Ford CEO Farley challenges dealers to cut EV cost to customers by $2,000

[PungoteagueDave]

Show me the production increase of $8500 for lariat. I don’t buy it.

invoice and msrp are identical. So again, why should the dealer take a hit?

Because Tesla's gross sales margins are 25%-30% every quarter, never below 15% for any quarter, and close to that only once (due to the temporary sale of the MS 45 for $39k). Ford can only dream... it's not like Tesla is being altruistic or doing customers a favor, unlike what their cult fanbois would have you believe - they are the most profitable car manufacturer in history, with Porsche a distant second. Bottom line is Ford needs a LOT of new capital to transition to full EV - factories, product sourcing, engineering, software. That comes out of profits. They need Apple and Tesla-liek profitability going forward, and right now, aren;t close. The model has to change. The dealer doesn't have much to squeeze, which is a good point. Tesla does it through premium pricing, not really an option in the mass market that Ford faces. In fact, Tesla may have a dose of reality in its future.

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[jazzmanmonty]

IMHO, I think Ford is regretting their new 10% dealer commission. Many companies did a lot of dumb things during the Covid era. Ford probably thought that giving the dealer a bigger cut will have them back off ADM and keep them from closing their doors. Now they are kicking themselves and trying to recoup some of that money with this new "idea."

I think the next few years are going to be very interesting. Ford wants to cut out dealers, yet keep dealerships open. They want to follow the Tesla model, but want to do a hybrid version. They want to protect the consumer but as we know in the forums, they have offered minimal help to combat ADM. Its like the perfect storm is brewing and nobody knows where it'll end up.

 

[p52Ranch]

I don't see where this $2000 is supposed to come from the dealers. Invoice price and MSRP are the same on Lightning and Mach-E.

My Lightning was the only order at my dealer. They hadn’t bothered to read the dealer playbook and wondered when we were doing paperwork why they only had $16 in profit on my Lightning.
I then proceeded to explain to them the details in the playbook and that they were making almost $6,000 on my Lightning as long as they met all of the objectives like selling to the order holder, etc.

 

[luebri]

Technology (the internet primarily) killed the intermediary. That's a good thing for the OEM and the consumer! The auto market and its often times state regulated mob like forced distributor selling agreements are in the cross hairs of capitalism. Man I love it when the free market scalps another shady relic business model of the past!!!

 

[cvalue13]

I then proceeded to explain to them the details in the playbook and that they were making almost $6,000 on my Lightning as long as they met all of the objectives like selling to the order holder, etc.

I’m late to this idea, can you expand or point towards more info on this?

separately I don’t understand why people are pointing to invoice equaling MSRP like that proves dealer’s margins: manufacturer-to-dealer incentives/holdback, backend charges in the F&I, finance reserve, trade-in rape, etc.

In my view, Ford’s saying “if y’all want to sell out EVs, you’re gonna have to stop being weasels and working your profits above the fold.”

 

[smax64]

How about, make it not profitable for dealers to sell, by raising internal price. Then tell the dealers they can just be delivery centers give them a smaller cut(for doing nothing) and make it a direct sale .. Farley is a genius, make the dealers not want to sell EVs and then go to legislation and say, "hey they don't want it, but we do(Ford)". I think at the end of the day, all dealerships need to understand that their days are numbered, I understand that there are laws on hand that protect them( for now) but because of their greed and refusal to adjust to current and future market needs, they are pushing themselves out and I think the manufacturers will capitalize on this very quickly.

Just my 2 cents

 

[luebri]

Technology (the internet primarily) killed the intermediary. That's a good thing for the OEM and the consumer! The auto market and its often times state regulated mob like forced distributor selling agreements are in the cross hairs of capitalism. Man I love it when the free market scalps another shady relic business model of the past!!!

Oh yea.. speaking of cross hairs. UAW and the Big 3... You got some real decision making to do. The big "Detroit 3" are playing with their hands tied behind their back as long as they play ball with UAW, which unfortunately I dont think at this point they can ever get away from. 2008 was their perfect storm opportunity to cut ties but unfortunately they would have never gotten their bailout from union loving administration at that time.

 

[GoodSam]

The article that talks about Ford weird Lightning dealer 10% commission available:
https://www.carsdirect.com/deals-articles/2022-ford-lightning-invoice-pricing-is-totally-weird

 

[F-150 Prius]

What percentage of the vehicle cost is the raw material going into the battery?

 

[SteelTerp87]

Show me the production increase of $8500 for lariat. I don’t buy it.

invoice and msrp are identical. So again, why should the dealer take a hit?

Because I initiated the order in my Lightning, I spec’d it online and clicked an “order button.” All the dealer did was, call to confirm what I had already confirmed when I clicked order, not provide any tangible updates during the process, sit with me for 2 hours to sign paperwork, “inspected”/washed my truck, and that was it. And then they get to walk away with $9k for what I would say is a total of 3 hours of work?

 

[RickLightning]

My Lightning was the only order at my dealer. They hadn’t bothered to read the dealer playbook and wondered when we were doing paperwork why they only had $16 in profit on my Lightning.
I then proceeded to explain to them the details in the playbook and that they were making almost $6,000 on my Lightning as long as they met all of the objectives like selling to the order holder, etc.

What a crappy business to not know that. GM should be embarrassed.

 

[p52Ranch]

I’m late to this idea, can you expand or point towards more info on this?

separately I don’t understand why people are pointing to invoice equaling MSRP like that proves dealer’s margins: manufacturer-to-dealer incentives/holdback, backend charges in the F&I, finance reserve, trade-in rape, etc.

In my view, Ford’s saying “if y’all want to sell out EVs, you’re gonna have to stop being weasels and working your profits above the fold.”

The Lightning Dealer Playbook got published on this forum briefly about 9 months ago. It has a since been removed.
It had all of the dealer profit info in it. Basically dealer cost (invoice) and MSRP were the same within a few dollars. Also why X-plan only saves you $16.
The Lightning profit was set at 10% of the MSRP of the vehicle. Achieving that 10% profit depended on meeting certain objectives. (E.g. customer satisfaction, selling to the original order holder, etc. ). I don’t remember them all but even if I did it would probably get edited out if I documented them.
Part of Ford’s new model for the EV business.

 

[p52Ranch]

What a crappy business to not know that. GM should be embarrassed.

I can’t complain. By them not reading the playbook or any of the other Lightning materials I got their one allocation. Had they been on top of everything Lightning, I’m sure they would have set up dealer priority on some other reservations. But since they didn’t, fastest clicker on a reservation won me the Lightning.

TLDR must also apply to Ford communications and some dealers.

 

[Pioneer74]

The Lightning Dealer Playbook got published on this forum briefly about 9 months ago. It has a since been removed.
It had all of the dealer profit info in it. Basically dealer cost (invoice) and MSRP were the same within a few dollars. Also why A-plan only saves you $16.
The Lightning profit was set at 10% of the MSRP of the vehicle. Achieving that 10% profit depended on meeting certain objectives. (E.g. customer satisfaction, selling to the original order holder, etc. ). I don’t remember them all but even if I did it would probably get edited out if I documented them.
Part of Ford’s new model for the EV business.

A-plan is more than $16. I belive you're referencing X-plan.

 

[ExCivilian]

The real question on my mind is how can a dealership employee (or owner) not have read the playbook? It sounds like it's possible, just didn't seem plausible to me.

When I spoke to the owner a few weeks back he was visibly pissed off at Ford and part of his agitation was that he wasn't making any money on my sale. At the time I just chalked it up to normal "we can't eat" shenanigans to which I normally respond with, "damn, I never know how you all keep your lights on since you only ever lose money every sale..." but this time I just played it as a, "well, I feel like an asshole referring three people to you..."

But now I'm wondering if that owner really didn't know he was going to make $8K off my delivery. Guess I'm going to call this week and see if he was just lying or really doesn't know. I never understood compulsive liars. I used to date one and it was bizarre to say the least.

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