Ford CEO Jim Farley poses with a Ford F-150 Lightning pickup truck in Dearborn, Michigan May 19, 2021.
Rebecca Cook | Reuters
Ford Motor dealer Mark McAver was brought back when he heard about the automaker’s plans to split its electric vehicle business and legacy business as part of a restructuring led by CEO Jim Farley.
The owner of an Olathe Ford Lincoln near Kansas City, Kansas, heard the news around 6:30 a.m. CST last Wednesday and “called Detroit” for 15 minutes to try and figure out what was going on.
“When it was first announced, I was very puzzled,” said McAver. “I was going crazy before I shaved that day.”
But after talking to Ford officials since then, McAver, whose dealership specializes in commercial and fleet vehicles, is now excited about the plans.
“After talking to some people at Ford, I feel much better,” he said. “It’s all pretty inventive.”
Soothing fears from dealers like McEver are expected to be critical to Ford executives on Saturday during the company’s franchised dealer meeting at the National Automobile Dealers Association show in Las Vegas. The event attracts thousands of franchised dealers each year, including many of Ford’s approximately 3,100 retailers.
Farley caused a stir on Wall Street and the auto industry last week when he announced plans for a split. He called them “one of the biggest changes” in the history of the more than a century old company, including dealers “specializing” in certain vehicles.
Farley said some dealers, such as McEver, may specialize in vehicles, while others focus only on electric vehicles or sales to retail customers.
“We’re going to bet on a dealer franchise system,” Farley said. “It’s a different bet than I’ve heard from others. But we’re going to do it by asking them to specialize.”
“Better than Tesla”?
Farley’s plans are adding serious pressure and change for franchised dealers, which many Wall Street analysts see as negative for traditional automakers like Ford when it comes to electric vehicles. They argue that the system eats up car profits and could provide a more controversial experience compared to electric car and Tesla startups that own their stores and sell directly to consumers.
Those looking to sell electric vehicles may have to work in entirely new ways, including online ordering, the obligation to have no inventory and sell at transparent non-negotiable prices, as some dealers have taken advantage of high demand and low vehicle inventory to mark up. Prices.
“Over the next 60 days, we’re going to be talking to all of our dealers around the world and developing a meaningful set of standards for a new experience that’s better than Tesla,” Farley said.
Ford and other automakers are contractually required to sell through franchised dealers. Many states also have laws prohibiting the direct sale of automobiles by automakers to consumers.
Franchise dealers have struggled for decades to maintain the traditional sales system. Traditional automakers see dealers as partners that are especially important when it comes to vehicle maintenance and community participation.
big meeting
Ford will try to resolve any issues related to the announced plans at NADA’s meeting on Saturday, spokeswoman Debra Hotaling said.
“That’s why we do it. We are working very hard to talk to our dealers and listen to them,” she said, echoing Farley’s comments about working with dealers on these plans.
Changes can cost dealers millions of dollars in upgrades depending on their size. They could also force some individual dealers to sell to larger, sometimes publicly traded companies such as AutoNation and Lithia Motors.
Consolidation of dealer networks has become a major trend in recent years during difficult times during the coronavirus pandemic, with automakers pushing dealers to increase investment in electric vehicles.
Ryan LaFontaine, CEO and co-owner of Michigan’s LaFontaine Automotive Group, says he’s excited about electric vehicles but would like to know some more details about Ford’s plans and requirements.
“It’s a big change, but it’s going to be something we embrace and are excited about,” he said. “It makes sense, but we are still waiting as dealers to understand the full implications.”
La Fontaine said his company, which has three Ford dealerships and 26 other stores in Michigan, is doing its best when it comes to electric vehicles.
The company, which sold almost 44,000 vehicles last year, has already invested about $1 million to switch to electric vehicles. Its franchises range from Detroit automakers and Toyota to Volvo-backed electric vehicle startup Polestar.
“This is an all-in game. All manufacturers pretty much use their entire portfolio, whether today or in the near future, as electric vehicles,” he said. “If you don’t adapt, what you are really saying is that you are not going to move forward with Ford or believe in their vision. Not just Ford, all manufacturers.”