The new rules have been in the works for months and will be officially rolled out in September, with Ford CEO Jim Farley confirming that the rules will create radically different standards than those already in place. As expected, these rules have ruffled the feathers of the Ford dealer network, with some dealers saying Ford’s actions potentially threaten the traditional franchise model that has been the default sales channel for many decades.
Zero inventory and stronger online sales define a new era
A key part of Ford’s plans revolves around two major goals, with the company confirming that it not only wants dealerships to have no inventory, but all sales to be done online, the buildings themselves focusing more on service and repair. The idea of zero inventory is a shocking contradiction to what dealerships are known for with acres of glistening metal neatly lined up in rows for all visitors to see.
“I think our dealers can do that. But the standards are going to be brutal. They are going to be very different from today,” Mr Farley said at the time.
Farley’s comments came during Bernstein’s investor conference, but while Farley and Ford are confident their plan will go off without a hitch, dealerships are singing a very different tune. In interviews with the the wall street journal, several dealer representatives expressed concern about Farley’s recent statements and were quick to remind the publication that dealers play a key role in the broader buying experience. A few of them went further in their remarks and confirmed that their lawyers would defend them in court, pointing out that franchise laws in many states are practical and that Ford’s actions could go to court. against these laws.
Ford is trying to fix things
Ford noticed some of the pushback and began trying to work things out with its dealers, with Farley himself holding four-hour group meetings with more than 300 dealership owners to discuss the company’s plans. Those meetings would have boosted morale, but it also shows the figurative pickle Ford finds itself in when it comes to pleasing customers, dealers and investors.
The company is committed to complying with applicable franchise laws according to a statement from a Ford representative and it looks like we won’t see anything happen to the point of direct direct sales. Instead, it looks like Ford is trying to create a no-haggle environment where prices aren’t negotiated and instead are set by maintaining an engagement with a customer.
While Ford has pledged to roll out its plan in September, asking the dealership branch to quickly change formats after years of selling traditional franchises in a pre-pandemic era will not be an easy task, especially since it will force dealers to revamp key aspects of the sales process while offering processes and layoffs they might have taken for granted.
Carl Malek has been an automotive journalist for over 10 years. In addition to his specialization at Ford, he grew up in a house of General Motors and is very familiar with their products as well. Contact Carl on Twitter at @CarlMalek3on instagram and Facebook for automotive news to send news tips.
Image credit: Ford Motor Company