Transition to EV, why Ford/GM still need dealers to sell the trucks?

[Kev12345]

reading comprehension.
Cash deal so no warranty purchase as usual. No adds as I said. You aren’t going to the dealer for service and deals aren’t made based off of that regardless. Pre-Covid many dealers will show a negative front end gross only to make a positive deal with holdback/d&h/etc.

But you’re sitting on your armchair, so you already know this.

Nice try though

And what percentage of your dealerships sales were cash, no trade in or add on’s. I’m willing to bet less than 5%.

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[SCandTC]

So money earned from holdback does not count toward profit? Short answer: dealers who don't sell cars for a profit don't exist for long.

Where was that stated?

 

[SCandTC]

And what percentage of your dealerships sales were cash, no trade in or add on’s. I’m willing to bet less than 5%.

20-33% depending on month. Will vary on region and demographics.

 

[Kev12345]

20-33% depending on month. Will vary on region and demographics.

I don’t believe that for a second.

 

[SCandTC]

I don’t believe that for a second.

You can believe whatever you want to. I will say no deal was made that after holdback, stairstep (this is 2015 when it was still around), etc was a true loser deal. Every deal made had to be at least $1 black after everything.
You’re forgetting the skinny deals you take, because you’re gonna have that deal where you have a nice trade to sell, they’re financing through Ford and you’re making reserve on the paper, and maybe a few F&I products are sold. You end up with $3,500-4,500 front to back to make up for your shitty survey customer who ground the piss out of the deal. Still thinking he overpaid.

 

[xtraman122]

I’ve always heard service departments carry a good portion of a dealership’s profit.

 

[Snakebitten]

Been out 6 years, just know the actual profit margins unlike so many arm chair experts here.
I’m talking the actual accounting on the specific truck. Plus Ford has got rid of all their stair step bonuses for the most part (region specific). Also holdback on a Lariat won’t be above $2,300 so $3,000 under invoice they’re losing money.
Sales guy you treated like shit gets $100 for spending 4 hours with you. Lot guy that cleans the truck for delivery is making $15-20/hour. Finance and management won’t make money since it’s a triple net loser.

You must know and expect the kind of consumer ranting that you are going to hear on a forum like this? Especially the modern day consumer who could care less if YOU earned your mortgage payment and put food on the table via "sales". ?

They don't need no stinkin salesman, and neither should anyone else. They likely tip 10% at Dennys in the middle of the night while a 60 year old widow serves them with a smile, although she limps because her feet hurt.

It's the first world and everything that comes with it.

I know I know, I sound like an old man myself. Cuz I am. And I know every salesman at my dealership by name. Consider a couple as personal friends. Fine folks who appreciate my business, but they are there to earn a living. I don't object.

 

[SCandTC]

You must know and expect the kind of consumer ranting that you are going to hear on a forum like this? Especially the modern day consumer who could care less if YOU earned your mortgage payment and put food on the table via "sales". ?

They don't need no stinkin salesman, and neither should anyone else. They likely tip 10% at Dennys in the middle of the night while a 60 year old widow serves them with a smile, although she limps because her feet hurt.

It's the first world and everything that comes with it.

I know I know, I sound like an old man myself. Cuz I am. And I know every salesman at my dealership by name. Consider a couple as personal friends. Fine folks who appreciate my business, but they are there to earn a living. I don't object.

its a hive mentality here, reminds me of Reddit but worse. Guys like Zach and Chip @ Granger are doing things the right way and people here only wanna reward shitty dealerships with bad markups and “games”. It’s 2022, use 5 minutes of research and you’ll know a fair price at a dealer willing to do it.

 

[rydfree]

So money earned from holdback does not count toward profit? Short answer: dealers who don't sell cars for a profit don't exist for long.

It's amazing any of them can even keep the lights on .

 

[Deleted member 9341]

Screw incentives, give me a hassle-free process at MSRP.

Yes!!!!!

 

[Deleted member 9341]

What?

Yeah that made no sense at all

 

[jfried]

The dealership model has its issues forsure -- starting with the genera disdain people have for the process and feeling of getting ripped off. But, I think it's important to remember that this forum is not a perfect sample of society. This forum are enthusiasts, who are generally, tech-people.

Tesla has sold a massive amount of cars using their model. But there are opportunities, especially amongst the boomer generation who would rather deal face-to-face. For every car buyer that's going to pound the pavement to 5 different Ford stores to find the best deal, there's somebody else who's all about the relationship; and when he needs a new truck, or his daughter needs a new Escape, he's calling good ole Steve at ABC Ford. As mentioned, the dealership model is necessary to facilitate trades & used vehicles.

That being said, EVs, combined with shifting consumer expectations (younger generations are much less comfortable negotiating / even knowing that negotiation is an option), and needs for the process to become more efficient will undoubtedly pose challenges and change to the dealership model.

You need service facilities for EVs, but you don't get to see them every 10k for an oil change, and some bonus services like brakes, air filters, fluids, etc. tacked on every few trips. Maintaining a large building, with techs to do all this work, is going to be very difficult when the vehicles are coming in 1/4 as often as they used to. Using the profits from a service department to support the sales side even more difficult.

On the efficiency side, having a wide variety of specifications, sitting scattered throughout the country, doesn't make a ton of sense. Not everyone can wait 3-4 months for a factory order, but there are very few people who actually need a car TODAY. Most people can happily / easily wait a week. Personally, I believe the solution lies in regional inventory hubs. Set them up in Oregon, Southern Nevada, Texas, South Dakota, Michigan, Alabama, Pennsylvania & North Carolina.

Let the dealers become showroom, sales and delivery centers. A car carrier can fit roughly 8 vehicles. When you buy a car, it gets scheduled onto that dealer's next shipment, and you pick up your car a week later. Let everybody pull from the same inventory.

As for the legislative side, Ford obviously cannot dictate price, but I think what they can do is make it more difficult for dealers to deviate on price. Rather than letting dealers "buy" stock to sit on, let the warranty and in-service date begin 7 days after the vehicle is delivered. Make exceptions for the inventory you want dealers to have (1 for the showroom, 1 for test drives, of each model).

Ultimately, Tesla's no BS sales approach is one that a very large chunk of people like... the people who gravitate towards that model become a greater proportion of the population every single day... so Ford has to figure out how to adopt it to remain competitive.

But, the dealership network, with the customer relationships it has and is capable of building, poses a huge competitive advantage over the Rivians & Teslas of the world. Personally, I think the solution lies in streamlining, putting all of the dealers on the same page, forgetting "allocations", pooling inventory that requires a paying customer in order to release it. Dealers charge ADMs or mandatory ceramic coating on cars because they know there's a shortage and they've got one whereas the Ford dealer across town doesn't. If they all pool from the same inventory, that takes a huge element of competition off the table.

Personally, I think we're already seeing that with the Lightning order process. Ford isn't regulating price, but they're putting everyone into the same "mechanism" for sales documents / pricing to ensure consistency. It would be very easy to take the Lightning model, and add a dealer-selector, with pricing dynamically updating based on what the dealer has selected. Heck, they could even have a sidebar saying: Price from Joe Ford $60k. Price from Billy's Ford $65k. Price from Steve Ford $60k. While they can't enforce MSRP, I believe they can enforce MAP (Minimum Advertised Price).

Plus, let's say you want that Antimattter Blue Platinum Truck with a Moonroof and a v8. In today's world, you call around to the 15 different dealerships within a 2-hour drive, and there's 1.... today you walk in, and if you ask the salesman how many people are interested in that truck, and he's likely going to lie to you to pressure you into the sale. Tomorrow, you walk into the Ford store of your choosing, you're told there's 3 in stock for the Florida, Georgia, Alabama, Mississippi, and Tennessee region. When the sales guy tells you he has no idea how quickly that inventory will dry up, you have confidence in knowing that's the truth, and rational knowledge that there could very well be 3 other people sitting infront of one of the 300 dealers in those states about to press the buy button. It's the perfect kind of "high pressure" because it's not coming from the guy sitting across the desk.

 

[greenne]

They still need dealers to hold stock so people can buy on the spot. There are a lot of people who have no patience and would not be able to wait for factory orders for whatever reason. However, Ford could separate both in order to satisfy all their customers without breaking any laws but they refuse to do it and therefore we are stuck with dealers installing $1500 LoJack on an EV.

Or people who need a car fast due to an accident.

Years ago I had an accident while traveling that totaled my vehicle. I had to buy a replacement vehicle fast. Sometimes it could be a catastrophic engine failure or transmission failure. For some, waiting may not be an option

 

[jfried]

Or people who need a car fast due to an accident.

Years ago I had an accident while traveling that totaled my vehicle. I had to buy a replacement vehicle fast. Sometimes it could be a catastrophic engine failure or transmission failure. For some, waiting may not be an option

Even in situations like that, there are certainly ways to mitigate the need for new car inventory to be sitting on dealer lots ready for somebody to drive home today.

If all inventory is a week away (obviously hawaii & alaska maybe a bit longer), that gap can easily be bridged with a rental car (which most insurance companies will cover). Heck, you could even mobilize a used car fleet towards rental operations for situations exactly like this.

 

[techguydave]

Do also consider that used cars aren't going anywhere, and not everyone will need or want to replace a car with a brand new one.

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