Ford CEO wants to follow the Tesla direct sales model

[MnLakeBum]

Interesting that Farley is saying that they will pursue a 100% direct sales model for BEV’s like the F150 Lightning and the Mach E. Plans are for many other Ford electric vehicles by 2026, including the possibility of an electric Bronco by then.

The dealer network is powerful and will resist this change but in another decade I think half of all car sales will be direct. Volvo and others are already direct only with some of their EV models.

There are dozens of articles on this in the last week, here are a few links.

https://jalopnik.com/ford-ceo-wants-to-abolish-the-dealership-experience-as-1849007700

https://www.electrive.com/2022/06/07/ford-aims-for-direct-marketing-in-the-usa/

https://www.roadandtrack.com/news/a...es-ceo-jim-farleys-comments-on-digital-sales/

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[Carolina Jim]

The crux of any business strategy is determining if you are in a "push" market, or a "pull" market.

The most important attribute of a pull market is brand loyalty, which Ford always scores dismally at.

 

[JohnnyBronco]

This is far from a new idea at Ford. It was proposed back in the 80s, I believe, written up in the rags, there would have still been dealers but, just like now at McDonalds, you would access a kiosk or computer and place your order at the dealer. Dealers would only inventory a few vehicles, maybe 1 per trim as mannequins and all production would be only as ordered, no 6-9 month unsold inventory sitting and rusting.

Dealers would still perform predelivery and correct factory or transit flaws. No manufacturer can guarantee 100% that a vehicle offloaded from convoy, especially if rail involved, needs nothing. They don't even ship with all electronics connected or seat plastic removed at factory.

 

[Razorbak86]

Interesting that Farley is saying this out loud. The dealer network is powerful and will resist this change but in another decade I think half of all car sales will be direct. Volvo and others are already direct only with some of their EV models.

There are dozens of articles on this in the last week, here are a few links.

https://jalopnik.com/ford-ceo-wants-to-abolish-the-dealership-experience-as-1849007700

https://www.electrive.com/2022/06/07/ford-aims-for-direct-marketing-in-the-usa/

https://www.roadandtrack.com/news/a...es-ceo-jim-farleys-comments-on-digital-sales/

You should clarify in the opening post that this is only intended for Battery Electric Vehicles (BEV), not for Internal Combustion Engines (ICE) like Bronco, so it won’t affect the Bronco sales process at all.

I know that’s clear in the articles, but a lot of members here don’t read embedded links, and you posted this in the Bronco ‘Ordering, Pricing, Production, Tracking, and Delivery’ forum.

 

[Carolina Jim]

BUT, many of the sub-brands and specific models score very well.

You're on the right track. The key for legacy manufacturers will be to downsize & kill off everything except specific models that are in high demand. If they try a hybrid approach & direct-sell the high-demand stuff while sluffing off everything else to 'dealers', who would want to be a dealer?

Personally, I don't see Ford being nimble enough to pull this off. It would be like a middle linebacker trying to become a ballet star.

 

[F OR D]

this one is tough. direct to consumer is great, am a huge fan.

also have a great dealer. how do we support dealers and service?

i know there are a lot of bad ones, and the whole adm thing might be the nail in the coffin due to their greed. but it's not all, and worried about the whole amazon crushing businesses removing competition and options. i know it's not the same, but there are good dealers and services they offer.

 

[flip]

There was a business update broadcast a few day ago and Frick walked this back....some. He said some the the quotes were taken out of context or cherry picked for shock value. While I do believe Ford want's to ultimately have more direct control of the customer through the order process through delivery, they don't have the internal infrastructure or technology, yet, to pull it off. The big thing they want is a seamless ordering process whether you're in the dealership talking to a salesperson or at home on the couch. EV is going to be specialized and there'll likely be dealers that elect not to make the investment or can't/don't for other reasons.

Ford clearly needs the dealer infrastructure for things they can't legally or physically do, like finance, product demonstration, delivery and after sales help. If I was a dealer that couldn't sell EV, I'm not sure I'd be interested in servicing them since there'll be additional costs in training and equipment which wouldn't make much sense considering EV maintenance is minimal. Once the standards come out we fully intend to be an EV selling dealer along with ICE and Commercial Pro.
Ford wants EV sales to be a one price, no mark up, no haggle affair. You buy from me it's the same price you get from any other EV dealer across the US. This will obviously get challenged by a dealer or state so we'll see how that actually works. My guess is the EV addendum to the master dealer agreement will compel dealers to give up state franchise law protections voluntarily specific to quasi direct sales and pricing. We'll wait to see.

I'm fine not having tons of stock as long as we have a few demos people can see AND their order to delivery timeframe is realistic. Things that will need to be answered are: What happens if a customer orders a vehicle without the dealer involved and it shows up wrong? Wrong trim, color, options? In the past this was the dealer's problem. What happens if a customer orders a vehicle, it arrives and they refuse to take delivery? Does Ford take it back and redistribute to another customer or do they force the dealer to take it and put it on their floor plan? Will there be allocation or does that go away?


We will find out more details in Sept.

 

[Sherminiator]

The most important attribute of a pull market is brand loyalty, which Ford always scores dismally at.

Uh....

Ford Motor Company Wins Overall Brand Loyalty Award From IHS

 

[MnLakeBum]

You should clarify in the opening post that this is only intended for Battery Electric Vehicles (BEV), not for Internal Combustion Engines (ICE) like Bronco, so it won’t affect the Bronco sales process at all.

I know that’s clear in the articles, but a lot of members here don’t read embedded links, and you posted this in the Bronco ‘Ordering, Pricing, Production, Tracking, and Delivery’ forum.

I fixed the OP.

Tesla has been so successful with the direct sales model that GM, Ford, VW, and Volvo are following the direct model for their EV’s and other car makers will follow suit.

Tesla made 305,000 cars(delivered 310,000) and is seeing massive sales growth even with supply chain issues and not having a truck available for delivery until next year. They are on pace for $80B in revenue this year and with most experts forecasting a growth rate of 50%(Tesla grew 70% car revenue YOY last quarter) the next two years, Tesla could easily surpass Ford and GM in annual revenue in 2024 to become the largest U.S. automotive company. That would also make them one of the 15-20 largest US companies.

The bottom line is 6 years ago all the other automotive companies laughed at Tesla and certainly didn’t see them as a serious competitive threat. Now all those same companies are scrambling to catch up and many are experimenting with some version of their direct sales model. Competition and change is good for all of us consumers.

 

[flip]

IMO, Ford, and all the other people getting in the EV game not named Tesla, see the market as wide open and the first one to get a bunch of products to market first, will get the majority of the demographic not sold on Tesla. I had the epiphany after trying to figure out why Farley kept calling this a "race". This business doesn't have a finish line so there's no, "we get there first, we beat everyone else", as much as a perpetual marathon.

I'm sure they've done the research prior to investing the billions for development and know the business is there waiting. What bothers me is talking in terms of the first company to get a lot of product out, somehow is entitled to this incremental business. If you put out product that was rushed through and is crap, all you did was taint the reputation and show everyone else what not to do. Ford has a ton of strengths going into this and needs to leverage them well. Keeping all dealers from being able to sell and service this product does not make any sense. We aren't talking about exclusive vehicles or mass produced at lest for now. The production capability is constrained and will likely stay that way for the next 3 years. Telling a customer loyal to Ford or specific dealer, they can't buy and service locally is absolutely insane and completely counter productive. EVs are going to be a second or third vehicle for a household. If I want a Ford, I should be able to buy any Ford at the Ford dealer of my choice. I shouldn't have to purchase an EV from a dealer 60 miles away but all of my other Fords from the dealer down the street.

This shit just makes me face palm every time I think about it.

 

[Carolina Jim]

Uh....

What I typically see from IHS, Consumer Reports, and other list-makers is a ranking of 15 or so makers, with very little variance in ratings...the very definition of undifferentiated.

A pull market strategy works best when you have a high level of aspiration. Bronco clearly has that at the moment, but there are relatively few vehicle models that can claim it with any consistency.

 

[Sherminiator]

Ford has a ton of strengths going into this and needs to leverage them well. Keeping all dealers from being able to sell and service this product does not make any sense. We aren't talking about exclusive vehicles or mass produced at lest for now. The production capability is constrained and will likely stay that way for the next 3 years. Telling a customer loyal to Ford or specific dealer, they can't buy and service locally is absolutely insane and completely counter productive. EVs are going to be a second or third vehicle for a household. If I want a Ford, I should be able to buy any Ford at the Ford dealer of my choice. I shouldn't have to purchase an EV from a dealer 60 miles away but all of my other Fords from the dealer down the street.

What it boils down to is the dealership needs to figure out what they want to sell and support. There is nothing stopping them from being a Ford Blue, Ford Model e or Ford Pro dealership.

A dealership in the rural midwest that might not have a huge EV demand wouldn't need to get a Model e right away. So they can focus on the other two dealerships till demand is there for a BEV.

 

[MayhemMike]

The buying a vehicle through a dealer for the most part sucks. Of course, before now, we could routinely buy vehicles off these lots at large price reductions. Competition, year end model and even customer orders could be had at well under MSRP. Hopefully straight from the factory won’t eliminate the same discount possibilities.

 

[‘21OBX]

This is far from a new idea at Ford. It was proposed back in the 80s, I believe, written up in the rags, there would have still been dealers but, just like now at McDonalds, you would access a kiosk or computer and place your order at the dealer. Dealers would only inventory a few vehicles, maybe 1 per trim as mannequins and all production would be only as ordered, no 6-9 month unsold inventory sitting and rusting.

Dealers would still perform predelivery and correct factory or transit flaws. No manufacturer can guarantee 100% that a vehicle offloaded from convoy, especially if rail involved, needs nothing. They don't even ship with all electronics connected or seat plastic removed at factory.

Our local dealer has already went to this model in a way. They told me well over a year ago it’s better for them and they are making more $$ by not having to stick and pay on 80-100 vehicles every month. He says there is less wasted time by the sales people because now when someone comes in they are ready to buy and order exactly what they want vs test driving a few things then leaving without a purchase. There may be 10 new cars on the lot the rest used that they’ve taken in on trade. It’s a more relaxed atmosphere with less pressure on the consumer to settle and buy the car they have now. Idunno if it’s working out for them but they claim it is. They also have a service and auto body shop at this dealer im which they plan to keep and shift to a more service oriented dealer.

 

[North7]

Jim Farley reins in dealers from selling the new F-150 Lightning for over MSRP, dealers respond...

Ford dealership applies $69,554 markup on F-150 Lightning despite corporate orders

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