Jump to content

Ford CEO Farley Cracking Down on Dealer Markups


Recommended Posts

1 hour ago, Deanh said:

lobbying groups or not, I doubt dealers are going anywhere as Ford NEEDS a buffer between their own ineptness and the consumer themselves. 

Now that’s a fact of epic proportions, the two examples you gave of customers talking directly to Ford shows that ford is only interested in “tidal production” , volume flowing through the system, not the people who’s orders get lost in the system because eithe Ford is incapable of tracking what should be priority orders or it simply doesn’t care/ overwhelmed at the lower operating levels. Whatever it is, having a dealer negotiate the BS and advocate on buyers behalf is still essential…. And for most part, a thankless unseen service by sales staff.

Edited by jpd80
Link to comment
Share on other sites

1 hour ago, Deanh said:

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


I was speaking more generally about franchise agreements not specifically automotive.  Many franchise agreements have limits on what you can charge and advertise as a form of brand protection.  And other Industries don’t have laws protecting them.   There is a reason you never see discounts on some brands and everyone has the same price.

 

Point is it might be the mfrs business what a dealer charges if the laws and franchise agreements say so.

Link to comment
Share on other sites

38 minutes ago, akirby said:


I was speaking more generally about franchise agreements not specifically automotive.  Many franchise agreements have limits on what you can charge and advertise as a form of brand protection.  And other Industries don’t have laws protecting them.   There is a reason you never see discounts on some brands and everyone has the same price.

 

Point is it might be the mfrs business what a dealer charges if the laws and franchise agreements say so.

ok, understand better....Im just not sure that a Dealer can release any personal information to ANYONE without prior permission....little worrisome given the purge of identity theft...

Link to comment
Share on other sites

42 minutes ago, jpd80 said:

Now that’s a fact of epic proportions, the two examples you gave of customers talking directly to Ford shows that ford is only interested in “tidal production” , volume flowing through the system, not the people who’s orders get lost in the system because eithe Ford is incapable of tracking what should be priority orders or it simply doesn’t care/ overwhelmed at the lower operating levels. Whatever it is, having a dealer negotiate the BS and advocate on buyers behalf is still essential…. And for most part, a thankless unseen service by sales staff.

I stated it before...whenever theres issues Ford immediately side steps passes the buck and leaves it for the Dealer to handle...we are Fords fall guys...and trust me...they NEED us more than you know...were like their complaints dept....lol...

  • Like 1
Link to comment
Share on other sites

9 hours ago, akirby said:


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.

 

It's interesting that some mfrs are allowed to set prices -- for example, Bose; Stihl; Tempur-Pedic -- and others are not.  I wonder how that is justified?

 

I'm confused by: "...technically it is a legally binding contract..." but then "... all this really means is you have the option of walking away with no penalty if they change the price or the terms."

 

Maybe I'm reading your post wrong, but if a signed buyer's order is an enforceable contract, there should be no need to walk away, and the buyer *could* successfully sue for breach of contract if the terms and/or price is changed.

 

I'm guessing that a signed buyer's order or order summary really is not a contract, in part because the ones I've seen state, "This is not an invoice".  

 

 

 

Link to comment
Share on other sites

26 minutes ago, sajohnson said:

 

It's interesting that some mfrs are allowed to set prices -- for example, Bose; Stihl; Tempur-Pedic -- and others are not.  I wonder how that is justified?

 

I'm confused by: "...technically it is a legally binding contract..." but then "... all this really means is you have the option of walking away with no penalty if they change the price or the terms."

 

Maybe I'm reading your post wrong, but if a signed buyer's order is an enforceable contract, there should be no need to walk away, and the buyer *could* successfully sue for breach of contract if the terms and/or price is changed.

 

I'm guessing that a signed buyer's order or order summary really is not a contract, in part because the ones I've seen state, "This is not an invoice".  


It’s really simple - if you want to sell their products then you have to agree to their terms.  Don’t like their terms?  Don’t sell those products.  Only a few companies can get away with that though.

 

With a breach of contract you have to show damages.  You can’t force the dealer to sell you the vehicle you ordered- it will be long gone by the time you get to court,  So you have to show how their breach damaged you, which is hard to do when you can just buy something else.  Even if you could somehow prove financial damages it usually isn’t worth the effort.

Link to comment
Share on other sites

1 hour ago, akirby said:


It’s really simple - if you want to sell their products then you have to agree to their terms.  Don’t like their terms?  Don’t sell those products.  Only a few companies can get away with that though.

 

With a breach of contract you have to show damages.  You can’t force the dealer to sell you the vehicle you ordered- it will be long gone by the time you get to court,  So you have to show how their breach damaged you, which is hard to do when you can just buy something else.  Even if you could somehow prove financial damages it usually isn’t worth the effort.


In an earlier post you said, "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."

 

That's what I was responding to when I wrote, "It's interesting that some mfrs are allowed to set prices -- for example, Bose; Stihl; Tempur-Pedic -- and others are not.  I wonder how that is justified?"

 

I haven't been able to find a Maryland state law that forbids auto mfrs from establishing maximum sale prices.  I did find the following FAQ:

 

Q: "One of my suppliers marks its products with a Manufacturer Suggested Retail Price (MSRP). Do I have to charge this price?

A: The key word is "suggested." A dealer is free to set the retail price of the products it sells. A dealer can set the price at the MSRP or at a different price, as long as the dealer comes to that decision on its own. However, the manufacturer can decide not to use distributors that do not adhere to its MSRP.":
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-supply-chain/manufacturer-imposed

 

This reinforces my suspicion that there is nothing in the franchise agreements preventing Ford dealerships from selling for any price the market will bear.  Or, if language like that exists, auto mfrs are ignoring it. 

 

Regardless, dealers are free to charge ADM.  Of course it should be made clear up-front, listed right next to the factory window sticker, or clearly included in the price on the order summary -- although I haven't heard of many dealers being bold enough to attempt to charge ADM on a customer order.

 

The most serious issue is blatant extortion -- slapping ADM on a customer ordered car at delivery.  If that is not illegal it clearly should be.

 

 

Link to comment
Share on other sites

1 hour ago, sajohnson said:

This reinforces my suspicion that there is nothing in the franchise agreements preventing Ford dealerships from selling for any price the market will bear.  Or, if language like that exists, auto mfrs are ignoring it. 

 

Regardless, dealers are free to charge ADM.  Of course it should be made clear up-front, listed right next to the factory window sticker, or clearly included in the price on the order summary -- although I haven't heard of many dealers being bold enough to attempt to charge ADM on a customer order.

 

The most serious issue is blatant extortion -- slapping ADM on a customer ordered car at delivery.  If that is not illegal it clearly should be.

 

That is the whole point of what Ford is trying to do-They are trying to stop the blatant rip off on a hot product that has been order by a customer. 

 

No one is saying that a dealership can't add an ADM to products they are technically paying for till its sold. 

The issue of ADMs will be a dead conversation once supply meets or exceeds demand, unless its a very limited production product. 

But that begs the question-Do auto manufactures really want to go back to the old days of having incentives or would they rather sell higher end products with no incentives by artificially limiting production? I think they will try to keep this going as much as possible, but once someone starts to "flood" the market to gain market share, other manufactures will have to do the same. 

Link to comment
Share on other sites

There is nothing in the Ford franchise agreement about selling prices because it’s been illegal for 50+ years in almost all states.   Maryland might be an exception.  Even if Ford had something in their franchise agreement state law would supersede it.  And Ford is t going to operate differently state to state.  Also note that state automotive franchise laws are separate and distinct from other franchise laws.

Link to comment
Share on other sites

39 minutes ago, silvrsvt said:

 

That is the whole point of what Ford is trying to do-They are trying to stop the blatant rip off on a hot product that has been order by a customer. 

 

No one is saying that a dealership can't add an ADM to products they are technically paying for till its sold. 

The issue of ADMs will be a dead conversation once supply meets or exceeds demand, unless its a very limited production product. 

But that begs the question-Do auto manufactures really want to go back to the old days of having incentives or would they rather sell higher end products with no incentives by artificially limiting production? I think they will try to keep this going as much as possible, but once someone starts to "flood" the market to gain market share, other manufactures will have to do the same. 

 

Extortion (last minute ADM) does not seem to be a very common practice, but it's hard to tell.  It's not as if there is a gov't agency keeping track.  Understandably, when it does happen the victim (customer) is usually going to make a lot of noise.  Some of the most outrageous examples -- like the guy who ordered a Mercedes EV only to have the dealer demand $50,000 ADM on delivery --- get widespread media coverage.  So it probably seems like more of a problem than it is.

 

Actually, I've read many, many posts by people who say the dealers cannot (or should not) charge ADM on in-stock vehicles.  They claim it's price gouging, etc.  My opinion is that dealers should be able to maximize profit -- as long as there are no laws that say otherwise and their franchise agreement does not forbit selling for over MSRP.  After all, we all do the same -- when we are selling something we want top dollar.  As a buyer of course I don't like ADM, but it's simply the free market at work.

 

The very existence of a "MSRP" causes a lot of the hard feelings.  People think that they should never pay over MSRP, when of course the "S" stands for "suggested".  The true value is determined by customers who are weighing all kinds of factors -- not the least of which is what other mfrs are offering.  Sometimes cars and trucks sell for well under MSRP.  It just depends on the market.

 

 

Link to comment
Share on other sites

14 hours ago, sajohnson said:


In an earlier post you said, "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."

 

That's what I was responding to when I wrote, "It's interesting that some mfrs are allowed to set prices -- for example, Bose; Stihl; Tempur-Pedic -- and others are not.  I wonder how that is justified?"

 

I haven't been able to find a Maryland state law that forbids auto mfrs from establishing maximum sale prices.  I did find the following FAQ:

 

Q: "One of my suppliers marks its products with a Manufacturer Suggested Retail Price (MSRP). Do I have to charge this price?

A: The key word is "suggested." A dealer is free to set the retail price of the products it sells. A dealer can set the price at the MSRP or at a different price, as long as the dealer comes to that decision on its own. However, the manufacturer can decide not to use distributors that do not adhere to its MSRP.":
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-supply-chain/manufacturer-imposed

 

This reinforces my suspicion that there is nothing in the franchise agreements preventing Ford dealerships from selling for any price the market will bear.  Or, if language like that exists, auto mfrs are ignoring it. 

 

Regardless, dealers are free to charge ADM.  Of course it should be made clear up-front, listed right next to the factory window sticker, or clearly included in the price on the order summary -- although I haven't heard of many dealers being bold enough to attempt to charge ADM on a customer order.

 

The most serious issue is blatant extortion -- slapping ADM on a customer ordered car at delivery.  If that is not illegal it clearly should be.

 

 

whats your thoughts on customers buying vehicles and flipping for huge profits?.....get on e-bay and check out used Broncos. Also...while your at it...look up the pricing being charged by people taking advantage of crazy used car pricing...the market ebbs and flows..it is NOT just the big bad delaers taking advantage of the situation...don't like it...don't buy.....easy.

Link to comment
Share on other sites

15 hours ago, sajohnson said:

 

Extortion (last minute ADM) does not seem to be a very common practice, but it's hard to tell.  It's not as if there is a gov't agency keeping track.  Understandably, when it does happen the victim (customer) is usually going to make a lot of noise.  Some of the most outrageous examples -- like the guy who ordered a Mercedes EV only to have the dealer demand $50,000 ADM on delivery --- get widespread media coverage.  So it probably seems like more of a problem than it is.

 

Actually, I've read many, many posts by people who say the dealers cannot (or should not) charge ADM on in-stock vehicles.  They claim it's price gouging, etc.  My opinion is that dealers should be able to maximize profit -- as long as there are no laws that say otherwise and their franchise agreement does not forbit selling for over MSRP.  After all, we all do the same -- when we are selling something we want top dollar.  As a buyer of course I don't like ADM, but it's simply the free market at work.

 

The very existence of a "MSRP" causes a lot of the hard feelings.  People think that they should never pay over MSRP, when of course the "S" stands for "suggested".  The true value is determined by customers who are weighing all kinds of factors -- not the least of which is what other mfrs are offering.  Sometimes cars and trucks sell for well under MSRP.  It just depends on the market.

 

The issue is that Bronco has had quite a few issues with ADMs and are still having issues with ADMs...I even had an article written about it last year with my Bronco. There has been reports of funky stuff happening with Lightning orders and Mach E orders to a lesser degree. 

 

I was checking local dealerships after that shitshow-nearly every car on the lots had an ADM from $2.5K to $5K on them. Some people are "stupid" enough to believe the lines dealerships tell them when buying a new car. Some people are happy to pay it because they are just worried about a monthly payment number and spread it out over 84+ months. 

Link to comment
Share on other sites

3 hours ago, Deanh said:

whats your thoughts on customers buying vehicles and flipping for huge profits?.....get on e-bay and check out used Broncos. Also...while your at it...look up the pricing being charged by people taking advantage of crazy used car pricing...the market ebbs and flows..it is NOT just the big bad delaers taking advantage of the situation...don't like it...don't buy.....easy.

 

The question of the hour is how many people are doing that vs how many dealerships are successfully selling Broncos with ADMs?

 

But you are right about the ebb and flow of things. 

Link to comment
Share on other sites

5 hours ago, Deanh said:

whats your thoughts on customers buying vehicles and flipping for huge profits?.....get on e-bay and check out used Broncos. Also...while your at it...look up the pricing being charged by people taking advantage of crazy used car pricing...the market ebbs and flows..it is NOT just the big bad delaers taking advantage of the situation...don't like it...don't buy.....easy.

 

I agree.

 

I generally prefer the free market.  As I've said, it's not as if car dealers are the equivalent of being the only source of baby formula in a refugee camp.

 

Supply and demand sets the price.  AFAIK, there is no legal reason why dealers should have to sell for well below market price, only to have the buyer flip the vehicle and pocket thousands of dollars.

 

However, extortion (last minute ADM) is completely different.  That is sleazy and unethical (if not illegal).  It makes the dealerships and mfrs look bad.  Once it becomes known that a particular dealer does that, very few people will trust them, and orders will dry up.  It is very short-sighted behavior -- a snake eating its tail.

 

Extortion aside though, as long as there is nothing in the franchise agreement precluding the dealer from charging over MSRP for in-stock vehicles, they are free to do so.  

 

Link to comment
Share on other sites

2 hours ago, silvrsvt said:

 

The question of the hour is how many people are doing that vs how many dealerships are successfully selling Broncos with ADMs?

 

But you are right about the ebb and flow of things. 

Ill give you that...but Ill also revert back to the limited markups from the get go, I don't condone addendums but I understand the practice barring some that just get flat out crazy...and the ADM situation is being relayed as a Bronco specific ( Ford ) only issue....it most definitely is not...customers are expecting ridiculous amounts on their trade is and getting it, AND taking the most money they can get...why should it be any different for Dealers when they have a unit in high demand...they just need to keep it civil...r

Link to comment
Share on other sites

1 hour ago, sajohnson said:

 

I agree.

 

I generally prefer the free market.  As I've said, it's not as if car dealers are the equivalent of being the only source of baby formula in a refugee camp.

 

Supply and demand sets the price.  AFAIK, there is no legal reason why dealers should have to sell for well below market price, only to have the buyer flip the vehicle and pocket thousands of dollars.

 

However, extortion (last minute ADM) is completely different.  That is sleazy and unethical (if not illegal).  It makes the dealerships and mfrs look bad.  Once it becomes known that a particular dealer does that, very few people will trust them, and orders will dry up.  It is very short-sighted behavior -- a snake eating its tail.

 

Extortion aside though, as long as there is nothing in the franchise agreement precluding the dealer from charging over MSRP for in-stock vehicles, they are free to do so.  

 

The ones that annoy me are the order the unit only to be informed of an ADM when taking delivery....that's , well at least me , unethical....but lessons arebeing learned the hard way...don't take anything for granted and get something definitive in writing.....but FWIW , 82% of American buyers paid over MSRP for a new car in January ( Autoblog )

Edited by Deanh
Link to comment
Share on other sites

16 hours ago, Deanh said:

customers are expecting ridiculous amounts on their trade is and getting it, AND taking the most money they can get...why should it be any different for Dealers when they have a unit in high demand...they just need to keep it civil...r

 

Well I was told a story by my sales person (before the Bronco debacle) that They had a F-150 Platinum (I think-was a high end model) come in off lease. They passed on getting it and he watched it go on an auto auction site for well over what the buy out was on the lease-I want to say the book value was something like mid 40-50s and it went for 8K over that. 

 

Part of the reason why trade ins are so high is because of a lack of supply for used and new cars. Some people are balking at higher pricing for new cars so they want to go the used route. The used route has less supply because less people are buying new-so its a self fulling loop that I'm not quite sure how we are going to get out of. Its not a good combination because all its doing is raising pricing for everyone. People need good trade in values to afford a new car so that raises the price of used cars...the price goes up because supply issues.

 

I remember when a decent 5 year old car back in the early 1990s was around 1500 or so. I had family that start driving back about 10 years ago and a similar car was almost 5-7x times that price. 

Link to comment
Share on other sites

2 hours ago, silvrsvt said:

 

Well I was told a story by my sales person (before the Bronco debacle) that They had a F-150 Platinum (I think-was a high end model) come in off lease. They passed on getting it and he watched it go on an auto auction site for well over what the buy out was on the lease-I want to say the book value was something like mid 40-50s and it went for 8K over that. 

 

Part of the reason why trade ins are so high is because of a lack of supply for used and new cars. Some people are balking at higher pricing for new cars so they want to go the used route. The used route has less supply because less people are buying new-so its a self fulling loop that I'm not quite sure how we are going to get out of. Its not a good combination because all its doing is raising pricing for everyone. People need good trade in values to afford a new car so that raises the price of used cars...the price goes up because supply issues.

 

I remember when a decent 5 year old car back in the early 1990s was around 1500 or so. I had family that start driving back about 10 years ago and a similar car was almost 5-7x times that price. 

yep...people are all applauding how they are fetching crazy money for their trade ins and yet complaining they are paying more for new vehicles...so, new vehicles are exempt from the same parameters apparently....

Link to comment
Share on other sites

4 hours ago, ibewlineman13 said:

Just drove past a dealership that had a new 450 parked out front. Out of curiosity, I stopped and checked it out. 2022 F450 XLT with cloth interior for a whopping $97k. Talk about a mark up!

you could always look for a used one and probably pay close to that for something with low mileage....THATS how crazy it is....

Edited by Deanh
Link to comment
Share on other sites

Recent study shows that Ford and especially Lincoln still get less than sticker price on average. Cadillac got the most over sticker...$4,000 on average. Guess this study didn't take note of Bronco, Maverick, Raptor, and Mach E. However, not that hard to buy Escape, Explorer, F150, Edge, and all Lincolns under sticker. And Ford Credit is offering low to 0% interest loans on many Ford products. 

  • Thanks 1
Link to comment
Share on other sites

The biggest issue with the ADM's is that there are going to be tons of lawsuits after this against dealers for bias. It is one of the reasons Ford and GM are actively trying to end and show they don't support the practice, they need to show they were not part of it as their defense when the racial/sex bias lawsuits start. As people will sue both the dealers as well as the manufactures when they can show group A were charged 15% over sticker vs 4% of group B which is bound to happen. Where manufactures come in is lawyers will use that it happened in many locations to show it was the manufactures were also liable for it, they have much deeper pockets than your local dealer. 

Smart dealers are registering cars and then just selling them as used; stops the issue from the pressure from the manufacture as it was purchased at MSRP or below price, then sold over sticker as a used vehicle with 500 miles on it. Used vehicles are harder to prove bias as the there is no MSRP or hard price point to compare it back too. 

 

Link to comment
Share on other sites

2 hours ago, FordBuyer said:

Recent study shows that Ford and especially Lincoln still get less than sticker price on average. Cadillac got the most over sticker...$4,000 on average. Guess this study didn't take note of Bronco, Maverick, Raptor, and Mach E. However, not that hard to buy Escape, Explorer, F150, Edge, and all Lincolns under sticker. And Ford Credit is offering low to 0% interest loans on many Ford products. 

and yet another survey stated 82 % of new car purchases were over MSRP...much like "Hillary in a landslide" don't believe everything you read...ESPECIALLY when it comes to Ford...for some reason it is THE Car brand the press LOVES bagging on....

Link to comment
Share on other sites

1 hour ago, jasonj80 said:

The biggest issue with the ADM's is that there are going to be tons of lawsuits after this against dealers for bias. It is one of the reasons Ford and GM are actively trying to end and show they don't support the practice, they need to show they were not part of it as their defense when the racial/sex bias lawsuits start. As people will sue both the dealers as well as the manufactures when they can show group A were charged 15% over sticker vs 4% of group B which is bound to happen. Where manufactures come in is lawyers will use that it happened in many locations to show it was the manufactures were also liable for it, they have much deeper pockets than your local dealer. 

Smart dealers are registering cars and then just selling them as used; stops the issue from the pressure from the manufacture as it was purchased at MSRP or below price, then sold over sticker as a used vehicle with 500 miles on it. Used vehicles are harder to prove bias as the there is no MSRP or hard price point to compare it back too. 

 

not so sure about that.....the S in MSRP stands for suggested...any Dealer can sell their inventory for whatever it deems...just like as the market changes Ford or GM can add or take away Rebates and subveened financing dependent on the Market . Car business is fascinating...its gone from Wholesale on Trade ins and Wholesale ( read ridiculous discounts and rebates ) on New vehicles to Retail and above on trade ins and Retail and above on New purchases. Whats ironic...and fully understandable given Human nature...is people are fine with getting gobs of cash on their turn in, but they don't want to reciprocate and pay more ona New Vehicle purchase....

Link to comment
Share on other sites

2 hours ago, FordBuyer said:

Recent study shows that Ford and especially Lincoln still get less than sticker price on average. Cadillac got the most over sticker...$4,000 on average. Guess this study didn't take note of Bronco, Maverick, Raptor, and Mach E. However, not that hard to buy Escape, Explorer, F150, Edge, and all Lincolns under sticker. And Ford Credit is offering low to 0% interest loans on many Ford products. 

may be location based....good luck getting below MSRP ( well...a "maybe" on Edges ) in So Cal...UNLESS theres $$$ being made in the back end... 

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...