Major automakers like Ford Motor Company (NYSE: F) have enjoyed surging new car sales in the U.S. market since the depths great recession and that surge has helped Ford rope in some of its most profitable years in company history. However, there will be a time when demand for new vehicles peaks in the U.S. and if automakers struggle to balance supply and demand it could lead to an incentive war between major automakers to maintain market share -- similar to the situation helped 2009 become a disastrous year for the automotive industry.
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One possible way for Ford to avoid using incentives to sell its vehicles, if demand for new vehicles weakens in the years ahead, revolves around its ability to offer unique products and services to consumers.
Here's a quick look at a couple of things on Ford's radar that could turn into a competitive advantage for Ford's market share in the years ahead.
Car for rent?
Ford has been experimenting with different strategies to generate revenue throughout 2015, and one of those experiments involves consumers renting out their vehicle. "Consumers tell us they are interested in sharing the costs of vehicle ownership, and this program will help us understand how much that extends to customers who are financing a Ford vehicle," said David McClelland, Ford Credit vice president of marketing, in a press release. "As most vehicles are parked and out of use much of the time, this can help us gauge our customers' desires to pick up extra cash and keep their vehicles in use."
Penn Schoen Berland, an independent research company, backed that notion up and says one-third of millennials in the U.S. are interested in renting out their own belongings as a way to increase their income. Ford's Peer-2-Peer Car Sharing is in pilot stages for select Ford Credit customers in six U.S. cities as well as overseas in London. If Ford is the lone automaker to figure out how to make a service like this feasible, it could lure new consumers and generate incremental revenue.
Another experiment that Ford is focusing on revolves around one-way journeys.
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Ford's new pilot program announced as GoDrive will have 50 cars positioned in 20 locations in London designed for one-way trips with guaranteed parking and pay-as-you-go, per-minute pricing. Because driving a vehicle in many large cities to and from work isn't as feasible as other modes of transportation, this is an attempt for Ford to generate a new revenue stream. "As cities become more and more congested, people are becoming increasingly open to new means of mobility, and car sharing is proving to be an appealing model," said Ken Washington, vice president of Ford Research and Advanced Engineering, in a press release.
According to the CarSharing Association, the global car-sharing market is expected to exceed $6 billion by 2020 and Ford investors would love for the automaker to add its fair share of the incremental revenue.
Ultimately, if Ford can leverage consumers financing their vehicles using Ford Credit with the ability to rent their vehicles for extra income, it could provide a unique reason for a younger generation to choose Ford over competitors. In addition to more reasons for consumers to buy from Ford, the company's early pilot programs designed to better understand the car-sharing industry could enable the company to generate extra revenue that investors would never have anticipated only five years ago.
As the auto industry sales peak in the U.S., having unique services and options is a way for automakers to lure consumers and protect their market share without using costly incentives. Ford's Peer-2-Peer and GoDrive programs are two of many other experiments the folks at the Blue Oval are dipping their toes into, and as intriguing as they are, the story is only beginning.
The article A Unique Way for Ford Motor Company to Protect Its Market Share originally appeared on Fool.com.
Daniel Miller owns shares of Ford. The Motley Fool recommends Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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