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Ford CEO Farley Cracking Down on Dealer Markups


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2 hours ago, AGR said:

 

They sold 352K last year in the USA, which is more than a "few thousand" the last time I checked. It's not at Ford levels, but it's not small potatoes either. In the history of the company, they HAVE sold over two million vehicles using the direct sales method. However you respond to me, I'll keep in mind your not-so-hot track record on Tesla. They were supposed to have went bankrupt, dried up and blown away in the wind by now according to you.


The only thing that saved Tesla is supply chain shortages that allowed them to raise prices by as much as $9k on some models.  Prior to that they were losing money on actual auto sales not counting carbon credits.  I’ll give them credit for increasing volume - I thought they were closer to 200k.

 

The point here isn’t that BEVs can’t be sold factory direct - the point is it takes a lot of overhead for the factory to take in and process trades and do the sale paperwork including state taxes, registrations, etc  and to submit and process loan applications.   Not to mention delivering and servicing vehicles outside large metro areas.  Nobody in South GA is going to drive 3-4 hours to Atlanta to test drive, pick up or get service on a BEV when they have regular car dealers within 30 minutes everywhere.  And those dealers can handle delivery, trade-ins, test drives and service with zero additional investment.  And they’re everywhere.  Replicating centralized services gets super expensive when you go from 350k to 2.5M - a factor of 8.  And right now customers are cherry picked - affluent and educated with 800 credit scores.  To get to 100% BEVs you have to sell less expensive vehicles to less qualified buyers and that is harder.

 

i just don’t see Ford abandoning dealers.  I see them handling the orders online and having more set prices and faster build times and maybe financing approval but I think dealers will still deliver service and complete the paperwork.

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2 hours ago, FordBuyer said:

 

Tesla is really sitting pretty now being the only EV company that can produce hundreds of thousands of EVs with more production coming on line this year. The only problem is how many more consumers can afford $60,000 + EV. The extended range Leaf looks better now at half the price. 


You’d rather have Tesla’s 350k units or Ford’s 800k F series volume? I would imagine ATPs are close or slightly higher for F series.

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17 minutes ago, akirby said:


You’d rather have Tesla’s 350k units or Ford’s 800k F series volume? I would imagine ATPs are close or slightly higher for F series.

 

So you think Ford is going to sell 800,000 FSeries pickups this year? My prediction is 500,000 tops with $5 gas if Ford can build that many. This is going to be one challenging year. 

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39 minutes ago, FordBuyer said:

 

So you think Ford is going to sell 800,000 FSeries pickups this year? My prediction is 500,000 tops with $5 gas if Ford can build that many. This is going to be one challenging year. 

 

22 minutes ago, akirby said:


Yes, including Lightning.

 

You guys putting any $$$ on this? 

 

HRG

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1 hour ago, FordBuyer said:

 

So you think Ford is going to sell 800,000 FSeries pickups this year? My prediction is 500,000 tops with $5 gas if Ford can build that many. This is going to be one challenging year. 

 

Outside of supply chain issues-back in 2013 and 2014, when gas pricing was around what it is now, Ford sold 753,851 F-series in 2014 and 763,402 in 2013....

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48 minutes ago, silvrsvt said:

 

Outside of supply chain issues-back in 2013 and 2014, when gas pricing was around what it is now, Ford sold 753,851 F-series in 2014 and 763,402 in 2013....


And fuel economy today is much better with hybrid and BEV options on F150.  Super duty buyers won’t be affected.   Could be impacted by supply chain or a recession though.

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Mike Martinez at Automotive News posted an article today about Jim Farley's "New Dealership Model" for BEV. Ford EV, ICE split will mean big changes for dealers | Automotive News (autonews.com)

 

Highlights about the commitments that Farley expects from Ford BEV dealers.

  • Sell at non-negotiable prices (MSRP only model, as akirby suggested)
  • Carry no new car inventory
  • Operate with scaled down facilities
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Please stop posting automotive news articles.  It requires a subscription after a few free articles.

 

The question is whether dealers will agree or if Ford will have to fight them or get legally creative to enforce it.  I would think they would agree once they realize that’s the model they’re competing against.  And instead of holdback Ford could just pay the dealer a fixed profit for each sale.  I thought that’s what they did with Mach-E.    The key will be not building stock orders so there is no way for a dealer to get one and resell for higher prices under normal circumstances.  If a buyer backs out before it’s built then it doesn’t get built.

 

I like the strategy.  Also means they do away with allocations and can build vehicles based on order date.

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  • 1 month later...
20 hours ago, rperez817 said:

Jim Farley won't be happy with what DCH Ford of Thousand Oaks has done with some of the F-150 Lightnings they just got in. $50,000 dealer markup.

New 2022 Ford F-150 Lightning Truck SuperCrew Cab Agate Black For Sale in Thousand Oaks CA | VIN: 1FT6W1EV7NWG01770 (dchfordofthousandoaks.com)

 

 

DCHLightning1.PNG

 

No comment...they must have not gotten the memo

 

Ford threatens dealers: We won't send you F-150 Lightnings if you break sales rules

https://www.freep.com/story/money/cars/ford/2022/01/07/ford-f-150-lightning-dealerships-sales/9129717002/

 

 

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On 5/7/2022 at 8:34 AM, silvrsvt said:

 

No comment...they must have not gotten the memo

 

Ford threatens dealers: We won't send you F-150 Lightnings if you break sales rules

https://www.freep.com/story/money/cars/ford/2022/01/07/ford-f-150-lightning-dealerships-sales/9129717002/

 

 

 

DCH Ford of Thousand Oaks updated their website listings for F-150 Lightnings with the phrase "Please Call" for the selling price. Maybe Ford sent that dealer a threat?

 

dch_may17.PNG

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On 5/11/2022 at 10:14 AM, FordBuyer said:

Mullinax has a 2022 Escape SE hybrid on lot with $38,000 price tag not including $3,000 in taxes and licensing. That is about an $8,000 markup including tax. So if you want a gas sipper, be ready to pay way up.


dealerships have the right to mark up vehicles that are dealer stock…it might not be popular, but it is their right to do so. 
 

The thing people get pissed about is when they do it to a retail ordered that is basically a “done deal” outside of driving it off the lot. 

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1 hour ago, silvrsvt said:


dealerships have the right to mark up vehicles that are dealer stock…it might not be popular, but it is their right to do so. 
 

The thing people get pissed about is when they do it to a retail ordered that is basically a “done deal” outside of driving it off the lot. 


Or you’re trying to sell a $22k Maverick for $44k.... 

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I rarely defend car dealers, but...

 

If someone won a new car or truck in a raffle (say) and they have no need for it -- should they sell it for:

 

a) $1 because they got it for free (or whatever the tickets cost them)?
b) Dealer invoice?

c) MSRP?

d) Top dollar/what the market will bear?

 

The value of any item or product is whatever a willing buyer and willing seller agree on (under no undue pressure).  Sticker/MSRP is often irrelevant.  The *value* of a vehicle may be higher or lower -- sometimes by a lot.  When the value is lower, the seller/dealer must reduce the price below MSRP.  When the price is higher, they can raise it.

 

Another way to think about it is, if a car/truck is worth $20,000 over MSRP (buyers are lined up at that price) and the dealer still sells for MSRP they are essentially giving away $20,000 with each sale.  Some buyers will just flip the vehicle and pocket the $20,000.  So why should the dealer do that?

 

I'm almost always on the side of the buyer/consumer, but in this case I think the dealers have a good argument for charging ADM.  To be clear, I'm referring to *in stock*/on the lot vehicles.  Last minute ADM on special orders is no more than extortion.

 

 

 

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1 hour ago, sajohnson said:

I rarely defend car dealers, but...

 

If someone won a new car or truck in a raffle (say) and they have no need for it -- should they sell it for:

 

a) $1 because they got it for free (or whatever the tickets cost them)?
b) Dealer invoice?

c) MSRP?

d) Top dollar/what the market will bear?

 

The value of any item or product is whatever a willing buyer and willing seller agree on (under no undue pressure).  Sticker/MSRP is often irrelevant.  The *value* of a vehicle may be higher or lower -- sometimes by a lot.  When the value is lower, the seller/dealer must reduce the price below MSRP.  When the price is higher, they can raise it.

 

Another way to think about it is, if a car/truck is worth $20,000 over MSRP (buyers are lined up at that price) and the dealer still sells for MSRP they are essentially giving away $20,000 with each sale.  Some buyers will just flip the vehicle and pocket the $20,000.  So why should the dealer do that?

 

I'm almost always on the side of the buyer/consumer, but in this case I think the dealers have a good argument for charging ADM.  To be clear, I'm referring to *in stock*/on the lot vehicles.  Last minute ADM on special orders is no more than extortion.

 

 

 

 

I'm thinking how the contract is between the dealer and manufacturer. 

You don't see Apple products too much off the list price and Ford can do it that way too.


Also, Ford is concerned it will ruin their reputation when the dealers put an excessive 'market value', so no one wants to buy from them.

I will admit many of the Ford dealers in the Twin Cities are are arrogant sas-holes.

 

So, I'm for... wait for it customer. 

 

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45 minutes ago, jniffen said:

You don't see Apple products too much off the list price and Ford can do it that way too.


Actually, they can’t.  Auto franchise laws specifically prohibit the mfr from setting prices or price limits.  As far as I know it’s the only industry where that exists and it’s utterly ridiculous.  There is a clause in the franchise agreement about doing things that are detrimental to Ford but that’s a gray area.

 

I think you’ll see Ford get creative with BEVs and also get some cooperation from the dealer associations to stop the more egregious behaviors.

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Not sure what can be done when you have such low supply and high demand for just about every model. And Ford is sold out of many 2022 MY models. So it's a sure thing that any new vehicles sitting on lot will go for at least list price and much higher for the super hot models. I'm glad and lucky I bought new in early 2020, because no way would I buy new this year. The dealers can shove it for the time being. 

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On 3/7/2022 at 8:43 PM, silvrsvt said:

 

Outside of supply chain issues-back in 2013 and 2014, when gas pricing was around what it is now, Ford sold 753,851 F-series in 2014 and 763,402 in 2013....

 

I think 2008 and 2009 would be more appropriate time frame to look at.  I don't think this recession will be as bad but it's here even if most people still have their head in the sand at the moment.

 

2008: 515,513

2009: 413,625

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6 hours ago, fuzzymoomoo said:

All of this makes me glad I have a-plan....

 

Now you just need to find a dealer to honor A plan. There are 0 within 100 mile radius of where I live. I'm not sure what Metro Detroit looks like with dealers. I have a hard time believing only the dealers by me are greedy.

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2 hours ago, jcartwright99 said:

 

Now you just need to find a dealer to honor A plan. There are 0 within 100 mile radius of where I live. I'm not sure what Metro Detroit looks like with dealers. I have a hard time believing only the dealers by me are greedy.


Theres not a dealer around here that's stupid enough to refuse A-plan when so many people around here work for ford or has family who does. 

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