Ford is cracking down on folks who ship overseas. This is an internal memo sent to all dealers:
subj: New Vehicle Brokering and Retail C&I Standard Rules of Eligibility
PLEASE TAKE A MINUTE TO READ THIS COMMUNICATION COMPLETELY. I GET QUESTIONS FREQUENTLY ABOUT THIS. YOU NEED TO UNDERSTAND THE RAMIFICATIONS OF BROKERING TO YOUR FRANCHISE. ADDITIONALLY, IGNORANCE IS NOT A DEFENSE. DEALERS MUST ENSURE THE VEHICLE IS REGISTERED (NOT JUST TITLED) WITH THE STATE IN WHICH THE VEHICLE WAS REPORTED SOLD AND CONTRACTED.
SUMMARY
As we have previously communicated to all dealers, the Ford and Lincoln Sales and Service Agreements and the Ford Contest and Incentive Standard Rules of Eligibility require new vehicle sales transactions occur directly between an authorized dealership and the end user--a retail/fleet purchaser with no intent to resell.
COMPANY’S POSITION ON NEW VEHICLE BROKERING (INCLUDING UNAPPROVED EXPORTING)
Selling vehicles to “brokers” or “resellers”, companies or individuals for resale, compromises the integrity of our distribution system and can negatively impact the value of the Ford and Lincoln franchises. It is important we work together to eliminate this practice.
We have taken and will continue to take appropriate action with dealers to prevent new vehicle sales to brokers for resale. Actions include:
• Chargeback of all domestic retail and fleet incentives paid by Ford on sales to companies who resold the units or sales transactions not directly between an authorized dealership and the end user
• Immediate adjustment to dealership sales histories to exclude retail sales credit earned on sales to brokers/resellers
• Restriction of dealer allocations on units destined for delivery through independent distribution channels (reference Paragraph 2(c)(1) of the Sales and Service Agreement)
• Dealers known to sell vehicles to brokers/resellers will not be considered for additional Ford and/or Lincoln dealer points
• During periods of production shortages, dealers known to use or sell to brokers will not be considered for additional production (i.e., in addition to standard allocation)
• Elimination of drop-ship privileges for dealerships abusing this policy
• Disqualification from Company recognition programs such as President’s Award
• Cancellation of Fleet Identification Numbers (FINs) for accounts purchasing vehicles for resale, rather than use
• If Ford were to incur liability or expenses in a safety-related defect lawsuit avoidable if proper notice of the recall had been given, Ford could assert that liability against the selling dealer who knowingly provided incorrect information as to the end-user
• Additional actions, up to and including termination of dealer’s Sales and Service Agreement
RECOMMENDED LANGUAGE FOR BUYER’S ORDERS
One thing you can implement to help address the situation at your dealership, is to include the following paragraph in all purchase orders when the vehicle is ordered on behalf of a customer:
"If at any time the dealer determines that the customer does not intend to use the vehicle ordered for personal use or that the customer has engaged in or intends to engage in the resale of vehicles for profit, the dealer reserves the right to cancel this purchase order."
The following can be used on a buyer's order at time of new delivery when Ford Retail incentives are claimed:
"Ford Retail incentives are intended to be used for retail customers at the location as identified by the customer in this purchase agreement. It is agreed that the customer represents they are the end user, will register the vehicle with their state motor vehicle department and are not purchasing this vehicle with the intent to resell/export the vehicle. If there are any misrepresentations on behalf of the customer, the dealer has the right to seek repayment of any Ford retail incentives that are paid."
Inclusion of these paragraphs should provide the dealer with the flexibility to cancel purchase orders when it is discovered that the buyer is a broker. Of course, dealers should consult an attorney with regard to their dealership's practices and policies.
We ask that you advise your dealership personnel to proceed with caution in dealing with potential brokers/resellers. You must perform due diligence in establishing who the end user will be. We will continue to investigate those situations brought to our attention where "sale for resale" is found, and we will take appropriate action.
KEY PROVISIONS OF THE STANDARD RULES OF ELIGIBILITY
It is recommended that all dealers and sales personnel review the Standard Rules of Eligibility on a regular basis and take the online C&I training course (3360W- Located on the Web Based training menu from My Training on FMCDEALER.COM).
• Dealer must ensure the vehicle(s) is/are registered with the state in which the vehicle was reported sold and contracted.
• The vehicle must be sold/leased by the Dealership directly to an end user; and
• Delivery of the vehicle to an end user occurs by the selling Dealer or by an authorized Dealer of the same line make, at an authorized Dealership location or at the home or workplace of the end user; and
• Vehicle sale/lease and delivery to and end user is completed by an employee who:
o Is listed in STARS, and is able to demonstrate employment at the selling dealership (or at a dealer of the same line make for a courtesy delivery)
• For customer cash incentives, the end user must select a payment option and sign the Customer Cash Payment Authorization Form. This form must be retained in the Dealer’s file. Do not use a power of attorney in lieu of the actual customer signature. Dealership personnel cannot endorse the Customer Cash Payment Authorization Form for the customer.
In addition, the rules explicitly address issues relating to units that are exported from the US:
• Any vehicles sold, leased or delivered to a resident outside the United States is considered an Export Vehicle and subject to chargeback of all incentives.
o Vehicles sold to a non-USA Dealer are not eligible for USA retail incentives, except for vehicles sold by OSMC (Over Seas Military Corporation).
o Vehicles sold to export markets are not eligible for retail incentives in the United States.
o To be eligible for incentives, the sales transaction must be directly between the authorized Dealership and the end-user.
It is the dealer's responsibility to ensure they review the Standard Rules of Eligibility and meet all of the criteria outlined. In the event a dealer claims retail incentives for any sales not meeting the program rules and/or the Standard Rules of Eligibility, Ford retains the right to chargeback all incentives paid to the dealership for ineligible sales. In addition, the Company may take additional actions as outlined in the Ford Sales and Service Agreement; including but not limited to termination of the Ford Sales and Service Agreement.
ORDERING VEHICLES FOR SALE OUTSIDE THE UNITED STATES
Caution needs to be taken when ordering vehicles for sale outside the US. Each vehicle line is designed to meet the local market conditions for a specific set of countries around the world. Vehicles shipped to unapproved locations will:
• Not have a valid warranty
• Be more likely to experience specific failures caused by not being designed for the market
• Not have locally available repair parts or trained service personnel
• Increase the likelihood of customer dissatisfaction
• Work against corporate distribution strategies and the value of the various local dealer networks
Company policy may vary based on the law of the applicable export market. For Exporting questions, please contact Mike Berry at 313-594-4068 or
[email protected] .
SMART VINCENT CAN HELP
Ford Motor Company maintains a list of select companies or individuals that have purchased new Ford or Lincoln vehicles with new retail US incentives and then either exported or engaged in brokering of these vehicles after the sale. It is important to note this is not a comprehensive list, but rather one including companies brought to our attention.
While a customer has the right to sell a vehicle after they purchase it from a dealer, there are requirements as outlined in the Standard Rules of Eligibility that a dealer must meet to claim new retail incentives. Dealers should proceed with caution and ensure each customer meets the requirements as outlined in the Standard Rules of Eligibility.
To help dealers identify potential brokers and avoid incentives being reversed, dealers can utilize Smart VINCENT to determine if a customer/business is a potential broker.
• Enter customer/business name and zip code under the Customer Information section in Smart VINCENT
• If the customer/business has been identified as a broker, a message will appear at the top of the screen:
"This customer is not eligible for any incentives. If this is a leasing company, Standard Rules of Eligibility states you must report the vehicle sold in the name of the end user, not the leasing company. Please refer to Standard Rules for further information."
QUESTIONS
Please contact your Ford or Lincoln Sales Zone Manager/Regional Office with any questions.
Refer to Standard Eligibility Rules for Retail Programs for the complete rules regarding sales, delivery and incentive eligibility.
