Ford - Direct Sales, NO Dealer Markups

One of the problem Jim Farley has specifically pointed out is that Ford is losing its relationship with customers through these predatory actions that dealerships use - and the Ford has no control over.

 

It doesn't matter what he said. He wants to keep dealer markups for himself. Raising prices rarely results in better competition.

There is no desire or need to buy out dealerships. They will abandon them and do what the third party warranty companies. The dealerships will find another brand or close.

 

Farley wants to LOWER prices. Today, dealerships control mark-ups, not Ford. The Ford EV pickup got markups of tens of K at various locations - something that is bad for Ford according to Farley.

Your last paragraph may well be the case. I don't know what dealership contracts look like. But, Tesla sells direct and they still have to have service centers and show rooms. So, the features of dealerships can't all just be ended.

This isn't just an issue for Ford, and dealerships form a significant and coordinated political and legal force.

 

I thought he didn't like the idea of dealers selling below MSRP. He should want that. If he wants to lower prices then he is on the right track. He would be able to sell to the public at current dealer prices and eliminate the expense of dealer relations and year end kickbacks. Thanks to the internet, it could work. If I were going to buy a used car at the moment I would use the internet. I buy everything but food, fuel and some clothing on the internet now.

I think they can. They can team up with independent repair shops in every market to handle the service and pay the bills for warranty work. Independent repair shops would be standing in line to get a contract. I think you can choose a car from photos and descriptions. Potential customers could call a company call center with questions.

It is happening in most industries. I see an assault on middlemen every day in our industry. As a dealer myself I hate the idea. As a consumer it makes perfect sense to me. I'm old enough that putting me out of business isn't the end of the world. As always, I will adapt.

 

He wants Ford to have control of pricing its product. Today, Ford doesn't have the right to sell direct to customers. When a dealership sells for more than MSRP, the dealership keeps the difference.

I don't know about used cars.

Good points! (Except putting you out of business isn't great by any measure, plus it's bad for others, too.)

I got interested as having new EV corporations getting to sell in one way while existing auto makers (who sell ICE and EV) are require to sell in a different way is not even slightly equitable.

 

I have buddy in the business "Salesman" Jeeps. The bulk of sales today "Post Covid" is factory order with a six month wait.. At most, he makes $300 bucks on sale, lil more on a used unit, no hourly pay, six day a week, twelve hours a day no benifits..

And he hates Carvana and all the other curbside folks

 

Of course he does. All businesses hate competition but improve themselves because of it.

 

Just to be square, you managed to make it look like I sad that.

But, that was a piece of what ButterBalls said.

 

Yes, this certainly is not about salesmen getting paid to much!!

 

Really?

I must have read the topic wrong

 

I was referring to the salesmen at a dealership, which I assumed was what you were mentioning.

The problem Ford has with its dealerships is deeper than that, as noted above.

 

I don't know how that happens. It happens to me from time to time as well.

 

You can make fun of me, but I have found such dealers. If you expect to get repeat business, you need to give good service.

I am not a fool. When I moved to Florida, I went to a dealer who figured I was stupid. He tried to get me to have my automatic transmission fluid changed every six months. He would bring in a little pallet with so-called "burnt fluid." It was all BS. I dropped him, and so did GM when they re-organized from their bankruptcy and dropped a lot of bad dealers.

I went to another dealer who was good until his father died. Then the business went to hell. The son took it to the wall in 6 months. I found another good dealer in the same town who picked up the Buick sales after the other guy went to pot.

Now I'm going to another dealer. because I moved up Cadillac, who has a string of dealerships all over Florida. He's not a saint, but he's got some good mechanics and supervisors.

You can laugh all you want, but cars are too complicated these days have some grease monkey work on them. Repair shops need all of the diagnostic tools and factory trained technicians.

 

And a large part of the added cost is the dealer and salesmans commissions! How are you dismissing something that fundamental to the topic and added cost of a vehicle?

 

I'm not disregarding that.

We'll have to see what Farley actually does, of course.

But, in his statements he shows willingness to include sales costs in MSRP - which is done to some extent today.

His statements have been more directed toward Ford having control over the price of his cars as sold to the public.

Today, dealerships can sell Fords for whatever they can get. That's a problem for Ford as it blocks Ford from using pricing as a marketing tool for the company.

Dealerships were tacking on tens of thousands to the price of Ford Lightening trucks, for example.