But Ford says mix, limited incentives will boost profits. By Amy Wilson Automotive News / July 14, 2003 DETROIT -- The price increase for the 2004 F-150 won't cover the extra money Ford Motor Co. is spending to produce each truck. But Ford says it will make more money on the redesigned truck by limiting incentives and selling a higher proportion of higher-priced models. Ford said on Thursday, July 10, that it would raise prices on 2004 models by $245 to $635 over 2003 models with comparable powertrains. The trucks will start arriving at dealerships late this month and go on sale in August. The redesigned base F-150 will start at $22,010, including freight, for an XL regular cab with two-wheel drive. The top-of-the-line Lariat SuperCrew will start at $36,365, including freight. With optional equipment, prices could exceed $40,000. Ford also will sell its current truck, now dubbed the F-150 Heritage, for 2004. It will start at $19,920, including freight, for an XL regular cab with two-wheel drive, a V-6 engine and a manual transmission. Ford did not raise the price of the F-150 Heritage for 2004, and the company will steer large incentives to the model. YEAR-OVER-YEAR PRICE COMPARISON Model 2003 MY Pricing* Difference 2004 MY Pricing* HERITAGE XL Regular Cab 4x4 4.2-liter V-6 Manual $19,125 $0 $19,125 XLT SuperCab 4x4 4.6-liter V-8 Manual $28,455 $0 $28,455 2004 F-150 XL Regular Cab 4x2 4.6-liter V-8 Automatic $20,970 $245 $21,215 STX Regular Cab 4x2 4.6-liter V-8 Automatic $21,965 $250 $22,215* XLT SuperCab 4x4 4.6-liter V-8 Automatic $29,550 $535 $30,085 FX4 SuperCab 4x4 5.4-liter V-8 Automatic $31,755 $430 $32,185 Lariat SuperCrew 4x4 5.4-liter V-8 Automatic $34,935 $635 $35,570 *Prices exclude $795 destination and delivery. 2004MY STX price includes optional Bright Tubular Running Boards at $350 MSRP. Ford plans to produce the Heritage model until mid-2004 at its Oakville, Ontario, plant. It won't disclose expected Heritage volume, but the one-shift Ontario plant produced about 107,000 vehicles during the 2003 model year, according to the Automotive News Data Center. Ford will limit discounts on the redesigned models but will share plans for some initial incentives with dealers by the end of July. Ford says the pricing plan for the new model should produce higher profits from F-150 sales, despite higher costs of $1,000 to $2,000 per truck. "The price rise will not likely cover the cost in and of itself, but we do anticipate that the incentive spending will be substantially lower and we do anticipate a mix improvement," Ford Division President Steve Lyons said. "So the combination of those two improves the contribution margin." Some industry analysts doubt that Ford can sustain a higher margin for long. Given the heavy discounts on the 2003 model, the buyer of an average redesigned F-150 would have to pay $1,800 more per vehicle, "a tall order off an average transaction price of $28,700," Goldman Sachs analyst Gary Lapidus wrote in a report. Dealer Jerry Reynolds of Prestige Ford in Garland, Texas, said he was pleasantly surprised by lower than expected prices. "The message I got out of it was they are really looking at this thing for volume," he said. "It would have been easier to sell less trucks and make more money on (each) truck, but that's something, as a dealer, we'd hate to see."