Carbuzz: Ford Has A New Plan To Stop Dealer Markups

[sborsch]

This article talks about Ford’s slight increase in penalty for dealers NOT attaching a customer name to an order (apparently a way to ‘game’ the system) but it sends a clear message: If you “F” around with us, you will be punished.

Link: https://carbuzz.com/news/ford-has-a-new-plan-to-stop-dealer-markups

My take? Ford knows that their dealer network is an asset, but a shift to EVs means a dealer’s major profit center (service) is going to deteriorate over time.

As an example of the radically reduced need for maintenance on an EV, a guy in my neighborhood has a Tesla Model 3 and, because of braking regeneration all the time, still has 85% of his brake pads at 46,XXX miles on his car.

In addition, Ford also has to compete with the direct selling model employed by Tesla, Rivian and Lordstown now, but Apple and others to follow will go that selling route too. As such, it will be even harder for Ford to maximize profit when competing with direct selling models.

It would be damn tough to be a car dealer right now so I can kinda, sorta understand why they’re gouging customers with additional dealer markup, but the consumer in me would like them to cease to exist!

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[Neil4Real]

I think your line of thinking isn't completely accurate related to mark ups. ALL cars are getting marked up by almost every dealer, regardless of manufacturer. The lack of revenue from EVs due to service and lower margin, on at least the MME, is definitely real, but not why we're seeing the mark ups we are. It is purely a supply and demand issue and dealers are milking it all they can.

Once this wave is ridden and we finally get to some sort of stabilization, if that ever happens, then we'll see what dealers end up doing due to the lack of service revenue, if that really becomes an issue, since ICE cars will still need service for years to come.

 

[FarSide]

Ford has no control over its dealers. Has Ford actually done anything to withhold allocations to bad behaving dealers for playing around with the reservation list per their threats earlier in the year? I am not aware of Ford truly trying to curb ADM practices; I see MME's going for $97K and Lightenings advertised for well over $100K? Also, the only barking from Ford seems to be centered around the Lightening and not the MME. Dealers seem to almost be bragging about ADM and market upfits and adjustments. Its all B.S.

 

[voxel]

I've heard from my Ford dealer that allocations have been taken away if the buyer's name doesn't match the order name but wasn't sure of the metric (article says 70%). Now it's been bumped to 75% and no 120 day grace?

"The new policy says that 75% of cars ordered by dealers must be name-matched to a customer. Previously, the policy said that number had to be 70% of cars ordered. Ford is also closing a loophole. Previously, a provision allowed dealers a 120-day period from the order receipt date to the dealer delivery date, after which that 70% name-match policy was voided. Now, dealers will be held accountable for every violation of the name-match policy, regardless of circumstance."

 

[DennisD]

This article talks about Ford’s slight increase in penalty for dealers NOT attaching a customer name to an order (apparently a way to ‘game’ the system) but it sends a clear message: If you “F” around with us, you will be punished.

Link: https://carbuzz.com/news/ford-has-a-new-plan-to-stop-dealer-markups

My take? Ford knows that their dealer network is an asset, but a shift to EVs means a dealer’s major profit center (service) is going to deteriorate over time.

As an example of the radically reduced need for maintenance on an EV, a guy in my neighborhood has a Tesla Model 3 and, because of braking regeneration all the time, still has 85% of his brake pads at 46,XXX miles on his car.

In addition, Ford also has to compete with the direct selling model employed by Tesla, Rivian and Lordstown now, but Apple and others to follow will go that selling route too. As such, it will be even harder for Ford to maximize profit when competing with direct selling models.

It would be damn tough to be a car dealer right now so I can kinda, sorta understand why they’re gouging customers with additional dealer markup, but the consumer in me would like them to cease to exist!

If anyone feels sorry for the owners of the dealerships, I have some river front property to sell you.
Please see link below.


https://joinyaa.com/guides/january-...data from J.D. Power,signs on the dotted line.

I do however feel sorry for the sales staff and other support staff that will suffer any shortcomings in the future.

I do Driver's Education and I pick up the students from their homes. The Dealership's kids usually live in a multi-million dollar home and they are usually flush with more money than they know what to do with. One comes to mind, when picking up one of the dealer's son I noticed in a well established neighborhood that there was a brand new home. I asked the student if the lot was vacant? He replied that his dad tore down the existing home to build a more modern home. When I got home I looked up the house that he tore down. The Zillow estimate for the "old" home was north of 2.5 million. Yes, you heard correct, he tore down a 2.5 million dollar home because he could.

General Managers make deep in the 6 figures as well.

That is why if frustrates me to see these high ADM's. One is simply making the "cat fatter".

 

[AKgrampy]

The only reason there is ADM is because there are people willing to pay. If no one was willing then prices would drop. Many dealers were selling below MSRP two years ago. I also see several forum members who have sold their Mach’s for more than they paid for them (plus they get the tax credit) and no one complains about them. And rightfully so as they are selling at the current market price. The only thing that makes me angry are the dealers that are attempting to add ADM to orders where there was no ADM at the time the order was completed.

 

[bp99]

A major part of Ford's plan going forward is limiting unsold stock. None of this is to benefit the consumer. It's Ford shifting profits from dealers to Ford. None of this is relevant in today's market as the current supply chain and transportation issues are the primary reason for less supply than demand and thus higher prices from the dealers.

Once those things return to normal, Ford is looking at keeping inventory numbers low. That will mean no more discounts below MSRP due to excess inventory. It will also likely mean Ford will be able to adjust their MSRP pricing to be more fluid and to be able to raise MSRP when demand dictates. Consumers will be paying more on average, the entity getting the profit will just be different. It will also be harder to travel to dealers where a vehicle you desire is not desirable in that dealer's market to get a big discount as prices will be fixed.

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