Ford Motor‘s (F) Canadian arm will offer customers a rebate of up to C$3,000 ($2,700) for the purchase of a new Ford vehicle in exchange for a 15-year or older vehicle.

The rebate program – Recycle Your Ride – would allow customers to receive C$1,000 for purchase of a new Ford or Lincoln car, C$2,000 for a new sport utility or crossover vehicle and C$3,000 for a new truck or luxury Lincoln. The program will start this Thursday and run for 60 days. If required, it may be extended.

Ford Canada plans to maintain sales momentum through the program. The program is built on the line of the Canadian Government’s “Retire Your Ride” program, which has given C$300 to consumers to turn in an old vehicle.

Ford Canada’s chief executive, David Mondragon, also strongly supported the similar “Cash for Clunkers” rebate program for fuel-efficient vehicles that generated big sales in the U.S.

Ford Motor revealed a 17% rise in sales to 181,826 cars and light trucks for August in the U.S., driven by the “Cash for Clunkers” program. Two models – Focus and Escape SUV, which are ranked fourth and tenth, respectively, on the top-10 buy list – heated up the company’s sales. Sale of the Focus increased 56% while that of the Escape shot up 49%.

Recently, it has been reported that Chrysler Canada would offer a rebate program of up to C$1,500 for qualifying trade-ins. Hyundai Canada had announced a similar C$1,000 incentive program last month.

Automakers are preparing for a new round of rebates and low-cost financing to bolster the sales gain generated by the car rebate program. This is because fears loom around the sustainability of the rejuvenation in sales once the rebate programs have expired.

We continue to recommend the shares of Ford as Neutral with a target price of $8.

Zacks Investment Research
View original at: Zacks.com News Feed

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