Dealer group urges small businesses to purchase vehicles before end of year

By John D. Stoll

Buy a truck and write it off.

That's the message Ford Motor Co. is sending to small-business owners in an effort to bolster demand for its most profitable products in the final days of 2016.

The auto maker's dealer group emailed an advertisement Tuesday to prospective buyers in the U.S. urging them to purchase a work truck, large sport-utility vehicle or van before the end of the year to take advantage of potentially substantial tax breaks. Citing the Internal Revenue Service's Section 179 deduction, which was recently retooled and made permanent, Ford suggests customers "could get a big tax break for your business."

The F-series pickup, large Expedition SUV and Transit work vans are highlighted in the email, which was obtained by The Wall Street Journal. Ford plans to slow production during the first quarter, including dialing back output of certain trucks and vans, in a move aimed at curtailing inventory levels.

Ford's U.S. market share has held steady at 14.9% in 2016, and it recently put a redesigned version of its F-series Super Duty trucks on sale to take advantage of surging demand for large pickups because of low gasoline prices and healthy economic activity.

The Dearborn, Mich., company relies on big trucks and vans for a substantial portion of global profit. The company is working to fund several initiatives, including a $4.5 billion commitment to electrified vehicles, investments in new mobility ventures and autonomous vehicles, and a push to add freshened trucks and SUVs to its U.S. lineup.

Auto makers typically pour on sales incentives and ramp up advertising to ensure strong December sales. General Motors Co., for instance, is currently staging a "Red Tag Sales Event" that offers a $9,600 discount on certain versions of its Silverado pickups.

Barclays Capital auto analyst Brian Johnson sent a note to investors Wednesday projecting a relatively strong December performance for U.S. light-vehicle sales, but he added that the industry faces a plateau after seven years of growth. He also said pricing power is under increasing pressure. Many analysts expect the auto industry to set a second consecutive annual volume record, but say that demand is being propped up by hefty discounts.

Ford's push aims to lure buyers by combining existing incentives with tax breaks being offered on vehicles put in service for business by Dec. 31. For those who qualify, the entire cost of a Transit work van can be deducted or as much as $25,000 can be deducted from the cost of Expedition SUV purchases.

"Thanks to the new guidelines under IRS Section 179 of the IRS tax code many small businesses that invest in new equipment can now write-off up to $500,000 worth of these purchases on their 2016 IRS tax returns," the bulletin said. "Normally, small businesses spread these deductions over several years. But now, the tax benefits...allow many small businesses to write off up to $500,000 of qualifying new equipment in the first year it is placed in service."

Write to John D. Stoll at john.stoll@wsj.com

(END) Dow Jones Newswires

December 29, 2016 02:47 ET (07:47 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.