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Ford CEO Farley Cracking Down on Dealer Markups

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39 minutes ago, silvrsvt said:


But that is the problem, Ford is too dependent on F-150 sales-spread this across the whole lineup and other lines like the Escape are more profitable because they don’t have incentives on them and they don’t have the same margins as more expensive products 

 

Don't know what to tell you - company wide that isn't true.  (This is coming from a Ford Finance Manager who's job is to consolidate/report this info.  He's one of my best friends and I've known him for 20 years.  We started at Ford together and worked next to each other for a couple years in the Marketing & Sales Division.)  Profits from vehicle sales is lower that it was a few years ago because the loss of profits from production volume is greater than what has been saved in incentives.  Are there some exceptions on a few specific vehicles?  Maybe...but overall they are down big.  

 

And my friend believes this most recent round of layoffs isn't to fund Electric vehicles, it's to help offset these losses from the lower production volumes.

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3 hours ago, silvrsvt said:

Given what has been going on for the past 30 months or so, production slow downs haven’t hurt the auto makers as much as incentives have in years past. 
 

There is going to be a mindset change with the buying public and ordering a car-would you rather buy what you exactly want at a set price and maybe get $1000 bucks back (like Ford has been doing with custom ordered products) with exact pricing within 60-90 days or deal with a dealership and possibly overbuy a car that you didn’t want even though it has a lot of incentives on it? 
 

I’ve been ordering my cars from Ford for almost the past 30 years this way, so this is appealing to me. 

I also like ordering exactly what I want but I don’t think most customers will have a mindset change. Given the opportunity most will buy something on the lot vs. waiting 8 weeks minimum on an order. Automakers that have stock available on dealers lots will take sales from those who don’t. They are claiming that they aren’t going back to the old way but how do you think Ford will react when the chip shortage is over and GM decides to try to take F150’s sales crown?

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35 minutes ago, Trader 10 said:

how do you think Ford will react when the chip shortage is over and GM decides to try to take F150’s sales crown?

 

I think that Ford will continue to emphasize sales quality over sales quantity, and GM will too.

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1 hour ago, silvrsvt said:


But that is the problem, Ford is too dependent on F-150 sales-spread this across the whole lineup and other lines like the Escape are more profitable because they don’t have incentives on them and they don’t have the same margins as more expensive products 


Bronco and NG Ranger are adding to that, and Explorer is the second or third most profitable nameplate in the company. It's not as imbalanced as it once was. 

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5 hours ago, Trader 10 said:

I also like ordering exactly what I want but I don’t think most customers will have a mindset change.

I'm trying to be a new Navigator customer, so can't speak for Ford / Lincoln customers, but I buy a new car every 2-3 years and haven't got one off the lot in 15 years - every one has been a factory order. 

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10 hours ago, fuzzymoomoo said:


Bronco and NG Ranger are adding to that, and Explorer is the second or third most profitable nameplate in the company. It's not as imbalanced as it once was. 

Right and that is my point-if F-150 where that important to Fords bottom line, we would

have seen bigger financial losses over the past 24 months or so due to the numbers being down. 

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11 hours ago, Trader 10 said:

I also like ordering exactly what I want but I don’t think most customers will have a mindset change. Given the opportunity most will buy something on the lot vs. waiting 8 weeks minimum on an order. Automakers that have stock available on dealers lots will take sales from those who don’t. They are claiming that they aren’t going back to the old way but how do you think Ford will react when the chip shortage is over and GM decides to try to take F150’s sales crown?


But yet again your exposing yourself to stupid dealer games when that happens and manufacturers will incentivize buying directly in some shape or form. I also think that the turn around time for ordering a product from the factory will drop because there will be less complicated products to buy from when it comes to options, much like how Honda does it with their products. 
 

I also don’t think we will totally have no stock on the lots either long term, but it won’t be nearly as much as what it was in the past. 
 

Plus the only thing that a manufacturer does by flooding the market with products is drop the price/profit of it. Remember the bad old days with GM dumping cars into rental fleets? Just take a look at the used car market over the past 10 years-used car values have skyrocketed due to lack of supply (overbuilding of cars) and more expensive new cars. 
 

When I first started driving you could get a decent car $1000 bucks-your lucky if you can touch anything less the five years old now for less then 10-15k

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25 minutes ago, silvrsvt said:

Right and that is my point-if F-150 where that important to Fords bottom line, we would

have seen bigger financial losses over the past 24 months or so due to the numbers being down. 

 

You can't just look at total bottom line from a couple years ago vs now and make the assumptions on that.   There are lots of things that can make it an apples to oranges comparison.  (Especially how companies account for taxes, depreciation, etc.)

 

What would be the proper analysis is looking at THIS YEAR's profitability at current production/incentive levels vs what it would have been with "normal" production.  Unfortunately none of us can do that as that is not public info.  But those I know inside the company will freely admit they would have done a lot better this year with normal production levels, even if incentive levels were the same as they were a few years ago.   

 

 

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1 hour ago, silvrsvt said:

Plus the only thing that a manufacturer does by flooding the market with products is drop the price/profit of it. Remember the bad old days with GM dumping cars into rental fleets?

 

Yes, though in the 2010 to 2020 (pre Covid-19 pandemic) timeframe Ford and Nissan were the worst offenders with fleet dumping. Both companies learned that sales quality > sales quantity and discontinued that profit eroding practice.

 

Those bad old days are over.

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1 hour ago, silvrsvt said:

But yet again your exposing yourself to stupid dealer games when that happens and manufacturers will incentivize buying directly in some shape or form. I also think that the turn around time for ordering a product from the factory will drop because there will be less complicated products to buy from when it comes to options, much like how Honda does it with their products. 
 

I also don’t think we will totally have no stock on the lots either long term, but it won’t be nearly as much as what it was in the past. 
 

Plus the only thing that a manufacturer does by flooding the market with products is drop the price/profit of it. Remember the bad old days with GM dumping cars into rental fleets? Just take a look at the used car market over the past 10 years-used car values have skyrocketed due to lack of supply (overbuilding of cars) and more expensive new cars. 
 

When I first started driving you could get a decent car $1000 bucks-your lucky if you can touch anything less the five years old now for less then 10-15k

 

Ford providing incentives to encourage retail factory orders helps but needs the additional support of substantially reduced and reliable OTD (Order to Delivery) times. Is it possible? Absolutely! For years, the average OTD was 4-6 weeks.

  • At the end of the 1986 Model Year, the Ford regional office called our Dealer Principal offering an additional 50 Thunderbirds if we could input the orders by the afternoon with a mix of Thunderbird models and options, and then provide the regional office with the order information. The vehicles were scheduled within hours, built and delivered to the dealership in exactly 3 weeks!

Ford needs to dramatically reduce the existing number of freestanding options and packages to simplify production, increase quality and improve supply chain performance, all of which will reduce costs, increase profits, simplify inventory management and improve customer satisfaction. 

  • Ford launched an "Inventory Reframing" structure which reduces the number of available options for Dealer Stock orders. Unfortunately, the reduced model and option availability is still more extensive than necessary. 

Dealer stock inventory started to improve in the past 30-60 days, primarily for Escape, Explorer and F-150. Inventory for all other vehicle lines is still minimal.       

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1 hour ago, rperez817 said:

 

Yes, though in the 2010 to 2020 (pre Covid-19 pandemic) timeframe Ford and Nissan were the worst offenders with fleet .

Oh boy he wants to bring this up again

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47 minutes ago, ice-capades said:

 

Ford providing incentives to encourage retail factory orders helps but needs the additional support of substantially reduced and reliable OTD (Order to Delivery) times. Is it possible? Absolutely! For years, the average OTD was 4-6 weeks.

  • At the end of the 1986 Model Year, the Ford regional office called our Dealer Principal offering an additional 50 Thunderbirds if we could input the orders by the afternoon with a mix of Thunderbird models and options, and then provide the regional office with the order information. The vehicles were scheduled within hours, built and delivered to the dealership in exactly 3 weeks!      


My memory is a bit fuzzy-but I seem

to recall it was at least a month or two for my parents to get their 1986 Escort GT and the 1989 Taurus wagon they had ordered. 
 

I ordered my first car in 1997 and got my 1998 Mustang GT in about a month, but there was a lot of behind the scenes work done with production manager at the plant my dad worked at with the plant the Mustang was built at to speed things up for me since I just got out of the Army at the time. 
 

I cant use my 2002 Focus SVT as an example because the launch was delayed a few months 

 

My 2006 Mustang GT took about three months at the height of its popularity-ordered in December and had it in March of the next year. 
 

My 2013 SHO took 2-3 months. 
 

my current Bronco is yet another shit show lol but that was 8 months the second time 😛

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28 minutes ago, silvrsvt said:

Oh boy he wants to bring this up again

 

You brought up the example of fleet dumping. In any case, "flooding the market with products" and using fleet as a relief for excessive production is dead and gone for all automakers in the U.S. 

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21 minutes ago, silvrsvt said:


My memory is a bit fuzzy-but I seem

to recall it was at least a month or two for my parents to get their 1986 Escort GT and the 1989 Taurus wagon they had ordered. 
 

I ordered my first car in 1997 and got my 1998 Mustang GT in about a month, but there was a lot of behind the scenes work done with production manager at the plant my dad worked at with the plant the Mustang was built at to speed things up for me since I just got out of the Army at the time. 
 

I cant use my 2002 Focus SVT as an example because the launch was delayed a few months 

 

My 2006 Mustang GT took about three months at the height of its popularity-ordered in December and had it in March of the next year. 
 

My 2013 SHO took 2-3 months. 
 

my current Bronco is yet another shit show lol but that was 8 months the second time 😛

 

At the end of the 1987 Model Year, I ordered 75 Taurus vehicles with the "B16" code which authorized Ford to schedule them above allocation. The B16 code was available for years and enabled dealerships to get extra inventory when available. As it turned out, all 75 Taurus orders were scheduled that night with consecutive VIN numbers. The OTD was about 5-6 weeks and all 75 vehicles arrived at the same time. I wish I had a photo of the 9 car carriers unloading at the same time in the shopping center across the street from the dealership. 

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1 hour ago, rperez817 said:

 

You brought up the example of fleet dumping. In any case, "flooding the market with products" and using fleet as a relief for excessive production is dead and gone for all automakers in the U.S. 

 

No my beef was you saying Ford was fleet

dumping-they are not. Selling product to commercial fleets and rental car companies are two different things. 

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Here is a good one local to me.  Only a $45,000 ADM.

Screenshot_20220805-142345_Chrome.jpg

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36 minutes ago, blwnsmoke said:

Here is a good one local to me.  Only a $45,000 ADM.

Screenshot_20220805-142345_Chrome.jpg

I get a kick out of the "No Dealer fees" claim.....

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31 minutes ago, coupe3w said:

I get a kick out of the "No Dealer fees" claim.....

 

Lol, it's silly with something like this but this dealer actually doesn't charge dealer/doc fees on any vehicle sale.  So yes, with an ADM, it's silly but when buying an ordinary vehicle, they don't add fees to the agreed upon purchase price.

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Just saw this on a youtube vid. It's called greedy capitalism and it's disgusting, disgraceful and shameful!

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55 minutes ago, Joe771476 said:

Just saw this on a youtube vid. It's called greedy capitalism and it's disgusting, disgraceful and shameful!

 

Federal Trade Commission is trying to crack down on some of the worst behavior by dealers. ice-capades posted info in the thread linked below.

 

 

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