F Ford Motor Company

By Eric Sylvers 

MILAN-- Volkswagen AG, already reeling from the commercial fallout of the emissions scandal that shaved off a third of its market value, is now facing stepped up competition in Europe from smaller rivals Ford Motor Co. and Fiat Chrysler Automobiles NV as they seek to grab some of the German company's disgruntled customers.

Ford, the fifth-biggest seller of cars in Europe, and Fiat Chrysler, the seventh biggest, in the past two weeks have added extra incentives to entice consumers to trade in their old Volkswagens, Audis and other brands made by the German manufacturer.

The Ford incentives are available in many European countries including Germany, France, Italy, Spain and the U.K. while the Fiat Chrysler incentive is just for cars bought in Italy.

The incentives, which are available for gasoline- and diesel-powered vehicles, are a bid by Ford and Fiat Chrysler to take a bite out of VW's dominant 25% share of the car market in Europe, where the German company last year sold 3.2 million cars, twice as much as the other two companies combined.

In September, Volkswagen admitted to U.S. regulators that it installed software on some diesel cars that makes emissions appear lower in testing than in real-world use. The scandal has led to a Volkswagen profit warning, the resignation of the chief executive, and much soul searching among German industrialists, politicians and the general population.

Ford, through its dealer network, on Sept. 25, just a week after the scandal became public, began offering consumers between EUR750 and EUR1,750 to trade in their Volkswagen Group car regardless of the age of the vehicle. The incentives had been in place, but were applied only when the car traded in was from the 2004 model year or earlier.

The amount of the Ford incentive varies from country to country, and in Italy ranges from EUR750 for a consumer who buys a Fiesta to EUR1750 for the acquisition of a Focus. The company hasn't said when the incentive will expire.

"From time to time around the world, we and our dealers offer special offers to encourage customers not currently driving a Ford to consider making the switch," said Mark Truby, a spokesman for Ford of Europe.

Mr. Truby declined to give details on how many VW trade-ins there have been since the incentives were introduced.

The Fiat Chrysler incentive, which ranges from EUR500 for a Fiat 500 to EUR1,500 for a Jeep Grand Cherokee, is paid to the dealer who then decides whether to pass it onto the consumer. Fiat Chrysler's incentive runs through the end of the month.

Fiat Chrysler might find fertile ground in Italy for its efforts to grab VW car owners as the emissions scandal, which became public on Sept. 18, appears to already have cut into the German company's Italian sales. Sales of VW brand cars dropped 1.4% in September while the overall Italian market climbed 17%. Overall VW Group sales rose 6.1% in the month, below the 9.2% for the first nine months of the year, on the strength of Audi and Skoda.

Rather than being passed onto new-car buyers, dealers could use the Fiat Chrysler payout to incentive consumers to buy the VW Group vehicles they take as trade-ins. Since it is still not clear how VW will fix the 11 million cars involved in the emissions scandal, it has been hard to put a value on the German group's vehicles already on the road, and that could make them hard to move off used-car lots, said a dealer.

Volkswagen and Fiat Chrysler spokesmen declined to comment.

Ford and Fiat Chrysler have been relatively muted on the new incentives and haven't advertised them with new marketing campaigns.

Other car makers--including PSA Peugeot Citroën, Mercedes-Benz and BMW AG--said they had no plans to offer specific enticements for current VW car owners.

Jason Chow and William Boston contributed to this article.

Write to Eric Sylvers at eric.sylvers@wsj.com

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(END) Dow Jones Newswires

October 06, 2015 14:10 ET (18:10 GMT)

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