Some Lincoln Dealers Hesitant to Updgade

[RichardJensen]

If you assume $333 per vehicle sold is an acceptable investment (I wouldn't know, but it 'feels' right from my admittedly limited perspective), and that Ford will subveen the loans down to 6%, with a 10% down payment, here's how a ten year loan breaks down as I see it:

 

$500k investment = 15 Lincolns per month, 180 Lincolns per year.

 

$1M investment = 30 Lincolns per month, 360 Lincolns per year.

 

$1.5M investment = 45 Lincolns per month, 540 Lincolns per year.

 

Now accepting that Ford is going to keep some Lincoln dealers in rural market towns, but assuming they only account for 10% of Lincoln's overall volume, you can do some guesstimating:

 

If Ford's target is $1M investments and 360 Lincolns per year as an average, with an average of say 120k Lincolns sold per year by end of 2012 (by which time the dealers will have either gotten on board or left), you're looking at 108k sales from the urban dealers (discounting 10% for rural dealers that won't be required to meet minimum investment and appearance standards).

 

108k sales @ 360 sales per dealer per year = 300 urban dealers.

 

Now I don't know if those numbers are at all accurate, but I would suggest that Ford is aiming to have fewer, perhaps significantly fewer than 500 Lincoln dealers by the time this is all said and done.

Edited October 26, 2010 by RichardJensen

[campbell53]

If you assume $333 per vehicle sold is an acceptable investment (I wouldn't know, but it 'feels' right from my admittedly limited perspective), and that Ford will subveen the loans down to 6%, with a 10% down payment, here's how a ten year loan breaks down as I see it:

 

$500k investment = 15 Lincolns per month, 180 Lincolns per year.

 

$1M investment = 30 Lincolns per month, 360 Lincolns per year.

 

$1.5M investment = 45 Lincolns per month, 540 Lincolns per year.

 

Now accepting that Ford is going to keep some Lincoln dealers in rural market towns, but assuming they only account for 10% of Lincoln's overall volume, you can do some guesstimating:

 

If Ford's target is $1M investments and 360 Lincolns per year as an average, with an average of say 120k Lincolns sold per year by end of 2012 (by which time the dealers will have either gotten on board or left), you're looking at 108k sales from the urban dealers (discounting 10% for rural dealers that won't be required to meet minimum investment and appearance standards).

 

108k sales @ 360 sales per dealer per year = 300 urban dealers.

 

Now I don't know if those numbers are at all accurate, but I would suggest that Ford is aiming to have fewer, perhaps significantly fewer than 500 Lincoln dealers by the time this is all said and done.

 

Ford is only focused on consolidating dealers in the top 130 metro markets. Anyone else is considered "rural". So my market (South Bend/Elkhart IN) is listed as 150 so I guess I'm "in" as long as I sign whatever upgrade they want. It remains to be seen if it's a cookie cutter upgrade or case by case based on current facility. I know absolutely nothing yet.

Edited October 26, 2010 by campbell53

[Deanh]

And if the dealerships HAVE been investing, then their cash outlay should be minimal this time around since they should been about up to par already.

and if they havent been selling any vehicles that the public just plain isnt interested in...where exactly do the cash reserves come from Fordman?

[Deanh]

But as Richard pointed out - they HAVE shown them everything they can guarantee right now. 7 vehicles including a new C segment vehicle. Unique powertrains and features like glass roofs and electronic suspensions. I'm sure they've seen the MKS refresh. What more do they need to see?

 

Ford has set a new standard for Lincoln, starting with the products and extending to warranties, maintenance and service (requiring like loaner vehicles). This requires investment by most dealers so they have a choice to make.

 

I'll ask again - if what Ford is doing is so bad - TELL US WHAT THEY SHOULD BE DOING. Stop whining and offer alternatives.

 

My point is without significant investments the existing Lincoln dealers won't be successful anyway. Perhaps they should kill the Lincoln brand, get rid of all the dealers and open up a new brand like the Japanese brands did and start fresh from scratch. Because as I see it that's the only real alternative for Ford to have a world class luxury brand.

I dont know the answer, but I will be the first to admit it, AND I have a TOTALLY different perspective than you armchair experts....too often I have seen strong arm tactics enforced on unwilling particpants with promises of benefits...only to see sadi dealer struggle with increased overheads and then have to close doors....been there KirbY?...I HAVE, I remember VERY well handing the keys to my Land Rover demo being handed over to Tokai Bank Henchmen that funded a Mousoleum demanded by a certain Manufacturer ( Jaguar ) when that happened Land Rover DEMANDED a seperate showroom. $1 mill became $10 ( granted it was ground up, but I re-iterate, was DEMANDED for the privilidge of carrying the brand-name ) then POOF, the same people that put the store in mortgage hock, produced ploblematic vehicles, demand went down, mortgages still had to be paid along with other expenses and........GAME OVER! ...i'm looking at this from the dealers standpoint kirby, THEY have more to lose than Ford does, you are looking at it from Fords standpoint...so I ask this....whats expected of THEM....?

[RichardJensen]

Ford is only focused on consolidating dealers in the top 130 metro markets. Anyone else is considered "rural". So my market (South Bend/Elkhart IN) is listed as 150 so I guess I'm "in" as long as I sign whatever upgrade they want. It remains to be seen if it's a cookie cutter upgrade or case by case based on current facility. I know absolutely nothing yet.

You have any comments on those numbers?

 

I would think that you'd have a time period over which you could implement the improvements, so you don't have to borrow everything all at once.

[Deanh]

If you assume $333 per vehicle sold is an acceptable investment (I wouldn't know, but it 'feels' right from my admittedly limited perspective), and that Ford will subveen the loans down to 6%, with a 10% down payment, here's how a ten year loan breaks down as I see it:

 

$500k investment = 15 Lincolns per month, 180 Lincolns per year.

 

$1M investment = 30 Lincolns per month, 360 Lincolns per year.

 

$1.5M investment = 45 Lincolns per month, 540 Lincolns per year.

 

Now accepting that Ford is going to keep some Lincoln dealers in rural market towns, but assuming they only account for 10% of Lincoln's overall volume, you can do some guesstimating:

 

If Ford's target is $1M investments and 360 Lincolns per year as an average, with an average of say 120k Lincolns sold per year by end of 2012 (by which time the dealers will have either gotten on board or left), you're looking at 108k sales from the urban dealers (discounting 10% for rural dealers that won't be required to meet minimum investment and appearance standards).

 

108k sales @ 360 sales per dealer per year = 300 urban dealers.

 

Now I don't know if those numbers are at all accurate, but I would suggest that Ford is aiming to have fewer, perhaps significantly fewer than 500 Lincoln dealers by the time this is all said and done.

agreed, I think this is subtle culling...damn shame I say....

[RichardJensen]

$1 mill became $10 ( granted it was ground up, but I re-iterate, was DEMANDED for the privilidge of carrying the brand-name )

And here's where I ask you why the dealer took on such an obviously unworkable proposition.

 

I have a client who's restoring a building. He needs underground parking. There's underground parking in the building across the alley, and that building is for sale, but they want a price for it that would require $16/sf per year just to retire the debt (and the going rate for comparable space in the area is c. $16/sf).

 

That's $16/sf just to retire the debt. That doesn't include the $10/sf+ that the building requires in improvements and deferred maintenance.

 

Net result? Nobody that borrows money for that building can turn a profit on it. Nobody.

 

And yet some idiot is going to buy it.

 

That's the way it works.

 

Yes, I sympathize with dealers that have lost money on Lincoln over the years.

 

However, you can't find me sympathizing with someone who does something that stupid.

[RichardJensen]

agreed, I think this is subtle culling...damn shame I say....

Well, with state franchise laws being what they are, what other choice does Ford have? This ain't like when Holiday Inn phased out almost all of the original roadside outdoor corridor motels.

[Deanh]

Dean, they showed them everything. There's no 'just trust us.'

 

Forget about the RWD thingy, it's irrelevant. What they showed is what the dealers have to bet on.

 

I think the problem, and it's a tough one, is that Ford is basically setting a minimum volume target for Lincoln dealers without explicitly setting a minimum volume.

 

And yeah, that stinks for a lot of Lincoln dealers that have lost money on the brand for the last 10+ years.

thx Rich...guess I just have a soft spot for underdogs...and in this case its the smaller dealers....what is sad is that the fewer dealers there are, then theres the risk of monopolies and huge corporate dealers hwere bottom line and profits are all that matters...and in my opinion with that comes a drop in customer service, and less dealing for customers....ie, if theres only one dealer in a certain radius, and he has no competition, he can ask what he wants and treat you as a "statistic".....CSI can drop with this mentality....and if theres no competition....

[Deanh]

And here's where I ask you why the dealer took on such an obviously unworkable proposition.

 

I have a client who's restoring a building. He needs underground parking. There's underground parking in the building across the alley, and that building is for sale, but they want a price for it that would require $16/sf per year just to retire the debt (and the going rate for comparable space in the area is c. $16/sf).

 

That's $16/sf just to retire the debt. That doesn't include the $10/sf+ that the building requires in improvements and deferred maintenance.

 

Net result? Nobody that borrows money for that building can turn a profit on it. Nobody.

 

And yet some idiot is going to buy it.

 

That's the way it works.

 

Yes, I sympathize with dealers that have lost money on Lincoln over the years.

 

However, you can't find me sympathizing with someone who does something that stupid.

its a long story, but Jaguar kept on coming in saying this needed to be improved, and this and this and this...fact was their ( and the owners ) egos got in the way, at the time the building was built ( now Sterling BMW in Newport Beach ) Jaguar was on a ROLL, with waiting lists and nothing but pre-sold cars....then BAM, after the building was complete out came the problem prone 88....then BAM ....LUXURY tax.....and we also had Ferrari, Asto and Lotus, if one had a bad month the other carried the load....but with those unforseen issues coming about, sales AND thus profits plummeted, all the while the mortgage and overheads remained the same. Sad thing is when things had started to turn the corner is the exact time the gates were chained. I guess Tokai was secretly shopping behind the owners back, and found a buyer. Funnily enough it was a group called the Aitken group, and when they requested 100% financing at the final negotiation table, the deal fell through. Building was empty for over two years..........all that time we could have been in there making payments, and theres NO doubt in my mind we would still be there....hell, Ferrari, jag, Lotus, Aston and LR.....

[RichardJensen]

THEY BORROWED $10M IN 1987??????????????????????

 

 

 

 

By gawd, that'd would've bought you half of Meade County, South Dakota back then.

 

----

 

A few years back, I was in Rapid City, SD, and I stopped by this outfit called "Standard Motors" on a side street. I have absolutely no idea what happened to it, except the guy's heirs (if he's died in the interim) inherited a fortune in cars, paper, and memorabilia.

 

Guy was a Jaguar dealer until '87. Out of this tiny cramped store front with a gravel lot that was the sum total of his inventory space.

 

He was a Benz/Studebaker dealer (still had an original Pam "Authorized Studebaker Service" clock with the lazy S logo), a Fiat/Bertone dealer (still had the funky Bertone X1/9 showroom display), he sold a few Deloreans (had a DMC in the showroom with blown door struts), and he was a Jaguar dealer (had a Jaguar clock and a BRG E-Type convertible). He also sold Land Rovers for a while (had a Defender outside), and Austins (had a Marina), and he had a '63 Buick Riviera..................

 

I wonder what happened to him. One thing I can tell you, having grabbed just about every failed or about to fail franchise, one after another, he didn't have much sympathy for manufacturers.........

Edited October 27, 2010 by RichardJensen

[Deanh]

THEY BORROWED $10M IN 1987??????????????????????

 

 

 

 

By gawd, that'd would've bought you half of Meade County, South Dakota back then.

 

----

 

A few years back, I was in Rapid City, SD, and I stopped by this outfit called "Standard Motors" on a side street. I have absolutely no idea what happened to it, except the guy's heirs (if he's died in the interim) inherited a fortune in cars, paper, and memorabilia.

 

Guy was a Jaguar dealer until '87. Out of this tiny cramped store front with a gravel lot that was the sum total of his inventory space.

 

He was a Benz/Studebaker dealer (still had an original Pam "Authorized Studebaker Service" clock with the lazy S logo), a Fiat/Bertone dealer (still had the funky Bertone X1/9 showroom display), he sold a few Deloreans (had a DMC in the showroom with blown door struts), and he was a Jaguar dealer (had a Jaguar clock and a BRG E-Type convertible). He also sold Land Rovers for a while (had a Defender outside), and Austins (had a Marina), and he had a '63 Buick Riviera..................

 

I wonder what happened to him. One thing I can tell you, having grabbed just about every failed or about to fail franchise, one after another, he didn't have much sympathy for manufacturers.........

1 story turned to two, turned to 3 with additional levels of parking AND a Helipad...marble and granite floors, glass dividers with leaping cats etched into the panels....EVERYTHING was top notch, the locker rooms also has marble floors a BUNCH of showers and all fittings were Hyatt quality.....it was to be Jaguars flagship....there was even a leaping cat scupture out front....dont know if its anywhere on the web but it was Newport Imports, owner was an absolutely awesome guy....did I forget the weight room?....anyways, he went berserk with visions of granduer based on how business was BEFORE all the afformentioned obstacles reared their heads.....hell, there were Million dollar transactions ( Ferrari F40 ) taking place at 1.30am with suitcases ( is NOT checks ) ...it was CRAZY I tell ya....Luxury taxes on Ferraris KILLED the business for a LONG time....

[RichardJensen]

Helipad?

 

See, that's why nobody feels sorry for California when they end up in the dumps every ten years or so.

[fordmantpw]

and if they havent been selling any vehicles that the public just plain isnt interested in...where exactly do the cash reserves come from Fordman?

 

Good question, but if they have invested as you say, they shouldn't have far to go to come up to spec, should they?

 

But I do understand your side of the story, and I agree that it is culling of those who don't want to "buy" in. As always, the little guy loses!

[akirby]

thx Rich...guess I just have a soft spot for underdogs...and in this case its the smaller dealers....what is sad is that the fewer dealers there are, then theres the risk of monopolies and huge corporate dealers hwere bottom line and profits are all that matters...and in my opinion with that comes a drop in customer service, and less dealing for customers....ie, if theres only one dealer in a certain radius, and he has no competition, he can ask what he wants and treat you as a "statistic".....CSI can drop with this mentality....and if theres no competition....

 

I sympathize Dean - I really do. But is it Ford's fault that annual sales dropped from 17M to 11M overnight? What about the investment Ford made in Mercury plus the Mark LT the last 10 years? Every dime of that was to keep Lincoln/Mercury dealers in business - period. Lincoln has WAY too many dealers for the number of vehicles it can sell, even with all new products in a recovering economy.

 

The current dealer situation is untenable for Lincoln. Why should Lincoln divulge all of their future plans to a bunch of dealers? How long do you think before it leaked out to the public and the competition? Is Ford trying to reduce dealers? Of COURSE! They have to. Now either you trust Ford, make the investment and trust that they'll get the right products out over the next 3-4 years or you don't. If you don't or you don't think you can recover the investment then it's time to get out of the business. Does that suck for long time dealers? Sure. That's why they need to hold out for more money from Ford. Get as much as you can and get out.

 

The alternative is to shut down Lincoln altogether - where does that leave all the dealers?

 

Could you take some of these existing dealerships and start selling Lexus or Infiniti or Acura? Of course not - and that's precisely the problem.

 

This has been going on quietly for the last 3 years with many dealerships closing or merging. This is just the final push.

[rmc523]

Basically, my opinion is that I think Ford is nuts for trying to redo Lincoln before their GRWD woes are fixed. Until they get GRWD fixed, Ford just doesn't have the platforms off of which to build the models necessary for a competitive luxury brand.

 

So you want Lincoln to just sit around and twiddle their thumbs and wait for a magical automatically/instantly-fixing-any-and-every-problem-with-the-brand RWD platform?

[roush235]

A tidbit from my long-time salesman.

 

Background: dealer is in an up-and-coming suburb of Houston. New Ford store (early 2000's vintage), excellent location. Dealer absorbed the local Lincoln-Mercury franchise three years ago. Small-business ownership.

 

The salesman told me they would cease selling Lincolns soon. He specifically mentioned "we just didn't sell enough to make it worthwhile," and "the cost of advertising two brands didn't make sense to us." I will generally agree, the whole Lincoln part of the dealership seemed like an afterthought; the town has a blue-collar flavor and as such, trucks are king. (In hindsight, maybe they didn't want the Lincoln-Mercury side of the business all that badly...??...) Based on what I read here, I would guess the dealership would need some facility upgrades, which was likely part of the decision. Also, what I consider a 'flagship' stand-alone Lincoln store is about 15 miles up the road.

 

So, I was surprised at their decision, but certainly not shocked. It will be very interesting to watch what happens in Houston and other metro areas.

 

Aside: I really appreciate Campbell53's comments on this subject. Nothing like having someone on the front line offering his thoughts.

[PREMiERdrum]

So you want Lincoln to just sit around and twiddle their thumbs and wait for a magical automatically/instantly-fixing-any-and-every-problem-with-the-brand RWD platform? Cadillac CTS

 

Fixed it for you. :shades:

Because Cadillac is living proof that dumping billions into one platform for one car automatically makes you a BMW fighter.

 

((don't look at the horribly outdated, uncompetitive lineup behind the CTS))

Edited October 27, 2010 by PREMiERdrum

[NickF1011]

and product that has been supplied till now has nothing to do with that correct?......and NOW the manufacturer that has supplied said product expects/ DEMANDS a cash outlay?....SHOW the product to the dealer base....thats all I'm saying....so far its all talk....like I said Kirby, for 25 mill up front I'll give you the winning lotto numbers for the 50 mill prise....

 

Most of the dealers Ford wants to keep open likely aren't barely clinging to life on 30 sales a month though.

[silvrsvt]

....there was even a leaping cat scupture out front....

 

The local Jag dealer near me has/had one of those...

[PREMiERdrum]

The local Jag dealer near me has/had one of those...

 

Mine too... it's up near against the road in place of a normal sign. Looks gorgeous.

[2b2]

oops, I fell behind in this thread - oh well...

But as Richard pointed out - they HAVE shown them everything they can guarantee right now. 7 vehicles including a new C segment vehicle. Unique powertrains and features like glass roofs and electronic suspensions. I'm sure they've seen the MKS refresh. What more do they need to see?...

my own list

 

...Perhaps they should kill the Lincoln brand, get rid of all the dealers and open up a new brand like the Japanese brands did and start fresh from scratch. Because as I see it that's the only real alternative for Ford to have a world class luxury brand.

I have been wondering about ^that

and the possibility of a high-end "Ford-Continental" Brand (sold only through FoMoCo-owned outlets?)

that could replace Lincoln.

 

 

...As for Lincoln - yes, a dedicated, rear-wheel-drive platform doesn't make economic sense...

Not 'dedicated' but I believe GRwdP could & hope it will happen

just Not TownCar size of course - just Mustang(smallish), Falcon(medium), and the Continental(large-ISH)

 

...If I'm going to spend big bucks to upgrade the dealership, I would hope that Ford has the equivalent of a 1961 Continental somewhere in that portfolio of future products.

as began above,

FoMoCo may not want to promise Lincoln the Continental because they might have other plans for it...

...can't figure out which plan is Plan-A and which is Plan-B yet.

[Deanh]

Helipad?

 

See, that's why nobody feels sorry for California when they end up in the dumps every ten years or so.

um, did you miss the "Million Dollars in a suitcase" statement.....at one stage $ were coming in hand over fist......before lux tax I would guess a LOT of money wasnt quite " legal" either....and question, think Penske doesnt have a helipad?......

[RichardJensen]

um, did you miss the "Million Dollars in a suitcase" statement.....at one stage $ were coming in hand over fist......before lux tax I would guess a LOT of money wasnt quite " legal" either....and question, think Penske doesnt have a helipad?......

I was just saying that when that kind of excess comes a cropper, you can't expect a lot of sympathy from people............

[Deanh]

Most of the dealers Ford wants to keep open likely aren't barely clinging to life on 30 sales a month though.

sidebar, I was tentatively offered a job co-running a LM dealership in Santa Margarita...I turned it down...IMO it was being put in a position to FAIL....and FWIW the store IS no longer....and this was 10 years ago.....I was of the opinion then that LM was going no-where...so question, if those were my thoughts back then, why would I continue putting "investment" into a franchaise barely holding its own?..........the ONLY way to support LM would be moving used vehicles or being multi-franchaised,,, Im REALLY surprized there are still so many Lincoln franchaises still open....and Nick, I would speculate there arent that many selling OVER 30 a month.........