Ford CEO Farley Cracking Down on Dealer Markups

[HotRunrGuy]

Here's a 4-door Lightning Blue FE for ONLY $29K over,,,,,,

 

https://www.jimtidwellford.com/inventory/certified-used-2021-ford-bronco-first-edition-four-wheel-drive-4-door-suv-1fmee5ep2mla42647/?store=2305&p.JTF223&kw=&gclid=CjwKCAiAo4OQBhBBEiwA5KWu__IMlpS6N3UQASEOfE5_McySMikIjvVwzVTzjurQ2M83tCys0XxioBoCNAAQAvD_BwE

 

HRG

[jasonj80]

1 hour ago, HotRunrGuy said:

Here's a 4-door Lightning Blue FE for ONLY $29K over,,,,,,

 

https://www.jimtidwellford.com/inventory/certified-used-2021-ford-bronco-first-edition-four-wheel-drive-4-door-suv-1fmee5ep2mla42647/?store=2305&p.JTF223&kw=&gclid=CjwKCAiAo4OQBhBBEiwA5KWu__IMlpS6N3UQASEOfE5_McySMikIjvVwzVTzjurQ2M83tCys0XxioBoCNAAQAvD_BwE

 

HRG

That one is used though.

These moves force the dealer to title the car and pay state start up costs (sales tax, title fees etc) if they want to flip it. It becomes cost prohibited as they have to pay sales tax on the cost of the vehicle so If your markup is 5K you'll be close to break even on the vehicle which takes the easy markup money off the table. Most dealers aren't going to do that for a gamble to make $1000 or $2000 on the sale of the vehicle, the risk/reward becomes to high. 

[HotRunrGuy]

20 minutes ago, jasonj80 said:

That one is used though.

These moves force the dealer to title the car and pay state start up costs (sales tax, title fees etc) if they want to flip it. It becomes cost prohibited as they have to pay sales tax on the cost of the vehicle so If your markup is 5K you'll be close to break even on the vehicle which takes the easy markup money off the table. Most dealers aren't going to do that for a gamble to make $1000 or $2000 on the sale of the vehicle, the risk/reward becomes to high. 

 

Yeah, used. 13 miles on it, the window sticker is a customer special-order.  Tell me somebody didn't get screwed-over when his Bronco came in,,,,

 

HRG

[jasonj80]

23 minutes ago, HotRunrGuy said:

 

Yeah, used. 13 miles on it, the window sticker is a customer special-order.  Tell me somebody didn't get screwed-over when his Bronco came in,,,,

 

HRG

Could be,  or just didn't want it / or very likely couldn't get the financing for it. 

Also could have bought it and turned right around and sold it back to the dealer for 10K markup. There's plenty of people who are flipping them.

Edited February 7, 2022 by jasonj80

[2005Explorer]

3 hours ago, HotRunrGuy said:

 

Yeah, used. 13 miles on it, the window sticker is a customer special-order.  Tell me somebody didn't get screwed-over when his Bronco came in,,,,

 

HRG

They probably ordered it thinking they would pay MSRP and when they were informed the dealer was going to throw a $30k mark-up on it they probably walked. I am sure the dealer is thrilled with all the money they are making totally ripping people off, but it could backfire on them.

[rmc523]

12 hours ago, rperez817 said:

 

 

Example green sticker from a new 2022 F-150 sold order. I think this one went to a dealership in Indiana.

 

 

Interesting....... now that I know that, I think I have seen some green ones around, but I feel like they were on hybrids or something, so I figured it was a hybrid thing.  Now it all makes sense lol.

[Chrisgb]

12 hours ago, 2005Explorer said:

They probably ordered it thinking they would pay MSRP and when they were informed the dealer was going to throw a $30k mark-up on it they probably walked. I am sure the dealer is thrilled with all the money they are making totally ripping people off, but it could backfire on them.

Might make some state legislatures take a fresh look at franchise laws

[akirby]

1 hour ago, Chrisgb said:

Might make some state legislatures take a fresh look at franchise laws

Not if they’re “protecting” their local dealers from the big bad corporations. 

[Black Label]

Yes, I'm sure the lobby from the big dealers is too powerful to have the laws changed. 

[rperez817]

2 hours ago, Chrisgb said:

Might make some state legislatures take a fresh look at franchise laws

 

Ultimately, the relationship between franchisor and franchisee will need to be improved on both sides to provide a better customer experience as legacy automakers and their dealers transition to 100% electric vehicles for new car sales. There is not much state legislatures can do in this area.

 

In Ford's case hopefully Jim Farley's crackdown on dealer markups is combined with more dedicated dealer support from Ford corporate helping them promote, sell, deliver, and service BEV. Especially important is improving digital infrastructure that makes the online reservation, ordering, and tracking process for BEV easy and seamless for customers and dealers.

Edited February 8, 2022 by rperez817

[Deanh]

I would say this will be interesting...is Ford going to visit Dealers and Audit actual transaction pricing for specific types of vehicles???/ Wouldnt that impinge on privacy laws?....I for one would object a 3rd party overviewing how I spent my money.....none of their business....

[akirby]

4 hours ago, Deanh said:

.none of their business....

It is if you signed a franchise agreement……

[iamweasel]

On 2/4/2022 at 4:33 PM, ice-capades said:

Ford CEO Farley Cracking Down Hard on $3.6 Billion Dealer Markups

Won't send dealers cars if they charge too much

 

https://www.foxbusiness.com/lifestyle/ford-cracking-down-3-6-billion-dealer-markups

 

"We have very good knowledge of who they are, and their future allocation of product will be directly impacted," Farley said.

 

 

I don't see anything wrong with dealers selling above MSRP if a customer is willing to pay it.   How is this different than homes being sold above asking prices?  It's supply and demand.....if the demand warrants it, no harm in dealers selling them for whatever someone will pay.  If Ford wants to hold dealers down to MSRP in the good times, then Ford should reimburse dealers for selling anything short of MSRP in slower times.  You can't have it both ways.  

 

Ford (and everyone else) has also been squeezing the delta between dealer cost and MSRP over the years, anyway, lowering the gross profit % on most vehicles along the way.  And now, when dealer sales are going to be down 25% because the OEM's are struggling to produce vehicles, getting "extra" grosses on the cars you do get is the only way for a dealer to maintain the same level of profitability.  

 

Edited February 13, 2022 by iamweasel
typo

[akirby]

10 hours ago, iamweasel said:

 

I don't see anything wrong with dealers selling above MSRP if a customer is willing to pay it.   How is this different than homes being sold above asking prices?  It's supply and demand.....if the demand warrants it, no harm in dealers selling them for whatever someone will pay.  If Ford wants to hold dealers down to MSRP in the good times, then Ford should reimburse dealers for selling anything short of MSRP in slower times.  You can't have it both ways.  

 

Ford (and everyone else) has also been squeezing the delta between dealer cost and MSRP over the years, anyway, lowering the gross profit % on most vehicles along the way.  And now, when dealer sales are going to be down 25% because the OEM's are struggling to produce vehicles, getting "extra" grosses on the cars you do get is the only way for a dealer to maintain the same level of profitability.  

 

Given that vehicles typically sell close to or just above invoice, selling at MSRP should provide way more profit without ADMs.   But I agree that Ford has reduced the gap between MSRP and invoice and I think they may have reduced holdback as well (or restructured it).  I think Ford needs to make some changes there especially on lower priced vehicles like a base Maverick which is only a $200 spread.

 

I do support a businesses right to supply and demand market pricing.  We’ve reaped the benefits of below MSRP pricing for decades.  My truck was $10k below MSRP.   I agree you can’t have it both ways.

 

BUT - these dealers are franchised and represent Ford and to a lot of buyers they ARE Ford and excessive markups reflect badly on Ford.  If you read what Farley said he first said “excessive markups” which I would take to mean things like $10k on a $30k Maverick or $30k on a Bronco not a few thousand here or there.  With most franchise agreements the manufacturer can set price limitations to maintain their brand image, but state auto franchise laws make that illegal.

 

Thats why I suggested allowing buyers to order directly from Ford at MSRP with a set doc fee.  This provides ample profit for both Ford and the dealer and the buyer gets more customization, priority scheduling and no surprises.  The dealer gets additional stock allocation with fixed option packages that they can sell however they want.

[Chrisgb]

3 hours ago, akirby said:

 

Thats why I suggested allowing buyers to order directly from Ford at MSRP with a set doc fee.  This provides ample profit for both Ford and the dealer and the buyer gets more customization, priority scheduling and no surprises.  The dealer gets additional stock allocation with fixed option packages that they can sell however they want.

Good plan. Still free market: Pay a premium to drive it home today, or pay a set amount and wait while it is built to order.

[rmc523]

14 hours ago, iamweasel said:

 

I don't see anything wrong with dealers selling above MSRP if a customer is willing to pay it.   How is this different than homes being sold above asking prices?  It's supply and demand.....if the demand warrants it, no harm in dealers selling them for whatever someone will pay.  If Ford wants to hold dealers down to MSRP in the good times, then Ford should reimburse dealers for selling anything short of MSRP in slower times.  You can't have it both ways.  

 

Ford (and everyone else) has also been squeezing the delta between dealer cost and MSRP over the years, anyway, lowering the gross profit % on most vehicles along the way.  And now, when dealer sales are going to be down 25% because the OEM's are struggling to produce vehicles, getting "extra" grosses on the cars you do get is the only way for a dealer to maintain the same level of profitability.  

 

 

I think a lot of what Farley is also trying to stamp out is the issue where customers are reserving and ordering a vehicle for let's say $35,999 MSRP, and that's what they get as a price from the dealer when order, only to find out when it's time to complete the purchase when it arrives, that they're tacking on the surprise $15k ADM.

 

I also don't have a problem selling above MSRP if they're willing to pay, but not on customer orders - unless it was spelled out at the time of ordering.  A unit on the lot?  Go for whatever the market will bear.  But don't trick someone that ordered a vehicle months (or years in case of Bronco) ago by throwing something on it last minute.

[Watson138]

On 2/8/2022 at 8:04 AM, Chrisgb said:

Might make some state legislatures take a fresh look at franchise laws

Lobbying groups are too powerful. They give a lot of money to the politicians to keep the status quo.

[Watson138]

4 hours ago, akirby said:

Thats why I suggested allowing buyers to order directly from Ford at MSRP with a set doc fee.  This provides ample profit for both Ford and the dealer and the buyer gets more customization, priority scheduling and no surprises.  The dealer gets additional stock allocation with fixed option packages that they can sell however they want.

That's a good model that really deserves some thought from the manufacturers.

[sajohnson]

5 hours ago, rmc523 said:

 

I think a lot of what Farley is also trying to stamp out is the issue where customers are reserving and ordering a vehicle for let's say $35,999 MSRP, and that's what they get as a price from the dealer when order, only to find out when it's time to complete the purchase when it arrives, that they're tacking on the surprise $15k ADM.

 

I also don't have a problem selling above MSRP if they're willing to pay, but not on customer orders - unless it was spelled out at the time of ordering.  A unit on the lot?  Go for whatever the market will bear.  But don't trick someone that ordered a vehicle months (or years in case of Bronco) ago by throwing something on it last minute.

 

Very well said.

 

Dealers just need to be straight with people.  They are free to charge what the market will bear (assuming their franchise agreement does not say otherwise) -- but they must be upfront about it.

 

Extortion (in the form of last minute ADM) should be illegal.  At a minimum it is clearly unethical and severely damages a dealer's reputation when word gets around -- which it will quickly with review sites like: Dealer Rater; the BBB; Google; and Yelp, among others.  Not to mention forums like this one.  It's very short-sighted and ultimately self-defeating behavior.  But hey, this quarter looks good on paper, am-I-rite?

 

 

[iamweasel]

10 hours ago, rmc523 said:

 

I think a lot of what Farley is also trying to stamp out is the issue where customers are reserving and ordering a vehicle for let's say $35,999 MSRP, and that's what they get as a price from the dealer when order, only to find out when it's time to complete the purchase when it arrives, that they're tacking on the surprise $15k ADM.

 

I also don't have a problem selling above MSRP if they're willing to pay, but not on customer orders - unless it was spelled out at the time of ordering.  A unit on the lot?  Go for whatever the market will bear.  But don't trick someone that ordered a vehicle months (or years in case of Bronco) ago by throwing something on it last minute.

 

Certainly having an agreement with a customer, and then after-order going back for a price increase (when the actual dealer cost of that product is not changing), is not something dealers should be doing and I have no issue with Ford trying to eliminate that practice.  That's why I tell everyone I know who is ordering a vehicle to get a signed buyers order with both signatures on it.  (Customer and dealer.)

 

I actually just had this happen to me last month.  I ordered a Bronco Sport for my wife in August and then 2 weeks before it came in I was talking to the salesperson about something and he was like "oh, by the way...."  (They tried to add $2K to my price - they didn't want to sell it to me at X-Plan anymore.)  Ended up talking to the GM and told him I expect them to honor our signed buyers order, which he did.  

[sajohnson]

33 minutes ago, iamweasel said:

 

Certainly having an agreement with a customer, and then after-order going back for a price increase (when the actual dealer cost of that product is not changing), is not something dealers should be doing and I have no issue with Ford trying to eliminate that practice.  That's why I tell everyone I know who is ordering a vehicle to get a signed buyers order with both signatures on it.  (Customer and dealer.)

 

I actually just had this happen to me last month.  I ordered a Bronco Sport for my wife in August and then 2 weeks before it came in I was talking to the salesperson about something and he was like "oh, by the way...."  (They tried to add $2K to my price - they didn't want to sell it to me at X-Plan anymore.)  Ended up talking to the GM and told him I expect them to honor our signed buyers order, which he did.  

 

I'm very glad to hear it worked out for you.

 

I've read and been told different things, like:

 

* A deposit locks in the agreed-upon price.  Some say a NON-refundable deposit carries more weight, others say it can be refundable or not -- the effect is the same.

* A signed buyer's order/order summary is legally binding.  Others say it can be helpful but is not enforceable.  I've heard that the sales manger must sign, and some say it must be signed by the GM.

* Only the customer and salesperson need to sign.
* The order summaries/buyer's orders I've seen say, "This is not an invoice".  That implies that regardless of who signs it, the dealer can still attempt to extort their customers with last minute ADM.

 

I'm not an attorney, and I hope I'm wrong, but it sure seems like -- even with a deposit and a signed buyer's order -- dealers are free to do whatever they want regarding last minute ADM.  There is apparently nothing in the franchise agreements precluding it -- because all Ford has threatened to do is cut the number of vehicles a dealer will receive if they act unethically -- and it's unclear whether that has actually happened.  

 

That may be bad business for Ford -- especially in markets where there is only ONE Ford dealership to serve a large area.  If that dealer has no/low inventory, some potential Ford customers will buy a different brand.

 

It may come down to the dealership -- how they treat people; if they think long-term, and care about their reputation and repeat business -- or if they are stupid and short-sighted..

 

 

 

 

[akirby]

9 hours ago, sajohnson said:

 

I'm very glad to hear it worked out for you.

 

I've read and been told different things, like:

 

* A deposit locks in the agreed-upon price.  Some say a NON-refundable deposit carries more weight, others say it can be refundable or not -- the effect is the same.

* A signed buyer's order/order summary is legally binding.  Others say it can be helpful but is not enforceable.  I've heard that the sales manger must sign, and some say it must be signed by the GM.

* Only the customer and salesperson need to sign.
* The order summaries/buyer's orders I've seen say, "This is not an invoice".  That implies that regardless of who signs it, the dealer can still attempt to extort their customers with last minute ADM.

 

I'm not an attorney, and I hope I'm wrong, but it sure seems like -- even with a deposit and a signed buyer's order -- dealers are free to do whatever they want regarding last minute ADM.  There is apparently nothing in the franchise agreements precluding it -- because all Ford has threatened to do is cut the number of vehicles a dealer will receive if they act unethically -- and it's unclear whether that has actually happened.  

 

That may be bad business for Ford -- especially in markets where there is only ONE Ford dealership to serve a large area.  If that dealer has no/low inventory, some potential Ford customers will buy a different brand.

 

It may come down to the dealership -- how they treat people; if they think long-term, and care about their reputation and repeat business -- or if they are stupid and short-sighted..

It’s not the franchise agreement per se that allows ADMs, it’s the state auto franchise laws that prevent the mfr from setting the selling price.

 

A buyers order signed by a dealership representative is the best protection and technically it is a legally binding contract whether you put down a deposit or not.  But all this really means is you have the option of walking away with no penalty if they change the price or the terms.  You can’t realistically force them to sell you a specific vehicle and if you sued them you would have to prove actual damages which would be difficult since you could always just buy another vehicle from somewhere else.  So it’s more a practical matter than a legal issue.

[Deanh]

On ‎2‎/‎11‎/‎2022 at 2:46 PM, akirby said:

It is if you signed a franchise agreement……

Im not sure that's correct...what I buy a vehicle for is between myself and the Dealer...theres all sorts of privacy laws that protect my information from any additional prying eyes...laws that lierally need my own personal signature to release. When I buy a vehicle I sign a credit application that entitle the dealer and loan institution ( whomever that is ) to check my credit worthiness...Ford Corporate doesn't enter into that foray at all...could be wrong as Ford has auditors here all the time...but Im 100% sure they do NOT check what a vehicle is sold for or have any rights to share that information with anyone...Id personally be PISSED

Edited February 14, 2022 by Deanh

[Deanh]

On ‎2‎/‎13‎/‎2022 at 9:25 AM, rmc523 said:

 

I think a lot of what Farley is also trying to stamp out is the issue where customers are reserving and ordering a vehicle for let's say $35,999 MSRP, and that's what they get as a price from the dealer when order, only to find out when it's time to complete the purchase when it arrives, that they're tacking on the surprise $15k ADM.

 

I also don't have a problem selling above MSRP if they're willing to pay, but not on customer orders - unless it was spelled out at the time of ordering.  A unit on the lot?  Go for whatever the market will bear.  But don't trick someone that ordered a vehicle months (or years in case of Bronco) ago by throwing something on it last minute.

I would believe a Sales Manager or the actual Dealers Director/ owners signature would be a good enough Guarantee for pricing...a Sales persons signature no.....

[Deanh]

On ‎2‎/‎13‎/‎2022 at 9:52 AM, Watson138 said:

Lobbying groups are too powerful. They give a lot of money to the politicians to keep the status quo.

lobbying groups or not, I doubt dealers are going anywhere as Ford NEEDS a buffer between their own ineptness and the consumer themselves. Ive just had my ear burned TWICE today already regarding Fords STUPID e-mails saying one thing one week and something completely different the next. Then they contact Ford directly and get told their Maverick...THATS IN PRODUCTION, will be 6 months away !. The second call was from a customer that was told his vin number on a Bronco order....wasn't even his vehicle.....