Ford Dealers Must Pay $1.2 Million To Sell EVs + NON-Negotiable Pricing, Or Be Phased Out?
In a bold new strategy by Ford to retain its customer base and leap into the future of E-vehicles, its reigning in the let loose wild horses of its dealer network.. Literally!
Ford's new company strategy, due largely to losing its customers confidence by language commonly termed as "Stealerships" to refer towards it and other manufacture dealers, which many of us have all heard the claimed cliche before; "Have you been to the stealership?".
Ford customers are and have been calling and complaining 24/7 about car deals they have or will not accept. This has happened-that had happened, or "I put in an order for a car and the dealership is trying to get an extra $10k out of me upon delivery 10-months later", or they show up and it is just not the car they ordered exactly, etc.
With the increasing demand stated by Ford HQ of vehicles, more with regards to electric vehicles or EV's. Dealerships are marking up, adding addendums onto MSRP's, and or charging in excess for the highest bidder; or in some cases, the right credit application and a impulse buyer who just can't say no. That person is likely to be "put together like a 3-piece puzzle" and sold a car deal that falls under the description of a bad deal or a "pounder" deal, which in car sales is not always reflected by the weight of the money made in the deal.
In past Ford has said there is nothing they can do, at which point the customers often using all the leverage they have say; "Oh, well then I'm not going to be your customer anymore, buh-bye.." They walk and most will never return, only a few will have a salesman capable of re-wrapping the deal and giving in to the customer.
And whose taking those other customers in, consoling their poor Dealership experience(s)? If you said Tesla, you might actually be correct and on the same page as many customers seriously looking for just the best deal on an EV and wanting to be treated fairly doing so.
But Ford has now found a way to change that and to seems to have its goals set on competing with Tesla Inc.. Ford is taking immediate action starting with all the bad P.R. and given it's Ford dealers until October 31, 2022 to make the decisions of whether they are going to invest their own money into one of two certified EV tiers in order to take on Ford's Model A Business plan. Tier 1 will allow the dealers to be all inclusive and have access to the full range of EV vehicles being released. Tier 2 will allow dealers access to 3-4 of the EV vehicles as well as an opportunity to catch the second phase in 2027 to upgrade to Tier 1 status.
This all comes shortly after a massive overhaul on their myford vehicle ordering system this quarter in an effort to unclog the current vehicle plants from spending too much time on complicated or custom optioned out builds like the new Bronco, Mustang, and F-series trucks that are witnessing shortage of parts. These shortages are backing up assembly lines on more complicated builds and will now exchange for building the easier vehicles that are typical dealer allocations with popular packages and colors to get out more vehicles. It has been slated that many vehicles will not be available for ordering throughout the 2023 year and from the start of the last quarter, those builds will be pushed off into the 2023 year instead of 2022.
What does that mean for Ford Dealers?
Ford has given its dealers just 6 weeks to commit now on whether or not they will exist in 10 years which is by far the most jaw dropping ultimatum we have ever heard of. That is 3000 dealerships in the United States alone have to make a decision now, or in a few weeks that is, or not be a Ford Dealership in ten years. And whats to say once the manufacturing world catches on and sees the stirring buzz, or its implementation and follows suit to stay in step with the same bold move? We are going to see one of the worlds largest industries flip on it's head without a doubt.
Only those dealers that buy in will be authorized to sell EV's as of January 1st of 2024. Which again adds to the information about not being able to order any vehicles like the new Bronco and a couple others all throughout 2023 as they spend the necessary time with those easier build sheets we spoke about earlier.
Now we can already hear the commenters clicking mechanical keys already in rebuking whether this is legal or not.. so we planned ahead, because we know you all so well and with some Google-Fu that information is very easily found thanks to who else but again Tesla, whom has faced dealership disputes in several U.S. states as a result of local and State laws.
In the United States, direct manufacturer auto sales are prohibited in many states by franchise laws requiring that new cars be sold only by independent dealers. Dealers said state franchise laws could give dealers leverage to resist efforts by Ford to set fixed prices or fixed fees for delivering electric vehicles. Tesla maintains that, to properly explain to their customers the advantages their cars have over "traditional" vehicles with an internal combustion engine, they cannot rely on third-party dealerships to handle their sales.
And here it is; At least 17 states have laws on the books that expressly ban direct-sales, while at least 18 have laws that expressly allow for manufacturers to directly sell vehicles to consumers.
New Mexico (also bans service centers)
Alabama (also bans service centers)
South Carolina (also bans service centers)
Virginia (2 stores, approval for 3 more)
Ohio (3 store limit)
New Jersey (4 store limit)
Maryland (4 store limit)
Pennsylvania (5 store limit)
New York (5 store limit)
Georgia (5 store limit)
North Carolina (6 store limit)
New Hampshire (2013 law change)
Minnesota (2013 law interpretation)
Washington (2014 law)
Massachusetts (2014 court ruling)
Missouri (2017 court ruling)
Wyoming (2017 law change)
Arizona (2017 court ruling)
Indiana (2017 law change)
Rhode Island (2017 law interpretation)
Utah (2018 law change)
Michigan (2020 legal settlement)
Colorado (2020 law change)
Ford Motor Company is not about to sacrifice its end user base over some allegedly greedy dealerships. That is not an option for the large US domestic auto manufacture looking to be, or continue to be successful, and so the time to act is likely going to be during the quickening pace and transitions into electric vehicles. That is one of the hottest trending subjects in media from vehicle buyers to State and Federal governments right now.
Considering in recent weeks California just announced the banning of by the year 2035 the sale and you could say ownership of conventional gasoline automobiles, California dealers alone are likely going to be motivated to jump on board in order to stay open as new EV sales will edge out conventional gasoline engine based cars.
Ford has been very vocal about embracing the EV market in recent years. For those familiar or not, the Ford Fusion, C-Max, since 2010-2011 both available in Hybrid and EV platforms. More recently hybrids have been the new Mavrick (2022), Escape SE Hybrid/Plug-in (2022), Explorer Platinum (2022), the F-150 and its all EV twin brother the F150 Lighting (2022), and our least of favorites - The misinterpreted Mustang MACH-E. Ford has been involved over the last decade but it seems to have escalated things the last 12-18 months.
Ford knows its future is at stake, they also claim to agree that electric vehicles are the future and they know they also have to transition faster than they are into the EV market to make the widespread changes they need. As for the dealerships, we seem to agree with some sources that say Ford has more in store for them and some dealers are getting a bit worried on what they may be.
Whats does it all come down to?
Each dealership could have to pay over $1M each to sell electric Ford vehicles. That is going to translate to fast-tracking massive changes at every level, and some are probably not comfortable, if albeit known or suspected yet. The prediction is, you're going to see the (Ford) Dealership network traumatized like never before.
What could be that bad you might further ask? Some other politics internally may be at work. Ford has recently split its passenger vehicle business into two separate entities under the Blue-Oval brand back in March. Ford Blue Division - Combustion and hybrid vehicles, the added Ford Model e Division featuring EV and connectivity based vehicles, and the revamped Ford PRO commercial Fleet vehicles.
The uncomfortable presumption is Ford Blue is going to go bankrupt and Ford is going to let it, and before you go and say "Oliver,.. what part of left field did you pull that out of?" Think about it. They will let Ford Blue go bankrupt because they know its not worth anything anymore, its worth less than it is anyway, and then because then Ford has an excuse to let go of employees that already have no value to Ford.
They have already started doing it, Ford has already let go of 10,000 employees because they're not trained to work on electric vehicles. We certainly don't agree with that, we think some of those people may have been bought out, did not want to retrain, or just could not be retrained for the upcoming changes.
Ford has already witnessed once since its inception in 1903 an industrial revolution and two world wars in 1914 and 1941, and we are clearly in the HOV lane heading into the second industrial revolution like it or not now or within the next decade as new demand and government issuance go up.
Ford is basically telling their dealers you need to invest into this with your own money or you will cease to exist. So dealers will have a very short time to make that choice or not stay within the Ford family. James Farly has been keeping close watch on the monthly numbers in the Norwegian market. Here's where the numbers rest. Tesla has a reported 1,200 employees stretching across 21 locations in a country with just over 5.4-Million people in it. By Fords math, if Tesla were to scale that to United States population, Tesla would have a physical network of 1,200 dealers.
Ford clearly believes that it would have to expand its physical presence as it scales its operations. However, 1,200 dealers is a lot less than Fords current 3,000 dealers, here is what Ford is saying. 3,000 Dealers is too many and that they realistically do not need have of that; we only need maybe - 1,200 Dealers? Ford knows that there are some dealers who will not be staying within the Ford franchise brand and therefore will be weeded out and not be a part of Fords future. Fords challenge to dealers to match Tesla's lower selling costs are clearly stated.
In making that choice, "there are 5-NEW pillars to selling EV's; We're betting on the dealers, we're not going to go direct but we need to specialize, we do that with unique standards", says James Farley President, New Businesses, Technology & Strategy at Ford
Pillar.1 Training - specialized EV teams that are knowledgeable across in sales and in ownership. EV University to train dealers and subsequently customers in which Ford dealers will have to pay for these things themselves
Pillar.2 Charging - Back of house infrastructure to support sales, maintenance, and care. Public DC chargers available along with the Blue Oval Network. 96% of the US population lives within 20 miles of a Ford Dealership, 85% live within 10 miles but implementing fast chargers at dealers insure that customers always have somewhere to charge their EV and even if they don't have the ability to charge it at their own home
Pillar.3 e-COMM - Transparent NON-negotiable pricing at MSRP* (Ford claims they had saw online sales jump from 6% to just over 50% in just one year)
Pillar.4 Physical Experiences - Remote delivery is available to all Model e customers, pick-up and delivery offered with a loaner to sell all Model e customers
Pillar.5 Digital Experiences - Software and subscription opportunities available Ford-Pass perks**
Ford knows that if you have fast chargers at the dealerships, you are going to get walk in traffic whether that means new foot traffic for new cross-traffic purchases as always, either or, the theory rests on atmosphere and perceptions because when people see a dealership busy, it attracts other people. Most dealers have some form of cafe or coffee houses in them, parts departments and of course always service. The more people around the friendlier and exciting the environment is, it sells cars. I've seen it work in person at least a hundred times myself.
* MSRP, Dealers will not be able to mark up the MSRP, which means no more addendums on just the car itself. The MSRP pricing however may be more disappointing to the Dealers than buyers to remain competitive with Tesla by having fixed pricing. They may not be able to legally enforce that but at the same time if the dealers do not agree, Ford manufacturing is not going to give them the EV Vehicles if you do not sell them at fixed prices. Boiled down, the current dealers are reportedly wrecking the brand itself and ruining it for other dealerships. Ford has told dealers that one key topic for the future will be a discussion of new agreements that would govern how dealers sell Ford’s expanding lineup of electric vehicles.
However, in my experiences as a car salesman, this may not stop dealers from at least trying to add-on items such as trunk/bed mats, floor liners, wheel locks, window tinting, you get the picture, in order to extend accessories and personal options to help to increase the bottom line. The newer pricing Ford promises and claims to be fair and transparent will insure there are no hidden fees and added charges.
Any of you that may be familiar with Toyota's past (04-15) North American only Brand called (Toyota) Scion, had a similar program whereas the price was the price, announced and marketed competitively at MSRP, but then Scion offered a bespoke of adding self after market and OEM personalization based on general accessories through performance options to excite the customer and help out the sales people who generally are paid on commissions and or flats on vehicles. The only discounts on the vehicles were Toyota Employee A, Z plans, supplier plans, as well as the occasional incentives offered but the vehicles new were actually prized right.
There is not too many parts you can replace on an EV, many will likely be R&R based (remove & replace) for convenience and efficiency. How much do you think you can really make out of servicing an EV? And so between offering bespoke personalization attributes to your vehicle, subscriptions for features and audio offerings, the competitive pricing, there is not going to be a lot of markup in these vehicles. By the sounds of it, we may even see commission sales go away and just better hourly wages for product specialists.
** Subscriptions, Pillar 5 seemed to be pretty explanatory, they are going to find ways to offer convenience both to customers and production alike by doing what BMW and a few other companies are starting to do by offering you paid subscriptions from your audio system to whether or not the heated seats work. You want heated seats. No problem, instead of paying $450-600 for those to be added in or be bumped to the next trim package or cost level overall in your new vehicle choice. For $19 a month we can add a feature subscription to give you those. On the other hand if you did not want to pay for them, you won't. Which sounds great right? Does it?
As someone from the automotive industry and as a average consumer who has bought several Ford products in my lifetime, this one stands out to me as being part of the plot twist in economical and political values as unknowingly brought to the forefront as change, to you. Some of you may have heard of the phrase, “You’ll own nothing. And you’ll be happy” actually originates, verbatim, from the WEF’s “8 Predictions for the World in 2030,” which was published in 2016 and is still on the WEF Agenda blog and still at the time of this publication.
WEF Managing Director Adrian Monck recently claimed that the phrase “own nothing, be happy” had started life as a screenshot by an anonymous account on the image board 4chan, in an opinion piece written earlier in 2022. However, the phrase didn’t “start life as a screenshot” — it came directly from a video on the WEF’s own website and social media channels.
In his piece, Monck acknowledges the phrase’s origins, stating, “The story begins in 2016, with the publication of an opinion piece on the World Economic Forum’s Agenda website by Danish MP, Ida Auken, ‘Welcome to 2030: I own nothing, have no privacy, and life has never been better.’ It is the reference for a social media video entitled ‘8 Predictions for the World in 2030.'” So, in a way, the
WEF managing director was technically correct about the phrase being “culled from the internet” because that’s where the WEF published it — on the internet.
I bring this up because the Subscription Based Features is a part of that agenda. "Oliver, we came here to get away from politics and read about vehicle and manufacturing news, come on!" Yes, I know.. unfortunately though The Ford Foundation brings politics and changes to your life that are crafted through marketing to be a part of a thousand cuts, and they bring politics into their products to sell you on the ideologies they represent. See what I mean here, as the Ford Foundation is a part of the WEF (World Economic Forum) and they do a lot with the money Ford brings in from buyers like you and I.
How are you making the connection to this? Why are you making the connection to this? If you buy something, the most expected response is by most, you own it. But in this reality you don't. On a smaller scale, let me interject a thought to define this that you, yourself, can scale up and see whats happening here.
As someone in the digital world for many years I have certain tools to help perform my job as an amateur blogger and photographer. The last version of Photoshop I bought was Photoshop CS6 $699, w/Extended Version $999, [a Full Master Collection comes out to somewhere around $2,600 all prior to 2010-11]. And for it I received a disc set in a case and had something tangible in my hands to touch and feel, because it was now mine, like many others who purchased it, I just had my "Extended" copy. If I needed to move machines, add or remove features, was not online, and or my program went corrupt or befuddled, I could uninstall/reinstall it and happily get back to work.
Adobe in 2011 decided to cancel future marketed discs and developed and offered the now new digitally accessed through the online accessible Adobe Suite which offers all of the Adobe products like Illustrator, Photoshop, they have video editing and more, honestly its a great offer that again is by subscription to which I have access to.
The subscription package has Photoshop, Illustrator, Camera Raw, Media Encoder, and Premier Pro in it and if I recall, is a $48-56 monthly fee. Its been over 3 years, $48 x 40months is what? $1950.40 and if I stopped paying on it, I do not have a program, I have no disc to continue my work. I own n o t h i n g.. I merely have the benefit so long as I choose to continue to be in Adobe's pocket. In another 3 years, I could have bought my extended version 4x and had 4 disc copies to claim as my own.
"So what is the big deal Oliver, get to the point?!"
Imagine everything you use today, in your life as a subscription. You have that thought? Great, now imagine having to work, and more work in order to feed your needs of the things that you want but are owned by a few other people that you can never own. Do you remember what that is called? There are several cultures of people that do.
What separates a man, or woman from being a slave in life? Ownership, to be specific, ownership of property. All rights are derived from property, property is property in law, and if you have no rights to your personal self, you are someone else's property whether you know that or who it is exactly that makes claim of ownership, albeit a person, an organization, or a corporation - therefore you are a slave to them because you rely on them to supply you with benefits that you need or want.
Now this story is not about whether EV, hybrid, or conventional vehicles are better. To be honest, we here believe that all of these general descriptors of vehicle platforms have their purposes and roles in our daily lives and some of us have Hybrid vehicles, ('20 RAV4 AWD w/533 MPG-e thank you). It isn't about directing our opinions at or about The Ford Foundation being a major contributor to the WEF, despite being an unelected council of people seemingly self appointed in telling the world what the world is going to do despite hypocrisy in their own actions.
This article is not directly about personal property or to discourage you from paying for everything you want or need without ever having ownership or rights to said wants or needs. We here simply have a few outlying varying opinions here around the shop that we can correlate with the drastic fast-tracking of politics and current events that I tend to point out in my relevant articles. So far, freedom of speech is still protected.
Even here, I have my fans.
What do you think of this? We really would like to see some engagement on this topic as this is going to affect all of the people you see every day and you.
Raceway Ford - Photo
NYTIMES - Photo
Ford Corporate Office - Photo
FREEP - Photo
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