Ford has announced the MKZ Hybrid will be priced the same as the base model. An interesting strategy on Ford's part. The following story appeared in today's Detroit News.
Ford drops hybrid markup Automaker prices Lincoln MKZ same as gas version
BY ALISA PRIDDLE
The Detroit News
Ford Motor Co. is throwing down a competitive gauntlet by becoming the first automaker to offer a hybrid, its new Lincoln MKZ Hybrid, for the same price as the gasoline version.
The midsize sedan goes on sale this fall.
Other hybrids charge buyers a premium over the gas version.
Ford’s move comes as automakers race to expand their lineups with cleaner and greener vehicles, frugal consumers pay more attention to fuel costs, and the federal government imposes stricter fuel economy standards.
“It’s very big news and I give Ford thumbs up for making it happen,” said James Bell, executive market analyst for Kelley Blue Book in Irvine, Calif.
Hybrids are becoming increasingly mainstream, Bell said, but with this step, “even the price difference is being washed away.”
There are no plans to make the same offer on Ford brand hybrids, said Ford spokeswoman Marisa Bradley.
Application to any future Lincoln hybrids would have to be determined.
Jim Hossack, senior consultant with Auto Pacific in Tustin, Calif., was surprised by Lincoln’s decision.
“There’s usually a substantial premium of $3,000 to $5,000 to buy a hybrid,” Hossack said, to cover the $3,000 average additional cost of the technology.
The 2011 MKZ Hybrid will have a starting price of $35,180, including delivery charges. That beats the nearest competitor, the 2010 Lexus HS 250h, which starts at about $36,000.
The innovative offer is designed to foster what Ford calls “the Lincoln experience” in an attempt to distinguish the brand. As the automaker phases out its Mercury brand, which has two hybrids, it will be left with just Ford and Lincoln.
“Lincoln is about delivering luxury standard,” said John Felice, general manager, Ford and Lincoln Marketing.
“Customers are very enthusiastic about the MKZ Hybrid and we think they will be even more excited to learn they sacrifice nothing to be able to go green in style.”
The MKZ Hybrid has been rated as getting 41 miles per gallon in city driving by the Environmental Protection Agency.
Felice expects the pricing will entice new customers.
With Mercury on its way out, Bell said, the move makes Lincoln more accessible.
Hossack said it is one response to the need for all automakers to meet future fuel-economy standards. A tactic going forward could be to increase the price of gasoline models and decrease the price of hybrids.
Ford’s move raises the question of whether the price of the 2011 MKZ — $100 more than the 2010 — factored in absorption of the extra cost of the hybrid, or whether the price of the car will increase in the future.
Bell believes the expected increase in sales of the hybrid MKZ will reduce the per-vehicle cost.
The pricing strategy should attract attention for a car that might otherwise have slipped below the radar, Hossack said.
“It certainly got my attention,” he said.
The competition will take notice, but there may be little they can do at this point, Bell speculated. No other automaker has a lower-volume, premium hybrid that’s in a position to make the same offer.
“It may be an experiment to see how it works,” Hossack said. Either way, “it’s an interesting and courageous move.”
apriddle@detnews.com (313) 222 - 2504
