Ford CEO Farley Says Dealers Who Gouge Could Get Fewer Vehicles

[CoronaRaptor]

That shift has already been happening over the years. Friends n family in auto service say they've been busier than ever and get a lot of comments from those customers to the effect $tealerships are WAY too expensive. These days the expense might be worth it if it were not for the ever dwindling quality of the service at those prices.

Oh I totally agree with what you are saying, I was referring to warranty work, recalls, etc. The more incompetence I experience and see from dealers, the more I am trying to work on my vehicles myself. I have a race shop in Kelowna that I use for service on my stang, where if I needed to, would take the Raptor in, but havent had to out source it yet. It's not so much the money spent, it's the lack of service and having to deal with nimcopoops and liars constantly that deters me. That's another reason why this forum is so helpful to those that lack mechanical aptitude or knowledge.

 

[melvimbe]

Oh I totally agree with what you are saying, I was referring to warranty work, recalls, etc. The more incompetence I experience and see from dealers, the more I am trying to work on my vehicles myself. I have a race shop in Kelowna that I use for service on my stang, where if I needed to, would take the Raptor in, but havent had to out source it yet. It's not so much the money spent, it's the lack of service and having to deal with nimcopoops and liars constantly that deters me. That's another reason why this forum is so helpful to those that lack mechanical aptitude or knowledge.

I keep hearing that dealership make the majority of their profits from service. So it stands to reason that some dealership might just opt to drop sales altogether and just be a ford certified service location, or something like that. That's said, I think the problem you would run into is people feel more comfortable with taking the vehicle back to the location they bought it from when it needs service. So in that regard, dealerships need the sales business in order to establish a relationship with customers for service.

If there were no dealers though, then it probably wouldn't be a problem. It becomes sort of a chicken or egg thing. These places don't need new vehicle sales for profit, but being the only dealer that doesn't sell vehicles will hurt the service business. It's almost like they would be secretly happy if Ford ended dealer sales. There isn't really a good way to transition from sales/service to just service.

I think Ford can start a slow transition though. For the higher end vehicles, don't give out dealer allocations. If a dealer can get a customer commitment, then they get in line for a vehicle, a reservation if you will. Or, customers get the reservation from Ford first, then pick your dealer to facilitate the deal. Dealers can still keep 'peasant vehicles' in stock for the vehicles they wouldn't get ADM for anyway. You can get it to the point where a dealer is for service, used cars, and facilitate purchase of new cars (maybe test drive only). Practically become more like a drop ship retailer than anything else. Dealer still gets a cut of the profit, but they become much less of a barrier between Ford and customers.

 

[CoronaRaptor]

I keep hearing that dealership make the majority of their profits from service. So it stands to reason that some dealership might just opt to drop sales altogether and just be a ford certified service location, or something like that. That's said, I think the problem you would run into is people feel more comfortable with taking the vehicle back to the location they bought it from when it needs service. So in that regard, dealerships need the sales business in order to establish a relationship with customers for service.

If there were no dealers though, then it probably wouldn't be a problem. It becomes sort of a chicken or egg thing. These places don't need new vehicle sales for profit, but being the only dealer that doesn't sell vehicles will hurt the service business. It's almost like they would be secretly happy if Ford ended dealer sales. There isn't really a good way to transition from sales/service to just service.

I think Ford can start a slow transition though. For the higher end vehicles, don't give out dealer allocations. If a dealer can get a customer commitment, then they get in line for a vehicle, a reservation if you will. Or, customers get the reservation from Ford first, then pick your dealer to facilitate the deal. Dealers can still keep 'peasant vehicles' in stock for the vehicles they wouldn't get ADM for anyway. You can get it to the point where a dealer is for service, used cars, and facilitate purchase of new cars (maybe test drive only). Practically become more like a drop ship retailer than anything else. Dealer still gets a cut of the profit, but they become much less of a barrier between Ford and customers.

Well a couple things to ponder with your statements, lol. 1) If the dealers were only making profit from servicing vehicles, why are they so flashy and in prime real estate all the time. 2) Where would all of those toothless salesman go to work? At least when I go to a dealer I expect to see them there and know how to avoid them, if they started working at Starbucks and wanted to upsell me on an extra shot of espresso or whip cream at the drive thru window, the only escape is to drive over the curb with my freshly tire shined wheels without my coffee and a dull spot on my tire where it rubbed on the curb. No bueno!!

 

[Muchmore]

He doesn't mean it. Some of the largest dealers are the ones gouging the most. Ford wont withhold vehicles from their most profitable dealers. He is probably just saying that to try and look good in the public eye.

Right now every vehicle Ford makes is sold almost immediately. It doesn't matter which dealership it goes to they are all being sold extremely fast. The days of Stealerships being sales leaders and getting preferential treatment are gone. The vehicle is going to sell no matter where it is shipped. I hear what you are sayin' but Ford is in a great position right now to punish those low lives that have been gouging auto sales. We ticket companies that take advantage of people in times of national disaster, well, with Covid shrinking our chip supply I think we call this a national disaster and start ticketing people that try to gouge.

(I realize a new car purchase is not a necessity like water or food but it's still a good thought)

 

[funkified]

I keep hearing that dealership make the majority of their profits from service. So it stands to reason that some dealership might just opt to drop sales altogether and just be a ford certified service location, or something like that. That's said, I think the problem you would run into is people feel more comfortable with taking the vehicle back to the location they bought it from when it needs service. So in that regard, dealerships need the sales business in order to establish a relationship with customers for service.

i think this holds true, while not immediately as it comes from the long term service of the vehicle. You're right in that most people will go back to the dealer they bought from, assuming they had a good buying experience. Otherwise, they'll take it else where as there are no shortage of dealers to go to in most cities.

Obviously, the different depts of a dealer all have to be profitable. In the pre-shortage/pre-covid times, it wouldnt be uncommon to take a skinny deal on the front end sale of the vehicle only to make more money in the back end and it averages out. People are always quick to talk about the sales guy/manager and how they suck, but really its the finance people that do the most damage at the end of the day. The warranties, the protection packs, life insurance, disability, PPF, service add ons etc....thats where the money is.

 

[CoronaRaptor]

i think this holds true, while not immediately as it comes from the long term service of the vehicle. You're right in that most people will go back to the dealer they bought from, assuming they had a good buying experience. Otherwise, they'll take it else where as there are no shortage of dealers to go to in most cities.

Obviously, the different depts of a dealer all have to be profitable. In the pre-shortage/pre-covid times, it wouldnt be uncommon to take a skinny deal on the front end sale of the vehicle only to make more money in the back end and it averages out. People are always quick to talk about the sales guy/manager and how they suck, but really its the finance people that do the most damage at the end of the day. The warranties, the protection packs, life insurance, disability, PPF, service add ons etc....thats where the money is.

You're right about the finance dept, just about every single person on the planet has been dry ra ped by them at least once, not realizing what they were signing, paying way too much interest and garbage add ons. I really hate those life lessons, but you learn fast and hopefully remember who fuc ked you over.

 

[funkified]

You're right about the finance dept, just about every single person on the planet has been dry ra ped by them at least once, not realizing what they were signing, paying way too much interest and garbage add ons. I really hate those life lessons, but you learn fast and hopefully remember who fuc ked you over.

ya they prey on fear and long term security of buyers. Worst part is just sitting through their spiels even if you know you dont want it. Lesson is, know what you want to get before you get in there. Some of that stuff can have value for sure if you haggle the prices down 30-40% lol. Most just dont prepare for it because the sales process was so painful.

 

[melvimbe]

Well a couple things to ponder with your statements, lol. 1) If the dealers were only making profit from servicing vehicles, why are they so flashy and in prime real estate all the time.

That's one of the points I was getting to. People tend to bring the car in for service at the dealer they bought it from. The sales business drives the service business.

2) Where would all of those toothless salesman go to work? At least when I go to a dealer I expect to see them there and know how to avoid them, if they started working at Starbucks and wanted to upsell me on an extra shot of espresso or whip cream at the drive thru window, the only escape is to drive over the curb with my freshly tire shined wheels without my coffee and a dull spot on my tire where it rubbed on the curb. No bueno!!

I don't see the folks with Women's studies degrees accepting former car salesmen into their ranks without a fight.

 

[Broken Wrench]

You're right about the finance dept, just about every single person on the planet has been dry ra ped by them at least once, not realizing what they were signing, paying way too much interest and garbage add ons. I really hate those life lessons, but you learn fast and hopefully remember who fuc ked you over.

So true, years ago when I was young & naive, I bought a used ranger from a Toyota dealer. The loan they got me (I had good credit) turned out to be a rule of 78 loan type where they get all the interest up front, it does not matter if you pay it off early or not.
So, I learned some valuable lessons,
1. Always read what you are signing,
2. Never trust a Dealers Finance person
3. Never buy a Toyota (yup, I blamed the mfg. since that dealer represents them as far as I'm concerned.) Never bought a Toyota, won't even look at them, I guess I'm a spiteful SOB when it comes to getting screwed...

 

[Txrunner]

What do they consider gouging? 10K adm? 15K? 25K?

I think we're going to see a seismic shift in the dealer model soon as soon as Ford can figure out how to make it work.

They would need to start another company for direct sales I think.