuing such a purchase might be financially reckless. Wait, don't buy now, these prices are going to have to drop.
Debt-Ridden Americans: Given the economic realities faced by many Americans, it's no wonder that consumers are finding it increasingly difficult to afford these vehicles. With stagnant wages and rising living costs, the burden of debt has become all too familiar for many individuals and families. In such circumstances, committing to an exorbitantly priced vehicle could potentially exacerbate their financial woes.
Ford's Price Reductions: Ford's recent announcement regarding price reductions is a step in the right direction, signaling an awareness of the affordability concerns surrounding their vehicles. However, it remains to be seen whether these reductions will be sufficient to make their cars and trucks accessible to a wider range of consumers. More comprehensive efforts are needed to ensure that the average American can realistically consider purchasing these vehicles without plunging into overwhelming debt. Ford is going to have to do better, their prices are still way to high.
Need for Lower Production Costs: Automobile manufacturers, including Ford and Jeep, must take a hard look at their cost of production. By identifying areas where efficiencies can be made, they can potentially reduce the overall price of their vehicles without compromising quality. Streamlining manufacturing processes, optimizing supply chains, and exploring innovative cost-saving measures can help bring down the prices and make these vehicles more affordable for consumers.
However, let's be honest again, Jeep wanted to change their business model and price their cars at luxury brand cars. So their prices went crazy because they now want to be known as a luxury brand. Go out and check their prices.
Creating Incentives and Discounts: To encourage sales and alleviate inventory build-up, auto manufacturers should consider implementing robust incentive programs and discounts. These could include cash-back offers, low or zero-interest financing options, and lease specials. Such initiatives can entice potential buyers by reducing the overall cost of ownership and making the vehicles more financially viable. However, really, the only thing that will help them sell their cars - significant price reductions, and you are going to have to change your business model. Government isn't handing out more free money, and Americans bank accounts are drained. Maybe it is time to go back to the old days when Ford said, you can any color that you want as long as it is black.
Addressing the Electric Vehicle Challenge: Apart from the issue of high prices, the sluggish demand for EVs poses a unique challenge for automakers. As the industry transitions towards sustainable transportation, it is crucial for manufacturers to find ways to make electric vehicles more appealing and affordable to a larger customer base. Lowering the prices of EVs, expanding charging infrastructure, and increasing the availability of government incentives can help drive demand and reduce inventory levels.
Now is not the time to purchase a car or truck. Prices have to start dropping as cars become inventory sitting way too long on the car lots. They have to move them, but not with their current prices. If you buy now, you will have purchased a car, taken on more debt, and the value of the car as it leaves the lot puts you into an upside down financial position. Don't be stupid.
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Michael Lodge is a Nationally Certified Professional Mediator specializing in business disputes, as well as family conflicts. He has written three books and hosts an international podcast on IHeartRadio and other podcast media stations.