Roughly a year after botching the launch of the redesigned Explorer crossover, Ford Motor Co. is cutting prices by up to $3,700 on certain 2021 model year trims.
It’s not necessarily a sign of big trouble. The Explorer maintains a solid sales lead in the profitable large crossover segment, and deliveries rose 12 percent in the second quarter despite the coronavirus pandemic.
The price cuts, analysts say, are likely meant to further cement Ford’s leadership status in an important segment that’s become more competitive with new entrants such as the Kia Telluride and Hyundai Palisade. It’s a nameplate Ford can’t afford to let fail, especially as it deals with a handful of costly launches at a time when the pandemic threatens to further depress new-vehicle sales.
“From a competitive standpoint, the Explorer’s not the F-150, but it’s a big product for them,” Jessica Caldwell, executive director of insights at Edmunds, told Automotive News. “I think the South Koreans have proved a newcomer can enter the segment and get attention. Their focus has to be on maintaining their leadership because I think some of these up-and-comers are threatening their territory.”
According to a pricing sheet first reported by Ford Authority, the base Explorer will cost $33,470 for the 2021 model year, including shipping, a $540 decrease from the 2020 model.
More expensive trims see more substantial price drops. The XLT will start at $35,245, a nearly $3,000 cut. The Limited will start at $45,955, down more than $3,500 from the outgoing model, while the Limited hybrid variant is more than $2,600 cheaper, starting at $51,100. The Platinum model gets the biggest drop, at $3,770 less than the 2020 model.
The changes put the vehicle more in line with its competition.
Ford’s biggest rival in the segment, the Toyota Highlander, starts at $35,775, including shipping. The Telluride starts at $32,735, while the Palisade starts at $32,595.
With the price reductions, the Explorer could also compare more favorably with and draw more consideration from consumers who use third-party shopping sites. Caldwell noted a high starting price can turn off would-be buyers before they even take a look at a particular model, even if most end up spending more than what’s advertised through add-ons.
“It’s more of a strategic move,” she said. “A lower starting price tends to draw you in to learn more.”
Ford said the pricing changes reflect a reshuffling of content.
“We repackaged some content offerings to better match customer requests and made other content standard,” spokesman Mike Levine said in an email. “The net result is a more competitively priced Explorer with content and features customers want. This will improve residual values for our customers, resulting in a lower monthly payment for those leasing and better resale value for those who purchase. It’s a win-win for America’s all-time bestselling SUV.”
Ford sold 101,149 Explorers through the first six months of the year, about 22,000 more than the closest competitor in the segment, the Highlander. Explorer sales are down 0.7 percent for the year, well outpacing overall sales in the large crossover segment, which have fallen 15 percent year over year. Two years ago, before the changeover to the current-generation vehicle, Explorer sales at the halfway mark of the year were 128,706 — 27 percent higher than this year’s tally.
Despite the relatively strong numbers this year, Ford slapped an average of $5,599 in incentives on the Explorer in July — the highest among the three top-selling three-row crossovers, according to data from Motor Intelligence. Only the Nissan Pathfinder and Buick Enclave carried bigger discounts.
Ford said July sales jumped 51 percent and that the Explorer’s retail share of the segment last month rose more than 4 percentage points compared with a year earlier.
Ford ended July with a 72-day supply of vehicles, including a 65-day supply of Explorers.
Automotive analyst Karl Brauer said the price cuts are likely a preemptive move to maintain sales and share that could be threatened by the recession.
“It’s great that it’s a sales leader, but if they’re building them faster than they can sell them, they’re heading toward a surplus they’ll have to get rid of,” he said. “The buying rate [in the first half of the year] might not be sustainable, and that could show up in reduced car sales later on.”