EV Transition-Can Dealers handle it?

[FordBuyer]

48 minutes ago, akirby said:

Ford did not force them to remove the ADM.  They can’t.  They convinced the dealer to remove it.

 

This has nothing to do with BEVs.  The same thing is happening with Maverick and Bronco because they’re in high demand and short supply.

 

At least add in paint and fabric protector for $5,000 like lots of dealers do that have low inventory like Subaru and Mazda do around here. Markups on the GV 70 are around $10,000 or so. I get that the Mach E is in demand and limited supply/allocation. I still think Ford has some leverage as in future allocation and other ways to temper the situation. 

[akirby]

47 minutes ago, FordBuyer said:

I still think Ford has some leverage as in future allocation and other ways to temper the situation. 

They have a little leverage with allocations but they still can’t force them to remove it.

[Sherminator98]

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. 
 

 

[twintornados]

2 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 know of one sure fire way to stop the dreaded ADM practice...don't buy the vehicle, but some schmuck will pony up the additional cheddar and blow my whole construct out of the water.

[Sherminator98]

19 minutes ago, twintornados said:

 

I know of one sure fire way to stop the dreaded ADM practice...don't buy the vehicle, but some schmuck will pony up the additional cheddar and blow my whole construct out of the water.

 

People are stupid that and that isn't going to happen-my sisters friend bought a jeep with a 10K adm and said oh everyone else is doing it too....sigh

 

[akirby]

I wonder if Ford will Jack up MSRPs like Tesla.  That would give dealers a lot more profit at MSRP.  Right now there isn’t much difference.

[ice-capades]

14 minutes ago, akirby said:

I wonder if Ford will Jack up MSRPs like Tesla.  That would give dealers a lot more profit at MSRP.  Right now there isn’t much difference.

 

I seriously doubt that Ford will change the pricing structure to increase the Dealer profit margin. I'd have trouble remembering a time when they did as Ford's priority is the corporate profit, not the dealerships. If anything, they've cut the Dealer's profit margin over the years. The MSRP vs. Dealer Invoice spread on a Shelby used to be $5,000 but is now $3,000 not including the $1,000 per year enrollment fee that Dealers have to pay in order to sell a Shelby, plus the cost of Shelby related parts inventory and technician certification. 

[akirby]

30 minutes ago, ice-capades said:

 

I seriously doubt that Ford will change the pricing structure to increase the Dealer profit margin. I'd have trouble remembering a time when they did as Ford's priority is the corporate profit, not the dealerships. If anything, they've cut the Dealer's profit margin over the years. The MSRP vs. Dealer Invoice spread on a Shelby used to be $5,000 but is now $3,000 not including the $1,000 per year enrollment fee that Dealers have to pay in order to sell a Shelby, plus the cost of Shelby related parts inventory and technician certification. 

Oh I understand all that, but these are unprecedented times.  Who would have thought buyers would be happy to pay MSRP for a Ford much less ADMs on top of that?  The benefit to afford is twofold - they would have more room to raise dealer invoice prices and they get better PR by reducing or eliminating ADMs which most buyers hate.

 

Instead of a Bronco at $32K invoice and $35K MSRP being sold for $40k with $5k adm the MSRP goes to $40K.  Dealer can sell at MSRP and make the same profit.  Buyers know the price going in and no surprises.  Of course the dealer could still add ADMs on top of that but I think it would be more rare. And they can always add rebates later if necessary or adjust MSRP down the road as the market changes. 
 

Just a thought.

[Deanh]

3 hours ago, twintornados said:

 

I know of one sure fire way to stop the dreaded ADM practice...don't buy the vehicle, but some schmuck will pony up the additional cheddar and blow my whole construct out of the water.

I understand, being what I do for a living...both sides of the coin...why wouldn't a Dealer add ADMS to a Mach E, where invoice is MSRP, why wouldn't Mavericks...with a $400 spread between invoice and MSRPs suffer the same fate....Ford for years has gradually, and decisively removed profitability from the Merchandize themselves. Its no wonder customers get plumped with Warranties and aftermarket...people seem to lose sight of the fact Dealerships are a BUSINESS....and not a particularly profitable one....Ive used the parallel before...if you could get more money for a house you are selling yourself...or even a used car for that matter, would YOU tell a potential buyer...Im sorry but that offer is too much....

Edited December 15, 2021 by Deanh

[rperez817]

18 minutes ago, Deanh said:

Ford for years has gradually, and decisively removed profitability from the Merchandize themselves. Its no wonder customers get plumped with Warranties and aftermarket...people seem to lose sight of the fact Dealerships are a BUSINESS....and not a particularly profitable one

 

Yes sir Deanh. It's not just Ford, but all legacy automakers to a certain degree.

 

In 2019 just prior to the Covid-19 pandemic, most of the profit earned by new car dealerships (over 90%) came from used car sales, F&I, and fixed ops. Fixed ops alone accounted for more than half of dealership profit in 2019. With the transition to BEV which require less maintenance and repair than ICE powered vehicles, dealerships will have to come with new strategies and approaches to stay profitable.

 

[akirby]

40 minutes ago, Deanh said:

I understand, being what I do for a living...both sides of the coin...why wouldn't a Dealer add ADMS to a Mach E, where invoice is MSRP, why wouldn't Mavericks...with a $400 spread between invoice and MSRPs suffer the same fate....Ford for years has gradually, and decisively removed profitability from the Merchandize themselves. Its no wonder customers get plumped with Warranties and aftermarket...people seem to lose sight of the fact Dealerships are a BUSINESS....and not a particularly profitable one....Ive used the parallel before...if you could get more money for a house you are selling yourself...or even a used car for that matter, would YOU tell a potential buyer...Im sorry but that offer is too much....

 

It’s really no different than ticket scalping.  When demand is high and dealers sell at normal prices many buyers will simply flip those vehicles for profit - why shouldn’t the dealer get that profit up front?  
 

Garth Brooks thwarts the scalpers by doing multiple shows at the same place.  He just adds shows until ticket sales slow down.  I think he did 5 or 6 shows in Atlanta a few years ago.  Of course that assumes you can meet demand and that’s a problem right now.

[Deanh]

13 minutes ago, akirby said:

 

It’s really no different than ticket scalping.  When demand is high and dealers sell at normal prices many buyers will simply flip those vehicles for profit - why shouldn’t the dealer get that profit up front?  
 

Garth Brooks thwarts the scalpers by doing multiple shows at the same place.  He just adds shows until ticket sales slow down.  I think he did 5 or 6 shows in Atlanta a few years ago.  Of course that assumes you can meet demand and that’s a problem right now.

Dealers cant win...they ask for additional markup and get blasted for it....only to watch the very vehicle they had an addendum on go for SERIOUS money through an auction or be sold overseas for serious bank...GT500s, Raptors....Broncos for 120k on e-bay....so, yet the Dealer is the bad guy???....sometimes I don't get it...but Capitalisms  Capitalism?....fine for the Consumer to make serious profitability, but the Dealers another story....head scratching sometimes. 

[HotRunrGuy]

Dean,

   I have no problem with dealers adding that ADM sticker to the window, UNLESS, like happened to a Mod here, the ADM is on an ordered vehicle and was not disclosed until AFTER the vehicle showed-up.  With Ford pushing toward an ordered way of business, how many times will this repeat itself in the future?

 

Price protection on MSRP is one thing, but there needs to be a policy in-place to avoid add-on ADM's after the fact.  In those situations, dealers deserve the negative press they get.

 

HRG

[Sherminator98]

34 minutes ago, Deanh said:

Dealers cant win...they ask for additional markup and get blasted for it....only to watch the very vehicle they had an addendum on go for SERIOUS money through an auction or be sold overseas for serious bank...GT500s, Raptors....Broncos for 120k on e-bay....so, yet the Dealer is the bad guy???....sometimes I don't get it...but Capitalisms  Capitalism?....fine for the Consumer to make serious profitability, but the Dealers another story....head scratching sometimes. 

 

The issue is one of perception-People HATE car dealerships due to shady shit that happens at them (both real and imaged). I get people are assholes too, but car dealerships have serious perception problems and adding ADMs to say a mass produced vehicle like the Bronco or even the Maverick is a major turn off to people.

 

The amount of people flipping vehicles vs dealers getting ADMs on them I'm willing to guess is in the dealerships favor. As for the profitability-what do you expect? Goes back to the relationship manufactures have with dealerships-the relationship is tilted to dealership bodies due to politics, so they are going to do what they can to narrow that profit margin down on them if they aren't going to play the tune the manufactures want them to play. 

 

Thus my comments before-does anyone really thing that this going to change within the next five years, bar a 2008 style recession? Car manufactures are making record profits and got rid of incentives for the most part because of demand and cut back on production without causing major issues to its workforce. 

[Sherminator98]

11 minutes ago, HotRunrGuy said:

Dean,

   I have no problem with dealers adding that ADM sticker to the window, UNLESS, like happened to a Mod here, the ADM is on an ordered vehicle and was not disclosed until AFTER the vehicle showed-up.  With Ford pushing toward an ordered way of business, how many times will this repeat itself in the future?

 

Price protection on MSRP is one thing, but there needs to be a policy in-place to avoid add-on ADM's after the fact.  In those situations, dealers deserve the negative press they get.

 

Its been happening multiple times with different people with the Bronco also. 

[Sherminator98]

Another thing about ADMs on MSRP-its not like your talking a 5-10% markup...your talking an additional 15-20% to the vehicles cost when 10K is added to a $47K Bronco or $5 to a 30K Maverick. That isn't small potato no matter what way you slice it.

So if the profit in a Bronco is say $1000 (which I'm thinking its half that) its fine to make a 1000% profit increase on it? In other industries that would be considered price gauging 

[Deanh]

14 minutes ago, silvrsvt said:

Another thing about ADMs on MSRP-its not like your talking a 5-10% markup...your talking an additional 15-20% to the vehicles cost when 10K is added to a $47K Bronco or $5 to a 30K Maverick. That isn't small potato no matter what way you slice it.

So if the profit in a Bronco is say $1000 (which I'm thinking its half that) its fine to make a 1000% profit increase on it? In other industries that would be considered price gauging 

squewed opinion IMO ...look at overall profit, what SHOULD be the margin in a $47k Bronco?...answer...its INADEQUATE IMO given a Dealerships overhead and responsibility to its clientele....your thoughts, whilst noted should NOT be based on percentages...that said theres some dealers being absurd with ADMS. SO...curious...what are your thoughts on those individuals flipping for 60 - 100k over after they've bought the car....? Keep in mind the investment that has gone into a Dealership....

[Deanh]

28 minutes ago, HotRunrGuy said:

Dean,

   I have no problem with dealers adding that ADM sticker to the window, UNLESS, like happened to a Mod here, the ADM is on an ordered vehicle and was not disclosed until AFTER the vehicle showed-up.  With Ford pushing toward an ordered way of business, how many times will this repeat itself in the future?

 

Price protection on MSRP is one thing, but there needs to be a policy in-place to avoid add-on ADM's after the fact.  In those situations, dealers deserve the negative press they get.

 

HRG

and THAT I wholeheartedly agree with 100%...everything should be dis-closed up front...but there are some dealers that change on the fly....and we get a LOT of business from them...

[Deanh]

and just an FYI, regarding ADMS...I don't condone them...but FULLY understand them...just some need to pump the brakes a bit...

[FordBuyer]

55 minutes ago, silvrsvt said:

 

The issue is one of perception-People HATE car dealerships due to shady shit that happens at them (both real and imaged). I get people are assholes too, but car dealerships have serious perception problems and adding ADMs to say a mass produced vehicle like the Bronco or even the Maverick is a major turn off to people.

 

The amount of people flipping vehicles vs dealers getting ADMs on them I'm willing to guess is in the dealerships favor. As for the profitability-what do you expect? Goes back to the relationship manufactures have with dealerships-the relationship is tilted to dealership bodies due to politics, so they are going to do what they can to narrow that profit margin down on them if they aren't going to play the tune the manufactures want them to play. 

 

Thus my comments before-does anyone really thing that this going to change within the next five years, bar a 2008 style recession? Car manufactures are making record profits and got rid of incentives for the most part because of demand and cut back on production without causing major issues to its workforce. 

 

Incentives are still here including Ford Credit 0% 60 month loans on F150, Explorer, Edge, and Escape. Just gotta Ford flyer in mail offering incentives on all the above. Not like they used to be, but 0% loan can be worth thousands in savings. 

 

Kind of nice that Ford for once has vehicles like Bronco, Mach E, Maverick that don't need incentives to move. I'm sure the Lightning will be another one. 

[akirby]

Huge difference between an ADM that was disclosed up front and agreed to and one that gets added after the sale/order.

[akirby]

Can Ford require a signed buyers order for a retail order (signed by both parties)?  Seems that would resolve the surprises.

[Deanh]

17 minutes ago, akirby said:

Huge difference between an ADM that was disclosed up front and agreed to and one that gets added after the sale/order.

absolutely....unfortunately when some dealers saw the extremely limited supply of certain product, they deemed THEY should be getting more for their inventory from the get go rather than sitting back watching individuals running their units through auctions making absolutely stupid money....Ive already had a couple flip their Broncos for asinine profits......and the amount they made was absurd....

[jpd80]

ADMs are a consequence of restricted supply of in demand products, what’s not so obvious is that the MSRP has a certain amount of incentive built in, so there’s tacit approval for automakers and dealers to both profit while they can but you know what? All of them are noticing that all are doing much better financially by not engaging in traditional price discounts and incentives just to increase sales. If this is a conspiracy of the many, I don’t see dealerships wanting to go back to a flawed low profit business model.

[wsybert]

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?