Ford targets US customers with poor credit histories

Ford will target consumers with impaired credit histories in a renewed drive to bring down swollen inventories of 2006 cars and trucks.

Ford said on Wednesday that “sub-prime” borrowers would be eligible for a new promotion offering interest-free financing for up to six years.

“Our programme is going to be quite a bit more accessible,” Ford said, describing the scheme as “something that customers will see as great value, and dealers will be able to rally around”.

Ford justified extending financing to buyers previously not considered creditworthy on the grounds that it was making its vehicles more affordable.

“It’s not that [the buyers] are not creditworthy, it’s that they don’t have quite as high a credit score,” it said. Bad debts will be treated as a marketing cost.

Ford announced last week that it would pare North American production by 21 per cent in the fourth quarter in an effort to bring capacity in line with demand, and improve trade-in values for its vehicles. Third-quarter output will be 3 per cent lower.

The troubled carmaker, which reported a first-half loss of $1.3bn, plans to unveil further measures by the end of September to reinforce its Way Forward turnround plan.

The Wall Street Journal reported on Wednesday that Bill Ford, Ford’s chairman, recently approached Carlos Ghosn, head of Nissan and Renault, about a possible partnership between the three carmakers if talks between Nissan, Renault and General Motors do not bear fruit. The report pushed Ford shares up 4.6 per cent on Wednesday to $7.76. Mr Ghosn is said to have told Mr Ford that he could not consider talks with the number-two Detroit carmaker until discussions with GM had been concluded.

A Ford dealer in Amery, Wisconsin, welcomed the new incentives as “a good idea to get rid of inventory”. However, he said that he had in the past advised prospective buyers not to purchase a vehicle if they could not afford it.

Ford suffered the humiliation last month of losing its traditional second spot in US sales to Toyota for the first time in its 103-year history. Ford’s share of the light-vehicle market slipped to 15 per cent from 19.2 per cent in July 2005 when sales were boosted by an employee-discount-for-everyone scheme.