Farley: Ford is Going to 100% Online, Fixed-Price Sales For EVs

[RMoore]

I’m missing something. Why is this only for EVs? Seems like an artificial distinction. Is the idea that you have to start somewhere and if people are comparing to the Tesla experience then perhaps Ford should start with their EVs?

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[lprobinson]

For those who were concerned about reading about what Jim said and paywalls, you can watch the entire interview for free, just a prompt for name, email address, the normal stuff for investor things.

It's worth a watch. As a Tesla owner (and stock holder $TSLA), I have a lot of respect for Jim Farley. Class act.

https://kvgo.com/bernstein-2022-38th-annual-sdc/ford-motor-company-june

Ford provided a full transcript as well:
https://shareholder.ford.com/files/...th-Annual-Strategic-Decisions_June-1-2022.pdf

Thank you! The transcript is worth the read. I wasn’t fully aware of Fords fleet management / Etransit business. If Ford can successfully implement even half of Farley’s vision … the dealership discussion we’re having now is moot.

 

[buzznwood]

I’m missing something. Why is this only for EVs? Seems like an artificial distinction. Is the idea that you have to start somewhere and if people are comparing to the Tesla experience then perhaps Ford should start with their EVs?

A mentioned in the thread already the various franchise laws limit what can be done so if there is an established dealer network it becomes hard to make changes.

As new manufactures appear in the EV space they are starting from scratch so can get around these laws and offer a online sales experience more in keeping with how a lot of people are used to making other purchases.

By limiting it to EV Ford can if needed spin it off as a separate entity bypass various franchise laws and easily offer a similar sales purchase.

 

[Kabish]

The way I see it, the dealers did this themselves with their greedy ridiculous after dealer mark ups that they have been doing. Hopefully that money was worth the cost.

 

[ElectrikPony]

Does this mean the ford a and x plans no longer will save you money on an EV vehicle?

 

[KevinS]

The way I see it, the dealers did this themselves with their greedy ridiculous after dealer mark ups that they have been doing. Hopefully that money was worth the cost.

I feel exactly the same way. Ford's long-term reputation has taken a direct hit as the result of the experience people have had with their dealers, ether through buying or poorly informed service departments.

 

[Auto Motive]

Paywall so I can't read the article. Is he implying that the dealerships will be cut out of the equation? If so, he'd better start building thousands of service centers because those dealerships will be gone or will not service such vehicles.

Thousands of service centers? Review the maint. Schedule for the mach e for the first 100k. The only service maint. Is cabin filter, tire rotations, wiper blades, tires, battery coolant replacement, brakes. Of course not at the same time. Tesla has home visit techs for everything except brake service. Soon brakes will be covered. The future of dealers taking away our money is coming.

 

[Mach1E]

The plan should be:
Eliminate dealers from EV sales
Establish service centers dedicated to solely Model E lines, preferably Ford owned.

Except that there’s no money to be made doing that.

So just like appliance repair shops……. They’ll disappear.

 

[Mach1E]

And how is having a (greedy) man in the middle saving you money? The math simply doesn't work.

Outside of current supply chain limited high profit margins, look at the past profit margins that car dealers make on new car sales.

It’s minimal.

They take a very small slice of the pie, in order to make money on used car trade ins, service, financing and accessories.

And if you are even halfway decent at negotiations, you can get a better deal than the average person at a dealership.

Manufacturer direct will not necessarily save you any money.

This article is 10 years old, but explains how things used to be. They car new car sales “loss leaders.”

https://www.huffpost.com/entry/car-dealers-profits_n_1380136/amp

“Car dealers made an average of $23 for every new car they sold in 2011, according to the National Automobile Dealers Association…..,…

Dealers are celebrating that $23, because it's a huge swing from 2010 figures, when dealers lost $180 for every car they sold.
Turns out that new cars are essentially a loss leader for dealers, who make most of their money by fixing your car, selling you a warranty when you buy a new car, financing car loans, and used car sales. New car sales are the smallest part of the puzzle, something most dealers do only because the automakers insist.”

So the dealership is willing to sell new cars at a LOSS.

Do you think a manufacturer direct “store” would do the same? It still has to pay for the salesperson, building etc and show a PROFIT for shareholders! I would bet the profit margin (and price) manufacturer direct would be higher. Tesla for sure isn’t cheaper.

 

[heisnuts]

Personally, I will believe it when I see it. Farley also said Ford will crack down on dealers selling the cars over MSRP, and as we all know almost every Ford dealer is selling MMEs well above MSRP. It is a great sound bite, but I don’t see it actually going into place anytime in the next several years.

 

[GoGoGadgetMachE]

woo boy. My dissertation elsewhere on this site actually says some positive things about the dealership model, but it's hard to defend people who are trying so hard to make us hate them...

buckle up...

"Dealers" - no apostrophe. https://amzn.to/38QAF9m

The proposal, which I don't completely agree with but that's another thing, was to own a small number of demo vehicles for testing purposes. Given that after a certain amount of time those would be readily sold as used vehicles - hell, the relatively meaningless "Certified Pre-Owned" label could be thrown on them - it would be basically paying for depreciation, which has a tax benefit (in the US) as well. So, for all intents and purposes, it's not really a huge amount of money being talked about. This whole "floor plan" bit is noise as a result.

And laws never change, ever - they are carved in stone tablets brought from on high and placed in the town square - so I can see your point here.

Wait, I'm being told now that is not true, which is why there are states that Tesla now sells direct-to-consumer where it was, at one time, illegal, and it's not now. So I guess anything along the lines of "it's illegal today therefore proposing anything different is dumb" is... dumb.

And many of them are going under actually as time goes on, because modern cars are getting more and more complicated. Nobody is going to "backyard mechanic" an HVB replacement on a Mach-E.

Besides which, the basic premises here is odd. As I correctly said above, dealers have always said that they were there to protect the consumer, especially in post-sales situations. This means they already claim that service is why they exist. The idea that servicing cars is "not in their nature" goes completely against that. So, to repeat myself since I'm completely right here, either a dealership owner admits their entire industry has been full of crap for decades or they do what they say they are going to do.

This is a very strange argument that business owners make again and again, and it's always complete nonsense. "I spent money so I deserve to make a bunch of profit back forever and ever. How dare you try to stop me?" Lots of people spent lots of money on Blockbuster franchises, too. It's nobody's job to guarantee you a return on investment - not mine, not the government's, not another company's.

Let me say that one more time, because so many business owners need to hear it as a basic fact of life:

It's nobody's job to guarantee you a return on investment - not mine, not the government's, not another company's.

This is the first thing said in this whole "dealerships are necessary - no, really, I mean it!" argument that actually holds any water. But only to a point, because this argument assumes there are no other OEMs all fighting for the customer's business. The market is such that most people don't care who makes their car, as long as they get something they like at a price they think they can afford.

Now, if we go back to service for a second, this is where dealerships actually can add value (in theory - there's a wide spectrum on this out there today) over the Tesla model. Many who have been through the Tesla service wringer know that in general they fail miserably at this, and part of it is because the repair network is so small and so poorly managed. I know for a fact there are people reading this right now that can talk to this, but if they are smart, they won't, because unlike me, they won't want to wade into this mess of a thread.

... Versus the OEMs, who I guess have no other OEMs that are going to be hungry and competitive? This statement is completely illogical and doesn't hold up to the slightest bit of scrutiny, and it's insulting to all of us to even attempt it.

You think car dealers are friends of the consumer? You think that the salespeople and service people don't answer to anyone? That sounds like something someone out of their mind would say.

Also, this is "we're here to protect you, the consumer," which completely makes my earlier point, stated twice now on this very thread, about what dealers argue their whole reason to exist is.

Anyway, I hope your dealership is doing well, I guess. Nobody is owed a profit, but that doesn't necessarily mean I want them to fail, either.

 

[agoldman]

This is fine with me. I'm ready for all cars to be sold this way. So sick of ADM's and tacking on usless extra dealer options by default.

 

[yngwenli]

For those who were concerned about reading about what Jim said and paywalls, you can watch the entire interview for free, just a prompt for name, email address, the normal stuff for investor things.

It's worth a watch. As a Tesla owner (and stock holder $TSLA), I have a lot of respect for Jim Farley. Class act.

https://kvgo.com/bernstein-2022-38th-annual-sdc/ford-motor-company-june

Ford provided a full transcript as well:
https://shareholder.ford.com/files/...th-Annual-Strategic-Decisions_June-1-2022.pdf

The best part is Jim is realistic that they are playing catch up and unlike that Mary Barra comment thinking GM will beat everyone quickly without any new EVs yet outside of a burning Bolt, Jim has respect for Tesla/Musk to make Ford better.

I think in terms of Ford vs. Dealerships, I think the experience with dealers is just so bad now at this point that there is little risk it can be much worst. Maybe that's just my gut feeling, and Ford may raise prices, but there is still a full market out there and in 4-5 years, there will be more and more EVs to choose from to keep any car maker honest.

If the MME Premium was at say, $70k start just because Ford, as the manufacturer thinks it can raise prices, would I still buy it? No (this is assuming they make it more expensive than the MY due to the 7.5k tax credit).

The Model Y jumped from $50k > $63k and has a long waiting list, but no way I'm buying that. The MME Premium with state/fed credits can be had for ~$40k.

Porsche Macan EV is coming in 2023 and no clue on pricing, but Porsche should have the fed tax credit for a while. The ICE Macan starts at like ~$57k or so. Some project $80k for the Macan EV, but I think that's too high.

Competition between all the EVs is what will keep the car makers honest. Rivian R1S starts at $72.5k and they will get their tax credit for a long time.

 

[SigSauer]

When i picked up my Mach E, in april 2021, the salesman literally told the guy delivering me the car "he probably knows the car more than we do" and he wasn't joking or wrong about that. Ppl are getting wiser and information is much more accessible than before. The newer generations will be much more informed and will only visit the dealers for the showrooms.

When we ordered our MME are sale rep made a comment about not knowing much about DC fast chargers. I told him it was his lucky day because my wife is the Charging Queen of Ohio! She spent 30 minutes "educating" him of DC fast chargers. You are correct, back in August when we ordered, we "knew" more about the MME then he did.

 

[yngwenli]

I’m missing something. Why is this only for EVs? Seems like an artificial distinction. Is the idea that you have to start somewhere and if people are comparing to the Tesla experience then perhaps Ford should start with their EVs?

I think it's also supply issues. Outside of Tesla, there was very little supply of any other EVs out there. I don't think Ford wants to ever have thousands of cars sit on lots anymore. They like the model of a customer ordering a car, they build it, sell it instantly. There is little/no need for dealerships in that model and many people bought a MME without even a test drive (there was a poll here earlier).

Also, with talks/news reports of gas prices not going down anytime soon (we see $6-$7 in CA now), EVs will be a hot commodity for a while. There is talk of a 70s style gas shock coming and when you have solar/EV, you aren't worried at all about that.

Since dealerships know so little about EVs, the consumer is the one doing their research here, on youtube/videos, etc....Most EVs sorta sell themselves and you can bet a lot of cars salesmen weren't interested in pitching any EV since they make little/zero $$ on them.

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