EV Transition-Can Dealers handle it?

[jpd80]

17 minutes ago, wsybert said:

Interesting discussion... I am wondering how the dealerships will handle the 2021 models that are still sitting in lots waiting on parts... assuming they are not already sold. A lot of chatter on forums about receiving MY 21 in 2022. Will there be incentives, or will supply and demand still prevail and drive pricing as it has the past several months?

All those F Series trucks were completed and sent to dealerships, inventory is still very tight, 94k is about 40% of normal. As I said above, manufacturers and dealers benefit by having not quite enough vehicles to sell, even selling at full MSRP is advantageous to manufacturers who avoid incentives, small ADMs would be less obvious and more effective way for dealers to increase profit.

Edited December 15, 2021 by jpd80

[Deanh]

20 minutes ago, wsybert said:

Interesting discussion... I am wondering how the dealerships will handle the 2021 models that are still sitting in lots waiting on parts... assuming they are not already sold. A lot of chatter on forums about receiving MY 21 in 2022. Will there be incentives, or will supply and demand still prevail and drive pricing as it has the past several months?

As far as I know, our ONLY issue right now is the ranger Super cab seatbelt recall that's holding us back delivering some Super cabs, but they are all in fact spoken for....as far as everything else 2021 we are sold out...

Edited December 15, 2021 by Deanh

[rperez817]

20 minutes ago, jpd80 said:

I don’t see dealerships wanting to go back to a flawed low profit business model.

 

They shouldn't. At the very least, in the U.S. market legacy automakers and their franchised dealers should work on making an online "build to order" paradigm the default way for consumers to buy new vehicles. 

 

For Ford, the "Express Buy" program that's used currently for Mustang Mach-E should be expanded to include all Ford vehicle models available for retail sale. Maybe Ford can offer spiffs to dealerships who participate, and penalties to those who don't. Ford Moving toward Build-to-Order, Away from Packed Dealer Lots (caranddriver.com)

[jpd80]

13 minutes ago, rperez817 said:

 

They shouldn't. At the very least, in the U.S. market legacy automakers and their franchised dealers should work on making an online "build to order" paradigm the default way for consumers to buy new vehicles. 

 

For Ford, the "Express Buy" program that's used currently for Mustang Mach-E should be expanded to include all Ford vehicle models available for retail sale. Maybe Ford can offer spiffs to dealerships who participate, and penalties to those who don't. Ford Moving toward Build-to-Order, Away from Packed Dealer Lots (caranddriver.com)

Electric vehicles are the new opportunity to not only reset vehicle pricing but also the way vehicles are ordered, collected and serviced. Dealerships maybe getting creative with new ways to interact with customers, what that exactly is remains to be seen….

[Deanh]

25 minutes ago, rperez817 said:

 

They shouldn't. At the very least, in the U.S. market legacy automakers and their franchised dealers should work on making an online "build to order" paradigm the default way for consumers to buy new vehicles. 

 

For Ford, the "Express Buy" program that's used currently for Mustang Mach-E should be expanded to include all Ford vehicle models available for retail sale. Maybe Ford can offer spiffs to dealerships who participate, and penalties to those who don't. Ford Moving toward Build-to-Order, Away from Packed Dealer Lots (caranddriver.com)

they are experimenting for sure...they need to concentrate on their product and getting THAT up to snuff before hindering and creating all sorts of problems at the Dealer level...we have a  couned saying...whenever Ford attempts to inject itself into the sales procedure, it will be a total F--K up....and they have proven it again and again. Concentrate and focus on what you are good at, like timely releases with "Built Right the First Time"...oh wait....cough cough...Unfortunately theres ALWAYS someone with a more clever idea attempting to fix something that IS NOT broken....but when it gos sideways, quite happy to leave it at the Dealerships feet to deal with.

Edited December 15, 2021 by Deanh

[Deanh]

27 minutes ago, jpd80 said:

Electric vehicles are the new opportunity to not only reset vehicle pricing but also the way vehicles are ordered, collected and serviced. Dealerships maybe getting creative with new ways to interact with customers, what that exactly is remains to be seen….

"reset vehicle pricing but also the way vehicles are ordered"...something that really did NOT need addressing in the slightest......it has been quite literally a friggen NIGHTMARE,  raft with confusion and pissed off Customers calling several times a week....let alone vehicles arriving, only to be told by the customer that ordered online..."That's not what I Ordered...…"

[Flying68]

I wouldn't have a problem with ADM's if the allocation system was eliminated, that way the dealers that effectively compete on price will be able to sell the most.  As it is, through allocation,  a dealer can put on a huge ADM knowing that his competitor most likely can't get another unit to sell anyway.  I was also under the impression that invoice to MSRP price spread was collapsing to make "at invoice" deals easier without giving up much from MSRP.  In turn weren't the backend factory to dealer incentives increased?  If not, that would be an issue.  The bottom line is Ford and other legacy OEM's need to get a handle on pricing that is consistent across markets, especially if they move to more direct ordering.  Consumers are going to eventually shy away from the current model as more factory direct ordering comes about through the new OEM's.  And I don't know how state franchise laws will hold up in Federal court if you order from a Factory that is out-of-state.

[Deanh]

20 minutes ago, Flying68 said:

I wouldn't have a problem with ADM's if the allocation system was eliminated, that way the dealers that effectively compete on price will be able to sell the most.  As it is, through allocation,  a dealer can put on a huge ADM knowing that his competitor most likely can't get another unit to sell anyway.  I was also under the impression that invoice to MSRP price spread was collapsing to make "at invoice" deals easier without giving up much from MSRP.  In turn weren't the backend factory to dealer incentives increased?  If not, that would be an issue.  The bottom line is Ford and other legacy OEM's need to get a handle on pricing that is consistent across markets, especially if they move to more direct ordering.  Consumers are going to eventually shy away from the current model as more factory direct ordering comes about through the new OEM's.  And I don't know how state franchise laws will hold up in Federal court if you order from a Factory that is out-of-state.

Im not sure ADMS would even be being discussed if there was an appropriate markup from the get go for the Dealers to work with from the get go. Keep in mind, no matter what the MSRP or what the vehicle is sold for, Ford is paid from the get go...you I or the dealer don't/ cant negotiate with them what our/ their acquisition cost is, can we....The fact remains, Dealers are a buffer between customer and Ford Corporate....something they have also proven time and again...that they desperately need...And the very reason Consumers think they should shy away from the "model" is the very reason its necessary....don't believe me?....how did the Bronco release and direct order model go?...the Mach E business model? reservations and direct ordering, the upcoming Lightning, the Bronco Sport reservations?....the Maverick....

Edited December 15, 2021 by Deanh

[Deanh]

28 minutes ago, Flying68 said:

I wouldn't have a problem with ADM's if the allocation system was eliminated, that way the dealers that effectively compete on price will be able to sell the most.  As it is, through allocation,  a dealer can put on a huge ADM knowing that his competitor most likely can't get another unit to sell anyway.  I was also under the impression that invoice to MSRP price spread was collapsing to make "at invoice" deals easier without giving up much from MSRP.  In turn weren't the backend factory to dealer incentives increased?  If not, that would be an issue.  The bottom line is Ford and other legacy OEM's need to get a handle on pricing that is consistent across markets, especially if they move to more direct ordering.  Consumers are going to eventually shy away from the current model as more factory direct ordering comes about through the new OEM's.  And I don't know how state franchise laws will hold up in Federal court if you order from a Factory that is out-of-state.

QUOTE " I wouldn't have a problem with ADM's if the allocation system was eliminated, that way the dealers that effectively compete on price will be able to sell the most "...……...I wish I could believe that, but if you think a smallish Mom and Pop store such as ours,  that is NOT charging over MSRP for vehicles, will EVER get additional allocation over several heavy hitters in our Zone ( one is 17k over on Broncos, the other had a couple at 30k ) you would be dreaming...and therein lies another issue....Ford likes to convey a character trait of frowning on said practices, while rewarding the very dealers that move larger numbers in manners they profess to frown upon...

Edited December 15, 2021 by Deanh

[Chrisgb]

The market is self correcting. The high market for new & used now will start to come down as people hang on to their vehicles and repair rather than replace, reducing demand. The current demand is driven by those who have no patience or a lot of anxiety- probably still have toilet paper they hoarded at this time last year. As the ability to build them returns to normal, the OEMs won't/can't run at just above or below break even, and supply will increase, reducing demand from current levels. Tomorrow's EV market depends on ICE profits today.

[akirby]

35 minutes ago, Chrisgb said:

The market is self correcting. The high market for new & used now will start to come down as people hang on to their vehicles and repair rather than replace, reducing demand. The current demand is driven by those who have no patience or a lot of anxiety- probably still have toilet paper they hoarded at this time last year. As the ability to build them returns to normal, the OEMs won't/can't run at just above or below break even, and supply will increase, reducing demand from current levels. Tomorrow's EV market depends on ICE profits today.

Don’t forget that a large percentage of vehicles are leased and those have to be replaced within a few months of lease end unless the buyer wants to keep them.

[Deanh]

20 minutes ago, akirby said:

Don’t forget that a large percentage of vehicles are leased and those have to be replaced within a few months of lease end unless the buyer wants to keep them.

we are getting a LOT of people buying their leases out right now, for a few reasons..A)they cant find something to replace it, B) its worth a shite load more than the residual C) they are buying it to re-sell and put some serious $$$ in the Bank....

[fuzzymoomoo]

22 minutes ago, Deanh said:

we are getting a LOT of people buying their leases out right now, for a few reasons..A)they cant find something to replace it, B) its worth a shite load more than the residual C) they are buying it to re-sell and put some serious $$$ in the Bank....

Or D) Ford no longer offers a comparable replacement or you don't like the options that are there. That's why we will be keeping the Flex when the lease is up next year. 

[Deanh]

12 minutes ago, fuzzymoomoo said:

Or D) Ford no longer offers a comparable replacement or you don't like the options that are there. That's why we will be keeping the Flex when the lease is up next year. 

don't forget Fusion....one prime example of a market shift....they weren't worth anything used and now...….we have had great interest in the hybrid Maverick as a potential placement...but good luck on that one...2022 is sold out.....

Edited December 15, 2021 by Deanh

[jpd80]

1 hour ago, Chrisgb said:

The market is self correcting. The high market for new & used now will start to come down as people hang on to their vehicles and repair rather than replace, reducing demand. The current demand is driven by those who have no patience or a lot of anxiety- probably still have toilet paper they hoarded at this time last year. As the ability to build them returns to normal, the OEMs won't/can't run at just above or below break even, and supply will increase, reducing demand from current levels. Tomorrow's EV market depends on ICE profits today.

Self correction only happens when there’s real competition, if all the players in a sales market work together by not cutting prices then all dealers benefit. This seems a lot like game theory…….

[rperez817]

1 hour ago, Chrisgb said:

The market is self correcting. The high market for new & used now will start to come down as people hang on to their vehicles and repair rather than replace, reducing demand. 

 

Yes sir Chrisgb, good point about the demand side. On the supply side, the correction will take the form of automakers aligning production more closely to actual customer demand, which means a lower SAAR compared to what was seen prior to the Covid-19 pandemic. Jim Farley said that his goal for Ford is to keep days of inventory for new vehicles at 50 days or less. That a huge change from the past when Ford regularly overproduced, resulting in days of inventory exceeding 90 days certain months.

 

The expansion of build-to-order paradigm will help Farley meet this goal. 

[Deanh]

18 minutes ago, rperez817 said:

 

Yes sir Chrisgb, good point about the demand side. On the supply side, the correction will take the form of automakers aligning production more closely to actual customer demand, which means a lower SAAR compared to what was seen prior to the Covid-19 pandemic. Jim Farley said that his goal for Ford is to keep days of inventory for new vehicles at 50 days or less. That a huge change from the past when Ford regularly overproduced, resulting in days of inventory exceeding 90 days certain months.

 

The expansion of build-to-order paradigm will help Farley meet this goal. 

days of inventory has been at that status for some time, AND prior to Covid...it was a few years ago they literally cut production 30 % to address units sitting on lots for months and requiring huge rebates to move....smart move, and that was prior to Farley.

 

[Chrisgb]

19 minutes ago, rperez817 said:

 

The expansion of build-to-order paradigm will help Farley meet this goal. 

Could we see the banking industry offer retail rebates one day to consumers to obtain a loan, as billions less in floorpan is lent?

 

 gm is rethinking just-in-time inventory and I think others will be as well. Built to order won't go anywhere if adequate parts are't consistently on hand. 

 

Sooner or later this Beanie Baby psychosis will end, and the economy of scale will dictate that a certain minimum number of vehicles must be produced, just to hold the corporate valuation I would think. Ford could jack the MSRP of a Mach E up to $500 million, sell one car and make the same profit as they would building 60,000 but what is Ford Motor Company worth then? 

[rperez817]

41 minutes ago, Deanh said:

days of inventory has been at that status for some time, AND prior to Covid...it was a few years ago they literally cut production 30 % to address units sitting on lots for months and requiring huge rebates to move....smart move, and that was prior to Farley.

 

Thank you Deanh sir. Good reminder that one of Jim Hackett's "fitness" goals for Ford was to address the company's overproduction issues and the negative impact they had on profitability for both Ford itself and for Ford dealerships. Sounds like that problem is now fixed permanently.

[rperez817]

19 minutes ago, Chrisgb said:

Could we see the banking industry offer retail rebates one day to consumers to obtain a loan, as billions less in floorpan is lent?

 

 gm is rethinking just-in-time inventory and I think others will be as well. Built to order won't go anywhere if adequate parts are't consistently on hand. 

 

Sooner or later this Beanie Baby psychosis will end, and the economy of scale will dictate that a certain minimum number of vehicles must be produced, just to hold the corporate valuation I would think. Ford could jack the MSRP of a Mach E up to $500 million, sell one car and make the same profit as they would building 60,000 but what is Ford Motor Company worth then? 

 

Good points Chrisgb sir. Don't know what the retail banking industry has in store there, but what you mentioned is worth following.

 

Regarding the certain minimum number of vehicles being produced, I think the ongoing transition from ICE to BEV will take care of that. In the U.S., there has already been discussion of a "Cash for Clunkers 2.0" program to incentivize owners of ICE powered vehicles to replace them with BEV. 

Edited December 16, 2021 by rperez817

[fuzzymoomoo]

1 hour ago, Deanh said:

don't forget Fusion....one prime example of a market shift....they weren't worth anything used and now...….we have had great interest in the hybrid Maverick as a potential placement...but good luck on that one...2022 is sold out.....

I just got my new Fusion in February and when that's up I'll trade it for either a new Ranger or hybrid F-150, whichever makes more sense for me in 3 years. 

[rmc523]

4 hours ago, Deanh said:

Im not sure ADMS would even be being discussed if there was an appropriate markup from the get go for the Dealers to work with from the get go. Keep in mind, no matter what the MSRP or what the vehicle is sold for, Ford is paid from the get go...you I or the dealer don't/ cant negotiate with them what our/ their acquisition cost is, can we....The fact remains, Dealers are a buffer between customer and Ford Corporate....something they have also proven time and again...that they desperately need...And the very reason Consumers think they should shy away from the "model" is the very reason its necessary....don't believe me?....how did the Bronco release and direct order model go?...the Mach E business model? reservations and direct ordering, the upcoming Lightning, the Bronco Sport reservations?....the Maverick....

 

Let's hope they learned something from the Bronco reservation/order process for Lightning.

[sullynd]

33 minutes ago, rmc523 said:

 

Let's hope they learned something from the Bronco reservation/order process for Lightning.

It’s much worse. There are reports of dealers auctioning off their priority orders on lightnings. 

[Trader 10]

16 hours ago, silvrsvt said:

After going through my experience and becoming internet famous with my Bronco, I seriously wonder if we will ever not see ADMs on cars anymore-at least till the economy takes a major shit. 
 

Demand is high and supply is low. Car makers are going to keep supply limited due to them not wanting to put incentives and maximizing profit from their products. COVID was the “great reset” when it comes to incentives we’ve seen for almost the past 40 years. 
 

 

I think you’re wrong about makers keeping supplies low. See link below about Toyota to produce a record number of vehicles in January. You don’t think that Chevy wouldn’t love to dethrone the F150 and that Ford will stop at nothing to prevent it? Sure automakers would love to keep supplies low but competitors will just jump their sales by raising production should one or more keep production constrained. Once the chip shortage disappears production will quickly return to pre Covid levels. 
 

https://www.autoblog.com/2021/12/15/toyota-production-800000-vehicles-january/

[jpd80]

10 hours ago, Trader 10 said:

I think you’re wrong about makers keeping supplies low. See link below about Toyota to produce a record number of vehicles in January. You don’t think that Chevy wouldn’t love to dethrone the F150 and that Ford will stop at nothing to prevent it? Sure automakers would love to keep supplies low but competitors will just jump their sales by raising production should one or more keep production constrained. Once the chip shortage disappears production will quickly return to pre Covid levels. 
 

https://www.autoblog.com/2021/12/15/toyota-production-800000-vehicles-january/

Chevrolet simply can’t do what you think because it’s not just F150, it’s the whole of  F Series they’re competing with….