Ford CEO Farley challenges dealers to cut EV cost to customers by $2,000

[Rfehl62]

https://www.autoblog.com/2022/09/09/ford-jim-farley-dealers-las-vegas-customer-ev-cost-cuts/

Ford's Farley will challenge dealers to cut EV cost to customers by $2,000
It needs to happen to stay competitive with Tesla, but some dealers may balk

September 9, 2022. DETROIT — Ford Motor Co Chief Executive Jim Farley will go to Las Vegas next week to roll the dice on a strategy to convince dealers to cut as much as $2,000 from the cost of delivering an electric vehicle to a customer.

Ford has told dealers that one key topic for the meetings will be a discussion of new agreements that would govern how dealers sell Ford's expanding lineup of electric vehicles.

Farley told analysts in July that Ford needs to cut $2,000 a vehicle out of selling and distribution costs to be competitive with Tesla Inc and other electric vehicle startups that sell directly to consumers without franchised dealers.

Full article:
https://www.autoblog.com/2022/09/09/ford-jim-farley-dealers-las-vegas-customer-ev-cost-cuts/

We have been on a low inventory model for over a year now. Have gone from a 90+ day supply to a 7 day supply with no signs of increase...

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[ShaggySS]

Perhaps you are aware that EV battery prices have increased for the first time in a decade, and in fact substantially so? Tesla has been raising prices every few months for a long time now, so it is not just Ford that is increasing prices to cover increasing battery costs. The cause is more demand than anticipated, and thus the raw materials are scarcer than needed - driving prices up. The law of supply and demand is sometimes inconvenient. The fact that we are also facing the steepest inflation in a long time should also be well known at this point.

I think you read too far into my response. I never once stated that Ford SHOULD NOT be raising prices. Just pointing out the fact that they significantly raised prices and are encouraging dealerships to cut costs. The cost of LIFE has increased. Dealership costs are also increasing because employee costs are increasing so I simply find it humorous that Ford is calling out dealerships.

 

[Blue highway]

Maybe he's firing his first shot toward selling direct. Something like: "Hey dealers, we need to save $2k on distribution. Help us solve the problem or we'll solve it by going direct to consumer".

sorta, he needs legislation changes to do this. Direct to consumer is not legal in most states. As I understand it, Tesla and other start ups legally transfer ownership to another entity to "skirt" the laws in most states. The difference here, is that Tesla doesn't have an established dealer model to object. Ford does.

 

[awp0]

sorta, he needs legislation changes to do this. Direct to consumer is not legal in most states. As I understand it, Tesla and other start ups legally transfer ownership to another entity to "skirt" the laws in most states. The difference here, is that Tesla doesn't have an established dealer model to object. Ford does.

Yeah, there are challenges for sure. But he's already committed to it publicly so I'd imagine he's beginning to work through the hurdles.

 

[CDanville]

https://www.autoblog.com/2022/09/09/ford-jim-farley-dealers-las-vegas-customer-ev-cost-cuts/

Ford's Farley will challenge dealers to cut EV cost to customers by $2,000
It needs to happen to stay competitive with Tesla, but some dealers may balk

September 9, 2022. DETROIT — Ford Motor Co Chief Executive Jim Farley will go to Las Vegas next week to roll the dice on a strategy to convince dealers to cut as much as $2,000 from the cost of delivering an electric vehicle to a customer.

Ford has told dealers that one key topic for the meetings will be a discussion of new agreements that would govern how dealers sell Ford's expanding lineup of electric vehicles.

Farley told analysts in July that Ford needs to cut $2,000 a vehicle out of selling and distribution costs to be competitive with Tesla Inc and other electric vehicle startups that sell directly to consumers without franchised dealers.

Full article:
https://www.autoblog.com/2022/09/09/ford-jim-farley-dealers-las-vegas-customer-ev-cost-cuts/

How about FORD challenge the dealers to treat the customers honestly?

 

[kennethjk]

FWIW, from a top down view of the industry, I agree with Farley on this.

Distribution and sales is high cost low value. To compete with direct sellers, costs have to come out because too many people are getting paid for little or no value add between when the car leaves the factory and when the buyer drives it away.

One of things I think will happen is that over the next decade, there will be a lot less dealers. Probably half will go away as we transition to EV's.

From a service standpoint, dealers can be a plus, but I don't need 12 within a 30 minute drive as is the case now.

I tend to agree with you on some areas but if you don’t need 12 dealers in 30 miles, someone does because people can’t get appointments when their car breaks down.

now if cars were perfect I would fully agree

 

[Xadion]

Dealers make money off of every car that drives off the lot... And have done so for years even when you got a few grand below invoice commonly.

To think MSRP sales are... 0... Is amusing

 

[EELinneman]

Call me crazy, but if Ford addressed the numerous warranty problems they have, perhaps that $2,000 wouldn't flow out of Ford's pockets to the dealer's service department.

 

[Haydn12]

Many of the dealers make you purchase things like window tinting, alarms, nitrogen in tires, etc adding over $1000 to the cost. They also push for expensive extended warranties. Maybe this is where he's trying to get them to save money on the out the door price.

 

[moparguy]

FWIW, from a top down view of the industry, I agree with Farley on this.

Distribution and sales is high cost low value. To compete with direct sellers, costs have to come out because too many people are getting paid for little or no value add between when the car leaves the factory and when the buyer drives it away.

One of things I think will happen is that over the next decade, there will be a lot less dealers. Probably half will go away as we transition to EV's.

From a service standpoint, dealers can be a plus, but I don't need 12 within a 30 minute drive as is the case now.

with 12 within a 30 minute drive, I had to wait a week for my car to get just an update, this for a car with low production numbers, they already had 8 in the line!

 

[timbop]

I tend to agree with you on some areas but if you don’t need 12 dealers in 30 miles, someone does because people can’t get appointments when their car breaks down.

now if cars were perfect I would fully agree

THIS.

Everybody wants to save a buck, but nobody thinks about service until later. The direct sales model cuts out a middleman, but the manufacturers are NOT going to pass on the savings to consumers. Tesla's direct sales model with very few service centers means that the Y and 3 are highly profitable for them, and Ford is squeezing the dealerships to try to stay on par price-wise with the Y.

 

[timbop]

with 12 within a 30 minute drive, I had to wait a week for my car to get just an update, this for a car with low production numbers, they already had 8 in the line!

Imagine how long it would have taken if there was only 1 dealer that was an hour away?

Clearly the dealerships aren't ready for these cars, but that will get much better as they gain experience. There's no cure if they all disappear.

 

[Blue highway]

with 12 within a 30 minute drive, I had to wait a week for my car to get just an update, this for a car with low production numbers, they already had 8 in the line!

Dealers aren't very good at MME software updates... they will get better, and with the gen 2 cars in a year or so, Ford will have learned some lessons on OTA and general SW updates as well. The one car a day rate of "fixing" software will be short lived because it costs too much.

Considering that the days of pushing cars to inventory is over, I suspect the economics are better for Ford if there are fewer larger dealers. (I'm sure these independent dealership see it differently)

 

[kennethjk]

THIS.

Everybody wants to save a buck, but nobody thinks about service until later. The direct sales model cuts out a middleman, but the manufacturers are NOT going to pass on the savings to consumers. Tesla's direct sales model with very few service centers means that the Y and 3 are highly profitable for them, and Ford is squeezing the dealerships to try to stay on par price-wise with the Y.

I understand.

I am not advocating one way or the other. I am willing to pay more for good service. I do have a 911 and nothing is cheap for that, even with an independent service entity. I was just responding to someone that said if there are too many dealers in a particular zone, maybe they aren’t needed. People here can’t get appointments, if that is the case then there aren’t enough employees or not enough dealerships or both.

I am a customer and want to be taken care of properly and promptly, meaning in a reasonable time frame. Dealerships have a place but they can be abusive and dismissive when they have a lock on things. Not all, my dealership has been great so no complaints from me but I and everyone else have seen some real shady ones out there. Some people want all dealership to be done away with.

I don’t know how Tesla deals with issues but I would much rather have my local dealer help me out as long as I am treated fairly. My friend has a Tesla that hasn’t needed much and he has been thrilled with their service, although this person doesn’t even know if he has Sirius radio in his car. I assume Tesla owns all of their service centers.

if cars were perfect we wouldn’t need any repair centers , dealerships could be avoided and Ford would make more and maybe they would make a better product, probably not and the shareholders would pocket the difference. Who knows. The negative of doing away with dealerships is the impact on local economy, that I would feel bad about.

 

[Logal727]

They just need to start offering buyouts to dealers who don't want to join the EV revolution, that's what GM has been doing and is going to start to do with Buick dealers as well. Don't wanna be part of it? Cool, we'll give you money to go away and do something else.

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