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Ford Authority

Ford Dealers Will Likely Switch Over To New Business Model By 2023

Earlier this year, Ford announced that it would be splitting itself into two distinct entities – Model e, which will focus on EVs, and Ford Blue, which will handle the ICE side of things. At that same time, FoMoCo also noted that it will ask Ford dealers to specialize in one or the other, or even other parts of the automaker’s business such as Ford Pro, the dedicated commercial entity. The idea is to let dealers choose which business model suits them best, though at the time, the automaker did not specify when we might expect to see this change. However, CEO Jim Farley is now saying that Ford dealers will likely switch over to the company’s new business model very soon.

“We’re now deep into discussions with our dealer partners around the globe, but especially in North America, on brand new standards that are required to launch a completely different customer experience that is leaner and better for our customers that we believe will not only be competitive but superior to a solely direct model,” Farley told investors while speaking on Ford’s Q1 2022 earnings call. “We’re drafting standards as we speak and plan to roll these out this year.”

On the EV side of things, dealers will be tasked with executing a list of new standards that Farley previously said will make the buying experience better than Tesla’s. As Ford Authority reported last month, that will likely include selling EVs at fixed prices, carrying zero inventory, and operating in scaled-down facilities. Dealers will be allowed to opt-in if they wish to sell EVs alongside ICE-powered vehicles as well. It’s currently unclear how much such a move would cost dealers or what sort of requirements will be in place, though the automaker’s “next-generation” EV certification costs roughly $35,000. Ford will also be sending salespeople, technicians, and parts employees to its new “Electric University” EV training school.

Selling EVs at fixed prices is a critical move as markups continue to tarnish the brand’s image. Most recently, the automaker itself expressed frustration over dealers selling the 2022 Ford F-150 Lightning for over sticker price, though the vast majority are moving the new EV pickup at MSRP. Additionally, the automaker is looking to overhaul its dealer experience after ranking below average in J.D. Power’s 2022 U.S. Customer Service Index (CSI) Study and the 2022 Pied Piper PSI Internet Lead Effectiveness (ILE) Study.

We’ll have more on these changes soon, so be sure and subscribe to Ford Authority for continuous Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comments

  1. Michael

    Sounds like what Cadillac did with their dealers, either convert to EV or die, and as a way to reduce the total number of dealerships. This EV thing is great now, but wait until you see the job loses and plant, dealerships, business and gas stations closers and bankruptcies in the future. At the end of the day, there will end up being a net lose in jobs, GDP and investment.

    Reply
    1. Anthony

      Today, there is a Hellcat with a 20k over sticker markup. This is why I am looking forward to dealership free sales experience.

      Reply
      1. Jeff

        I spec’d out a Ford Maverick on their website and it came to about $31,000. When I started the checkout process I found out that the dealer was going to add 8 Grand to the price. I ended up buying a Hyundai

        Reply
    2. Witness

      It’s unlikely to ding GDP but it will reduce employment. That said, the pre-pandemic and present customer experience, has been awful. For decades now, car salespeople not only haven’t had much product knowledge, they haven’t very good knowledge bases to consult.

      Reply
      1. Geno

        Criticizing salespeople for lack of product knowledge while you lack basic grammar.

        Reply
        1. Matthew

          Seems fair. I need a salesperson to have product knowledge. I don’t need an internet commentator to have proficient grammar.

          Reply
  2. Greggt

    I can’t imagine any dealer in their right mind would choose to be solely an EV dealer!
    Foley need to quit having lunch with AOC and her Green Crowd and get back to business concentrating on quality and customer service!

    Reply
    1. Matt

      I suspect its about moving the EV profit from the dealer to the mother ship, so they can best compete with Tesla and other companies that don’t have an extra step of distribution in their path to the buyer. Plus, EV vehicles may have quite an impact on future service revenue for dealers.

      Reply
  3. Joe

    Glad we bought 2 ICE vehicles at X-plan for 2022 before the price increases for 2023. EVs are not going to take off like Farley thinks. The average Mach E owner has a payment of $829.00. Try getting the masses to eat that payment, feed their kids, heat their house and watch inflation continue.

    Reply
    1. P.R.Ford

      I think you’re severely math challenged.

      Reply
    2. Bc

      My superduty payment is much higher. I would love to have a 800 a month payment

      Reply
  4. David Dickinson

    If you have to pick one or the other, then who sells the hybrids?

    Reply
  5. David Dickinson

    Will this effect the dealerships ability to repair vehicles, or does it only effect sales? As a practical matter, do people with a Ford Extended Warranty get a rebate if their local Ford dealer chooses to go EV and thus takes away their local repair shop?

    Reply
    1. JDE

      If they want to compete with Tesla then there will not be dealer mechanics to work with, the service and repairs under warranty will happen on site at he customers house or business from a service van.

      Reply
      1. GreenNGold Cheesehead

        And heaven forbid there is a problem, no one local who really cares about your problem and helps you fight Ford’s “corporate policy”.

        Reply
  6. James cronin

    Is there any way to send Jim Farley? I would like to let him know how much I love my new raptor,and what a great job he is doing.

    Reply
  7. WorldCtzen

    It’s always interesting watching folks trying to project the present into the future because they can’t envision anything other than more of the same.
    Just because EVs cost $50k+ today doesn’t mean they will in the future. Battery prices are falling, and next year or two will see the introduction of <$30k models.
    Losing jobs from a bloated industry means more employees for the new industries that are emerging. Nobody's crying much over all the lost horse buggy making and manure shoveling jobs.
    Ya'll need to wrap your head around the fact that EVs mean that within 20 years, there won't be much need for more than one showroom and service center per city.

    Reply
    1. George S

      I cannot recall at anytime that the MSRP dropped. Once or twice I might have read a hundred bucks here or there, but it’s hard to believe as battery prices drop, so will the vehicle? Profits will sure go up. The new business model is manufacture on demand, no inventory at dealers, therefore, most sales incentives will also go away. Does Tesla have sales incentives? I know of one Tesla showroom inside a mall in Orlando Florida and no service department if ever needed. Rent is sure cheaper than keeping a multi million dollar dealership with a costly service department doing oil changes and warranty work.

      Reply
      1. Matthew

        “Costly service department”? Service is where dealers actually make their money.

        Reply
    2. GreenNGold Cheesehead

      They can build a new landfill on the old dealership site to process all of the toxic metals from the batteries that failed. They can build the junk yard next to it where the old Tesla and other EVs go when people won’t pay the replacement battery costs. One guy blew up his Tesla on YouTube because the battery replacement was $30k.

      Reply
  8. RICHARD E HERNES

    Bring back the Taurus. Straight ice no boost 5 liter.

    Reply
    1. P.R.Ford

      If they could sell them, they’d still be making them.

      Reply
  9. Xranger19

    Funny how so many who comment here are experts on the future of the automobile.

    Reply
  10. Jim Taylor

    Cars are getting to be a rich mans toy like the old days.After leaving my milion dollar house and getting into my 100000 dollar truck and paying my 500k student loan I wonder if I can afford a box of donuts for the kids.Lucky I have a line of credit.

    Reply
  11. Sb

    As we all plan for the future, Mr. Jim Farley should plan for tomorrow and not 50 years from now. Fords sales and service experience rating is directly related to Ford Motor Company’s inability to produce a quality product.
    He should not comment on charging over MSRP on one or two models.
    Farley and the consumer has no idea what it cost to operate a Dealership.
    The expense to satisfy a customer has tripled in the last 5 years. The amount of recalls, part shortages, rental car program changes, inventory costs, the lack of Training, the expense of warranty approvals, not to mention property taxes , health care , family leave act and the fixed costs of operating a facility that has been updated to Fords Standards several times in the last 20 years.
    Now, let’s talk about the ability to operate profitably.
    The newest and greatest E van. The dealers cost is approximately $300 more than the MSRP!!
    The Mach E cost is higher than MSRP.
    Ford selling aftermarket products directly to the consumer, cutting any and all profit margin out.
    Not to mention the small stuff like cutting technician repair times, limiting parts markup, name match, CSI, fixed right the first time and hundreds of other programs that have come and gone.
    In todays market conditions Ford is making more money per car than ever before.
    There are NO rebates or incentives to speak of. Consumers waiting years for a product that will have 3 recalls before they receive a call that there plates are in.
    Waiting months for the vehicle to be repaired.
    The dealership receiving 20, 21 and 22 model year vehicles on the same car carrier. Help explain that to the customer.
    With all this being said, good luck charging into the future !

    Reply
    1. Jeff d

      You are clearly in the business. You are 100% percent accurate in every word you wrote. The average “pissed off at every car dealership or salesman” comment on all these forums, is written by those with very little understanding of the whole picture.

      Reply
    2. Steve

      This is more accurate than most people realize

      Reply
  12. Byron s anderson

    I like the idea of ordering a vehicle with only what I want but I would never by a vehicle that i could not see, sit in, or test drive. How many times have you bought a vehicle that you liked but not so much after you drove it a while.

    Reply
    1. P.R.Ford

      Back in the 1970s, when I bought my first new car, the dealership had some stock, but mostly had demonstrator models for the customer to drive, then we went inside and ordered the car I wanted, equipped the way I wanted. I think it took about 6 weeks to be delivered. That said, even today, my local Ford dealer let’s me drive a vehicle for a day or two to be sure it meets my needs. I guess it helps I’ve bought about 20 vehicles from this same dealership over the past 30 years and have dealt with the same person, who is now the GM, promoted up from salesman back then. They’ve even prepped and delivered the vehicle to my house on occasion, after I signed the paperwork a day or two before.

      Reply
  13. CurtNorth

    Everyone knows the worst part of buying a new car/truck is having the interact with the dealership. Yes, we need their service folks and facilities, but if all car salesmen were replaced by an online purchase experience, wouldn’t we all be better off?

    Also, EVs (despite the hype) are still only around 5% of sales, we have many years left with the humble and fairly reliable gas engine. I say that as an EV owner, mine makes a great commuter car but for long road trips or hauling anything I’m jumping into my ICE truck.

    Reply
    1. P.R.Ford

      I always have a great experience with my local Ford dealership. I realize its probably not norm, but its part of the reason I’m brand loyal….. that and my last name being Ford, though I joke I must have come from the black sheep side of the family. Funny thing though, my dad retired from GM.

      Reply
    2. Sean

      We say the worst part of the car buying experience is the dealership. Let’s think back just 3 years ago when not one customer would ever dream of paying M.S.R.P. As a consumer you always want to pay the lowest you can. So we would get a customer who demanded us to match the price of X dealer of 10k off or whatever. There no talk of MSRP. The harsh reality is market based pricing. Had the norm been MSRP from 3 years ago we would not be in the situation we are in now. As far as the dealership experience when you have issues with the vehicle who do you call? Would you call Ford direct? This is the issue that Tesla is having. Sell all the cars to the consumer at retail may i add oh and if it breaks they can travel as far as 500 miles and wait 4 months to get it serviced. I agree the dealership experience could use some work however you would not believe what expenses are associated with every customer that walks in the door. Even when you deliver great service and do what you thought was everything you can to help the customer you are still the bad guy. I think there is a need for both the dealership and obviously the consumer. There just needs to be a more streamline process with a margin that could provide the best outcome for both sides. Instead of driving 300 miles to save $100 maybe spend the extra money where you know when you call they will pick up and take care of you. I understand not all dealerships are like this but you’d be surprised how many are.

      Reply
  14. Erik Szpyra

    Way too late, Tesla came in and proved all the US automakers wrong about their views of electric vehicles and their stock is around $900. Ford Stock has not been above $35 in 40 years.

    Reply
    1. Matt

      Tesla’s enterprise value is $924B. Ford’s is $147B. Its not quite as stark as just share prices.

      As additional context, over the last twelve months Ford generated $4B of free cash flow on $135B in sales, and Tesla $7B on $62B in sales.

      Why would anyone invest money in Ford over Tesla?

      Ford gets this and needs to free its EV business from the legacy business so it can show the same or better profile, and I suspect will spin it out as a separate company and let the legacy business become less and less relevant over time.

      Reply
  15. Every time I interact with a Ford dealer it’s a horrible time. Heck one time a Ford dealer said I should but a corvette! No product knowledge- They almost know the color the car is and thats it. I asked if a certain motor is dual injection and it took weeks to get the wrong answer. The product sells itself and the airheads in the office are just there to shuffle paperwork and add middleman fees. Say what you will about Tesla but they are doing it right in that regards.

    Reply
    1. Sean

      If you own a Tesla and needed service you would not feel as if they have it right.

      Reply
    2. SRW

      Could you not just look up you question regarding dual injection yourself online ?

      Reply
  16. Dmenace

    As for the commentary on lack of product knowledge…
    Ford and everyone else these days require certification to sell their product. Several hours of study and tests on each model.
    Product knowledge is there, maybe you aren’t listening.

    Reply
  17. Ron

    Agree with the comments on finding the “right” dealer, I drove from North Florida to North Carolina to buy my last F150 at an agreed upon fixed price via email – saved $5K over Florida Ford’s best case prices. My guess – California and NYC will be very happy with Ford EV’s and Tesla’s EV “first to market” will begin to fade with the options by Ford, GM, VW….. Owner of 2 F150’s, never see my self going EV.

    Reply
  18. Ell Dee

    Seeing comments about profitability of Tesla vs Ford. Remember Tesla makes money from emissions penalty payments from other mfrs including Ford. Since Tesla sells only EV s they have excess credits to sell to other OEM s selling ice cars. Profitability measures are not apples vs apples

    Reply
  19. Bill

    The lack of customer service is directly related to service. Ford started producing vehicles with significant quality concerns, and their solution to lost profits was cutting the labor times for their technicians. Most of us who aren’t near retirement, and are good at what we do, left the dealer world. This has lead to a drastic reduction in their quality rankings since the middle part of 2017! Even prior to that, they made a change aimed at better quality, albeit misguided, creating an unintended consequence. In 2016, they implemented “Tech Based Competency”. On paper, this is good. It means only a trained, certified tech will work on your warranty concern. Warranty repairs pay 40% less and take the same amount of time for the technician. In effect, their best techs got a 40% pay cut – and 100% warranty work, while the dealer enhanced profits on customer pay work by having lower level guys with no training doing that work. The time cuts starting in mid 2017 were more the straw that broke the camel’s back!

    New CEO – no change in policy to revert back to a fair system. Continued decline in quality that they seem to think can be fixed by improving the sales experience…

    Correctly identifying the source of the problem/failure is the first step!

    Reply
  20. Thug peterson

    I cannot wait to see the lines at charging stations from these fools that buy into this EV nonsense. Hey, let’s wait overnight at a gas station so I can charge my go-cart. People are so naive. EV, the answer to a problem that does not exist

    Reply
  21. Malvern

    Sounds like Ford is trying to create a cash cow for themselves while avoiding lawsuits from existing dealerships and eliminating those nasty, expensive, commission salespeople. Might work… until someone else sells more cars doing it the old fashioned way.

    Reply
  22. RGSwan

    When everybody drives EV cars, the wait for a recharge station to accept a near dead vehicle will be hours and hours.
    This the customer won’t be happy.

    Reply
  23. Ken T

    Have been with Ford trucks since 1978. My best friend,brother,two others. We are loosing the blue in our oval. High prices,additional mounting charges,now subscription to what should be what was ordered. Guess you won’t miss us. But it seems we won’t be missing you. Oh yes all our friends are watching us. The path Ford is on will not have past loyal customers if this continues.

    Reply
  24. Dude

    It’s crazy how many people don’t see the issue of what will happen with the dead batteries. Lithium ion batteries aren’t really easily just trashed.

    Reply

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