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Chip Shortage May Change The Way Ford Does Business Forever


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It will really help if they standardize dealer stock models.  Just make 3 models of each vehicle for stock - a cheap base version, a mid grade nicely equipped and a fully loaded model.  Even with 8 colors a dealer only has to stock 24 vehicles to cover all the bases.  If you want different equipment then you special order.  This worked fine for Honda in the 90s with DX, LX and EX.  Make wheel swaps a dealer option.

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Highlights from Ford Authority article.

  1. Target 50 days supply of new vehicles
  2. prioritizing high-margin and strategically important vehicles over others
  3. deleting features where possible
  4. shifting toward more of a build-to-order model rather than filling dealer lots with inventory
  5. (industry overall, not just Ford) A full 89 percent of new vehicles purchased this year have sold for near or above MSRP, compared to just 12 percent in 2019, and that doesn’t seem likely to change.

 

Looks like Farley intends to end Ford's bad habits of overproducing, excessive sales incentive spend, and fleet dumping once and for all.

Edited by rperez817
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1 hour ago, akirby said:

Ford stopped overproducing most things a few years ago.   This isn’t about cutting production as much as cutting dealer stock levels.

 

Their hand (and the entire industry really) has been forced into it. Manufacturing will

never be able to catch up if the intention was to bring dealer stock levels back to pre-pandemic levels, especially if supply issues continue into 2022. 

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1 hour ago, akirby said:

Ford stopped overproducing most things a few years ago.   This isn’t about cutting production as much as cutting dealer stock levels.

 

Overproduction and excessive dealer stock levels go hand in hand. As recently as July 2020, Cox Automotive's data indicated Ford had 88.1 days and Lincoln had 103.4 days of inventory, well above the industry average of 62.3 at that time. This was a direct result of Ford overproducing in late 2019 and early 2020 just before industrywide plant shutdowns due to Covid-19 pandemic.

 

July-2020-inventory-chart-2.jpg

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2 hours ago, akirby said:

Ford stopped overproducing most things a few years ago.   This isn’t about cutting production as much as cutting dealer stock levels.

 

Fundamentally, the issue is really who controls distribution. Dealer inventory level is high because dealers wants to hoard. The economic incentive for dealer is to have units on the lot so buyers don't walk away to the next dealer that has the exact unit he or she is looking for. But if dealer overorders and cannot meet floorplan payment, Ford has to step in to provide incentive to help dealer clear the lot so Ford can get paid. So essentially, dealers have no skin in the game... Ford will always bail them out with rebates or 0% loan so why wouldn't they over stock and hoard?

 

What Mach E, Bronco and Maverick launch has taught Ford is that it can really leverage that away from the dealers if it has product in high demand. It's something the luxury car makers have figured out a while ago. Ford has to limit dealer's ability to order... that's the main change.

 

 

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Dealers have also discovered that a shortage of supply for desirable vehicles means that they can charge more (ADMs), sell fewer units and actually make more profit. It’s basically an extension of Mulally’s right sized manufacturing followed through to its natural conclusion.

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7 hours ago, rperez817 said:

Highlights from Ford Authority article.

  1. Target 50 days supply of new vehicles
  2. prioritizing high-margin and strategically important vehicles over others
  3. deleting features where possible
  4. shifting toward more of a build-to-order model rather than filling dealer lots with inventory
  5. (industry overall, not just Ford) A full 89 percent of new vehicles purchased this year have sold for near or above MSRP, compared to just 12 percent in 2019, and that doesn’t seem likely to change.

 

Looks like Farley intends to end Ford's bad habits of overproducing, excessive sales incentive spend, and fleet dumping once and for all.

 

#3 sounds bad on the surface, but looking into the context of what they meant sounds better.

 

Purely "deleting features" isn't good.  But digging more, they were talking about temporarily removing a feature (such as auto start/stop) to help continue production while they don't have chips.

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27 minutes ago, rmc523 said:

 

#3 sounds bad on the surface, but looking into the context of what they meant sounds better.

 

Purely "deleting features" isn't good.  But digging more, they were talking about temporarily removing a feature (such as auto start/stop) to help continue production while they don't have chips.

 

I believe I heard Ford will no longer include the keypad as standard on most trim levels. It will now be an option on most trim levels. Glad my Escape has it on SE trim. I would imagine other "standard" features will go by the wayside. Glad I bought when I did. 

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30 minutes ago, rmc523 said:

 

#3 sounds bad on the surface, but looking into the context of what they meant sounds better.

 

Purely "deleting features" isn't good.  But digging more, they were talking about temporarily removing a feature (such as auto start/stop) to help continue production while they don't have chips.

I don’t know that deleting stop start would affect the level of chips available, it’s not ecu chips that are the problem, the VDU chips are…

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1 hour ago, jpd80 said:

I don’t know that deleting stop start would affect the level of chips available, it’s not ecu chips that are the problem, the VDU chips are…


It absolutely does.  That’s exactly why Ford made it optional on some vehicles.

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25 minutes ago, akirby said:


It absolutely does.  That’s exactly why Ford made it optional on some vehicles.

Yes, I remember now,

The original orders (45,000) were vehicles that were already built incomplete,  drivable but needing VDU chips to complete. Back In August, Ford offered the other vehicles built with no stop start as a way of easing wait times, the 45k are all delivered now.

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15 hours ago, FordBuyer said:

 

I believe I heard Ford will no longer include the keypad as standard on most trim levels. It will now be an option on most trim levels. Glad my Escape has it on SE trim. I would imagine other "standard" features will go by the wayside. Glad I bought when I did. 

 

That's a mistake, IMO.  Ford needs to be doing the opposite of decontenting in their vehicles.

 

15 hours ago, jpd80 said:

I don’t know that deleting stop start would affect the level of chips available, it’s not ecu chips that are the problem, the VDU chips are…

 

I'm just going on what the article said (well, actually the second article that you have to click through to from the article in the OP here)..

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1 hour ago, rmc523 said:

 

That's a mistake, IMO.  Ford needs to be doing the opposite of decontenting in their vehicles.


With every vehicle having a modem now, telematics almost make the keypad redundant since you can use your phone to lock or unlock it.  The exception would be if you’re out of cell range or want to leave the phone in the vehicle.

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22 minutes ago, akirby said:


With every vehicle having a modem now, telematics almost make the keypad redundant since you can use your phone to lock or unlock it.  The exception would be if you’re out of cell range or want to leave the phone in the vehicle.


On the contrary the keypad enables phone as key. If your phone dies/breaks/Paak just doesn’t work you can still get home. I haven’t used my key fob since the first week I had my car, but have had to use the code when PAAK wasn’t working (including once when fords servers were down).  I also use the Kay pads on all three of my fords frequently when I don’t have my phone on me, for instance when grabbing something out of one of the cars on the driveway. 

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1 hour ago, sullynd said:


On the contrary the keypad enables phone as key. If your phone dies/breaks/Paak just doesn’t work you can still get home. I haven’t used my key fob since the first week I had my car, but have had to use the code when PAAK wasn’t working (including once when fords servers were down).  I also use the Kay pads on all three of my fords frequently when I don’t have my phone on me, for instance when grabbing something out of one of the cars on the driveway. 

The keypad is nice for locking the vehicle running, w/iPhone plugged in. e.g. doing errands when you are out of the vehicle for short periods in cold weather; post office, dry cleaning etc. 

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1 hour ago, sullynd said:


On the contrary the keypad enables phone as key. If your phone dies/breaks/Paak just doesn’t work you can still get home. I haven’t used my key fob since the first week I had my car, but have had to use the code when PAAK wasn’t working (including once when fords servers were down).  I also use the Kay pads on all three of my fords frequently when I don’t have my phone on me, for instance when grabbing something out of one of the cars on the driveway. 


Thats why I said almost but I forgot about PAAK.  I wasn’t advocating that they get rid of it - I use it all the time.  Just pointing out that telematics make it less important.

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1 hour ago, akirby said:


With every vehicle having a modem now, telematics almost make the keypad redundant since you can use your phone to lock or unlock it.  The exception would be if you’re out of cell range or want to leave the phone in the vehicle.

If I understand correctly, the telematics can send data on how features are used; how many vehicles have MyKey programmed, lane keeping, sport & trailer modes use, is Homelink programmed, etc.

Useful for deleting or packaging options.

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3 hours ago, akirby said:


With every vehicle having a modem now, telematics almost make the keypad redundant since you can use your phone to lock or unlock it.  The exception would be if you’re out of cell range or want to leave the phone in the vehicle.

 

I have that feature on my phone through Ford Pass, but it's slow and glitchy at times. Much prefer the keypad as it has been unique to Ford for a long time. 

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I ordered a 2022 Raptor a couple of months ago and I just recently heard they are eliminating the temperature readout on the HVAC dials, cup holder lights, glovebox lights, and rear licenses plate light has changed. If true, I haven’t heard a word from Ford about this and if I care to guess they aren’t going to be discounting the truck accordingly.  
 

This stuff is incredibly frustrating, considering the first three items are things I like, particularly the cup holders.  It’s funny they managed to get the temp in the dials on my 2022 Superduty,  However they did eliminate the cup holders lights which I wasn’t aware they were doing.  I’ll be really pissed if the eliminate the keypad as I use it regularly.  
 

 I know the excuse is going to be the chips, but considering that Ford has a bad habit of decontenting vehicles to start with, color me skeptical. Perhaps give the customers an option to subtract these or allow them to wait longer for the vehicle. 

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1 hour ago, tbone said:

I ordered a 2022 Raptor a couple of months ago and I just recently heard they are eliminating the temperature readout on the HVAC dials, cup holder lights, glovebox lights, and rear licenses plate light has changed. If true, I haven’t heard a word from Ford about this and if I care to guess they aren’t going to be discounting the truck accordingly.  
 

This stuff is incredibly frustrating, considering the first three items are things I like, particularly the cup holders.  It’s funny they managed to get the temp in the dials on my 2022 Superduty,  However they did eliminate the cup holders lights which I wasn’t aware they were doing.  I’ll be really pissed if the eliminate the keypad as I use it regularly.  
 

 I know the excuse is going to be the chips, but considering that Ford has a bad habit of decontenting vehicles to start with, color me skeptical. Perhaps give the customers an option to subtract these or allow them to wait longer for the vehicle. 

 

Yeah, I heard no lighted cup holders on even Titanium models. Glad I have the lighted temp on HVAC controls and keypad on B pillar though. I miss the puddle lamps that my Tairus had, the auto dimming mirror, and lighted compass on the mirror. Ford Giveth and Taketh away as the Bean Counters always ultimately rule in the long run. 

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Ford goes after lighting first when cost cutting happens, the glove box light is always the first to go and it has been a cycle for 30 years. Ford has slowly been eliminating ambient lighting on the Ford brand for years from different levels in the door lights, to the ability to change the color it has become a pretty basic that will probably be completely eliminated in the next few years. It is also like the Heated Wiper Park area, proved to be a good cost cutting item and was dropped through out the 2019-2020 model year some vehicles losing it at Job 2 or as a running change - still in the owners manual though. The single worse thing they do is when they go after safety equipment for cost cutting; like the turn signal repeaters on the mirrors of vehicles that prevent sideswipe and pedestrian accidents, or amber rear turn signals that prevent the vehicle from being involved in a rear end collision. 

 

They eliminate things they know might make a customer angry but are not going to actually leave for another brand. Most customers are not going to get another vehicle because it has lights that change color, most won't even know until they turn the lights on at night by that time Ford has their money for replacement and when time comes to get another vehicle most will forget they didn't have it. What they don't account for is how many of those customers badmouth their new vehicle to other people turning them off in the short term. The ambient lighting is sad as Ford brought it out but hasn't done anything with it really while other OEM's have it change with drive modes, temperature, different colors at different layers, change with music classification type on sirius. etc.

To be honest this is the life cycle at Ford, build crap, get beat up and go though a turn around, improve product by adding features and better quality, finally build a few great products and features then start cost cutting to increase profit, complicate builds to get as much profit out of each vehicle, eliminate features and the cycle repeat.    

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1 hour ago, jasonj80 said:

Ford goes after lighting first when cost cutting happens, the glove box light is always the first to go and it has been a cycle for 30 years. Ford has slowly been eliminating ambient lighting on the Ford brand for years from different levels in the door lights, to the ability to change the color it has become a pretty basic that will probably be completely eliminated in the next few years. It is also like the Heated Wiper Park area, proved to be a good cost cutting item and was dropped through out the 2019-2020 model year some vehicles losing it at Job 2 or as a running change - still in the owners manual though. The single worse thing they do is when they go after safety equipment for cost cutting; like the turn signal repeaters on the mirrors of vehicles that prevent sideswipe and pedestrian accidents, or amber rear turn signals that prevent the vehicle from being involved in a rear end collision. 

 

They eliminate things they know might make a customer angry but are not going to actually leave for another brand. Most customers are not going to get another vehicle because it has lights that change color, most won't even know until they turn the lights on at night by that time Ford has their money for replacement and when time comes to get another vehicle most will forget they didn't have it. What they don't account for is how many of those customers badmouth their new vehicle to other people turning them off in the short term. The ambient lighting is sad as Ford brought it out but hasn't done anything with it really while other OEM's have it change with drive modes, temperature, different colors at different layers, change with music classification type on sirius. etc.

To be honest this is the life cycle at Ford, build crap, get beat up and go though a turn around, improve product by adding features and better quality, finally build a few great products and features then start cost cutting to increase profit, complicate builds to get as much profit out of each vehicle, eliminate features and the cycle repeat.    

 

Good post. You hit the nail on the head. And all the auto companies do it. I had a Crosstrek Limited before the Escape...highest trim level.....and manual front seats where the seat would move under hard braking, manual tailgate with no inside opener, doors wouldn't automatically lock once you got moving, no keyless start, and no light in tailgate area. They all giveth and taketh away. Make you play the option game that adds thousands extra dollars. 

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I remember reading a post a couple years ago where I believe Ford was getting rid of the rear touch door locks on newer Edges.  Our '17 Edge has them, and we have a toddler and literally use the rear touch door locks all the time.  Small touches like that are why we enjoy our Edge, and to hear that Ford is once again going down the de-contenting rabbit hole is frustrating.  As a shareholder, of course I want Ford margins to increase...but as a customer, there is a limit when you start nickel and diming the customer to the point where you erode your reputation and loyalty from repeat buyers.  I would rather see Ford boost margins by making quality vehicles that don't succumb to massive warranty campaigns.  Or offering services such as a more robust Ford Pass / Lincoln Way app for a small service charge such as $5.99/mo. that gives you expanded telematics features.  Expand services offered, but don't eliminate value.  Taking away standard features that a previous generation vehicle had and then charging extra for them as an option is what the Germans and Tesla do.  Don't be like them, Ford.

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