Ford Wants To Compete With Tesla, But Its Dealers Are Getting In The Way

[North7]

With the reservation system for the Mach-E, the Bronco and the F-150 Lighting we all knew Ford was attempting to go head to head with Tesla with direct to the consumer pricing. Unfortunately, Fords archaic dealer franchise system has Snatched Defeat from the Jaws of Victory.

Ford Wants To Compete With Tesla, But Its Dealers Are Getting In The Way

By Tom McParland 9/17/2021

Ford Motor Company is serious about offering more electric cars in its lineup. The Ford Mustang Mach-E and the upcoming F-150 Lightning are impressive products. However, the company’s approach to actually selling these products is leaving some customers frustrated and looking elsewhere. While short-term sales seem good right now, the long-term impact may not be.

The first issue is that on these EVs Ford has moved to what it calls “e-invoice” pricing; this means that the invoice price (or dealer cost) and MSRP are identical. Usually dealer invoice pricing is lower, allowing dealers to offer deals below MSRP, which just isn’t as clean or simple to a consumer, who may rather want to just pay what the car costs instead of worrying about getting the best deal. Whether Ford will admit it or not, with this “e-invoice” pricing, it seems to be taking a page from Tesla’s playbook where everyone pays the same price for a car. If you buy a Tesla, the price online is what you pay. No games, no dealer nonsense. Except, despite Ford’s “e-invoice” pricing, dealers can play games and markup cars well over the MSRP.

CarsDirect.com recently reported that Ford is implementing a program where dealers can “snitch” on each other if a dealer advertises the upcoming Lighting below MSRP. Advertising well over sticker price is perfectly okay, though; the “voluntary” program says a dealer can sell a car for whatever they decide, but it is only attempting to discourage advertisements that indicate any level of savings.

I have assisted with several Mach-E deals for various customers in different areas of the country, and though there are some vehicles for sale at MSRP, I’ve seen upwards of $10,000 over sticker. There are even dealers putting a markup of over $33,000 on these cars.

(Update, Bowen Scarff Ford reached out to me. To clarify the markup above -
“ But just to clarify, the Mach-E you reference in the article for 33k over MSRP is our dealership demonstrator model and is not for sale but available to test drive prior to people doing a factory order. We honor all of our orders at MSRP at our store. Our manager put a crazy high price on this specific model to stop people from calling on it all day. We had them remove the price so it does not give the wrong impression.”)

There is a lot of demand and not enough supply. When those factors come together, sellers can charge whatever they like. However, earlier in the summer Ford’s Manager of Communications Mike Levine sent out a tweet responding to a customer’s frustration regarding dealer markups.

I was curious as to exactly how Mr. Levine, or Ford corporate for that matter, planned on enforcing any type of “policy” that would disincentivize dealers from selling these cars over MSRP. I reached out to him on a few occasions to get clarity on the matter but did not get a response. I did get a response from Emma Berg who is the director of Ford’s communications for EVs:

“If a customer isn’t happy with their dealer, our team can help them find a different dealer that’s a better match. Dealers are independent franchises and ultimately the final price a customer will pay for any vehicle is agreed between themselves and a dealer.”

I totally understand the franchise agreement and that dealers can sell for whatever they want. While I think it’s great that Mr. Levine was personally active in communicating with dealers on behalf of customers, it’s also not a great look for the brand when your PR representative has to be an intermediary between the customer and the retailer.

There are ways to limit these practices if an automaker was actually serious about it. In 2014 Dodge put a plan in place to limit Hellcat markups and tied future vehicle allocations (i.e. how many cars the manufacturer would send the dealer) to how fast the dealers sold the first round of Hellcats. While Ford cannot dictate what a dealer can sell a car for, it could perhaps tie future allocations for other in-demand cars based on how many vehicles a dealer sells at or below MSRP.

The other issue is that when it comes to leasing Ford’s EVs, lessees cannot take advantage of the tax credits as part of a cost reduction on the car. Ford Financial services will not pass this rebate on. Several brands use the Federal EV tax credit as essentially an upfront discount on leases. For example, if you lease VW’s ID4, which like the Mach-E, has no margin between the invoice and MSRP, you get the $7,500 rebate which makes the VW lease much more competitive than a similarly priced Mach-E.

Right now demand is far outpacing supply, which creates a market where the sellers have the leverage, but that won’t always be the case. Tesla has been drawing customers not just due to a compelling product, but because people don’t want to buy cars with typical dealer hassles. If Ford, and other mainstream automakers want to compete in that space, offering electrified vehicles alone is not enough. Automakers are going to have to figure out a way to work with their dealerships so that the sales process isn’t sending EV clients to competitors.

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[HotdogThud]

it's an antiquated business model that needs to either adapt to what the consumer has now realized they want (and can have), or it needs to die. The fact that the only time I've had a good dealer experience that didn't leave me feeling like I got f**ked was buying a Saturn 25 years ago should speak volumes.

 

[BroncMe]

My Ford dealer is keeping MSRP for a popular vehicle, which is the same as Tesla. Who cares.

Teslas are absolutely soulless and not really well built. And their service network blows on both time and cost.

Govt subsidies are Tesla's reason for being. along with all my virtue-signaling friends, which will run out soon

 

[North7]

My Ford dealer is keeping MSRP for a popular vehicle, which is the same as Tesla. Who cares.

Teslas are absolutely soulless and not really well built. And their service network blows on both time and cost.

Govt subsidies are Tesla's reason for being. along with all my virtue-signaling friends, which will run out soon

Your missing then entire point, regardless of your opinion of Tesla, they understand value marketing to the consumer, like Saturn did.

Who cares, the other 90% of people that get ripped off by dealers high mark-ups and fees.

There is not one penny of that additional expense that makes the vehicle more soulful. Further, the added high mark-ups and fees do not buy you better service.

(no, I don't own nor would I buy a Tesla, but they know how to sell to be more fair to the consumer.)

 

[Bison]

You're missing the point. Regardless of your opinion ford and tesla don't care about what you think! Tell me where is Saturn now? Ford made successful vehicles with the mach-e and lightning. They just have to get on production and when they do I promise they won't be worried about tesla either. It's funny how you're fine with paying msrp on a tesla (you call fair) and not any other vehicle so only tesla can make money off you. It's ok to spend tesla's manufacturers suggested retail price and not fords? Also not all dealers have fees. Sound awfully misinformed

I like how you know what Ford and Tesla are thinking. Lol
I believe they care what the consumer is thinking so they can make decisions that will continue to make them money. My opinion is Ford will start doing things like Tesla one day and Tesla will do more like ford, kind of a meet in the middle situation. Neither is perfect. I have not met a sales person that wasn’t a slime ball and I used to take care of dealerships back in the day. I am keeping my fingers crossed granger won’t turn into a disaster.

 

[Carolina Jim]

Fords archaic dealer franchise system has Snatched Defeat from the Jaws of Victory.

Might be too early in the game for that assessment. The EV product is an infant...think PCs in the 80s....we might not only be in the first inning - but the first pitch. Some envision EVs where the entire cabin/coach is easily detachable from the wheels/frame/batteries/engines - so you might keep your coach for an extended period, but routinely exchange the underparts.

So, hard to envision post-acquisition support needed.

Plus, if brand leverage diminishes in vehicles as it did in PCs, Ford's name is meaningless. Think of how Intel overwhelmed the actual PC manufacturer. In fact, as it stands now, the onboard fire extinguisher brand might be more important than the vehicle maker.

 

[HotdogThud]

You're missing the point. Regardless of your opinion ford and tesla don't care about what you think! Tell me where is Saturn now? Ford made successful vehicles with the mach-e and lightning. They just have to get on production and when they do I promise they won't be worried about tesla either. It's funny how you're fine with paying msrp on a tesla (you call fair) and not any other vehicle so only tesla can make money off you. It's ok to spend tesla's manufacturers suggested retail price and not fords? Also not all dealers have fees. Sound awfully misinformed

exclamation points really do drive that home, thanks

But to imply that Saturn is gone because their model failed is also misinformed. They started as a side project that got funding from GM to do things a bit differently and see what happens (much like Scion with Toyota). And to their credit, the model *worked*, they sold like wildfire by forcibly treating every single customer the same. Nobody got special pricing, nobody got shitty pricing. "The cars cost this much, options are this much, and we'll help you sort out the financing" was pretty much all the dealerships did. It was only when this model's success became apparent, that GM starting pulling control back in, and the shift between Saturn of the 90's and Saturn of the early 2000's is pretty clear. Once they became just another GM brand that didn't get as much love as the beloved Bowtie, they were consigned to suffer the same fate that Oldsmobile and Pontiac would.

The point is, different sales models do work. Saturn proved it, Tesla is re-proving it. Ford is trying to make it work for them, but (understandably) dealers are digging in their heels, because change is hard, and they've taken more than their fair share over the last few decades. It's not in their best interest to give up that gravy train, but consumers are demanding it more. Myself included. Gimme a product that costs X amount of money, and a network of places to get it fixed. That's all I need, nothing more. No 'rust-proofing', no 'market adjustments', no shady salespeople that won't stop calling, or even better, selling your info to lead brokers, because that's a revenue stream too. Just give me my product.

 

[North7]

Might be too early in the game for that assessment. The EV product is an infant...think PCs in the 80s....we might not only be in the first inning - but the first pitch. Some envision EVs where the entire cabin/coach is easily detachable from the wheels/frame/batteries/engines - so you might keep your coach for an extended period, but routinely exchange the underparts.

So, hard to envision post-acquisition support needed.

Plus, if brand leverage diminishes in vehicles as it did in PCs, Ford's name is meaningless. Think of how Intel overwhelmed the actual PC manufacturer. In fact, as it stands now, the onboard fire extinguisher brand might be more important than the vehicle maker.

I understand the model, I built my own PC's for years. But I wonder with the proprietary nature of automobiles, the high level of software and integration required, along with a slew of safety requirements and testing, I think the build-it-yourself model may be a stretch for the auto industry.

 

[Carolina Jim]

But I wonder with the proprietary nature of automobiles, the high level of software and integration required, along with a slew of safety requirements and testing, I think the build-it-yourself model may be a stretch for the auto industry.

Yeah...I wasn't thinking build your own.

"Proprietary" is one of those things....well - in the olden days it could be overcome with the Royal Wrist Roll and a declaration 'Make It So'....today, all it takes is an act of congress

 

[JTBros]

(no, I don't own nor would I buy a Tesla, but they know how to sell to be more fair to the consumer.)

I do respect Tesla for a decent amount of things, starting the EV trend, doing direct to consumer, trying to ensure their reps aren’t pushy, but fair to the consumer isn’t necessarily one lol. They mess up on QC and product consistency (parts being changed over the years and no one knows which car has what). BUT I do wish we saw a greater implementation of what them and Genesis do. Just drop the car off at my house after I buy it and pick it up if it needs service. Unfortunately lobbying gets in the way of that and not all dealers can be as good as the frequent posters we see on here.

 

[North7]

Also not all dealers have fees. Sound awfully misinformed

Which dealership do you work for?

I've been called many things, misinformed is a new one. Here are several of the informative threads and posts I written to help forum members in the car buying process (no, I don't work in the automotive industry).

2021 Bronco pricing & savings spreadsheet (X-Plan vs Invoice and Below Invoice)

Dealers as a group have earned themselves the distinction of being less than honest, you must always protect yourself by having everything in writing, signed by the General Manager.

When you order a vehicle, after you spec it out, review the DORA order details printout of your Bronco.

Then negotiate the FINAL, OTD (Out of The Door) pricing, including ALL FEES and TTL (Tax, Title and License).

Next add a statement:
1) Any additional changes such as options or accessories will be negoiated separately.
2) The dealer will not add ANY dealer add-ons (VIN etching, alarm system, nitrogen in the tires, etc.).
3) There will be NO test drives except by you, the named buyer.

Once this is done and EVERYTHING is in writing, have it signed by the General Manager, NOT THE SALESPERSON.

While this is new or late informaton for many, please protect yourself.

 

[HotdogThud]

My Ford dealer is keeping MSRP for a popular vehicle, which is the same as Tesla. Who cares.

Yeah, but not every dealer is, are they?

Teslas are absolutely soulless and not really well built. And their service network blows on both time and cost.

You're not wrong. I've driven a few, even a Model S performance with ludicrous mode. It was legit insane, and yet still a little soulless and kinda rattly the whole time. And the fact that people would accept that and all the flaws that a Tesla has, to get away from the (ford) dealer model of sales really does say a lot, doesn't it?

 

[BroncMe]

Yeah, but not every dealer is, are they?



You're not wrong. I've driven a few, even a Model S performance with ludicrous mode. It was legit insane, and yet still a little soulless and kinda rattly the whole time. And the fact that people would accept that and all the flaws that a Tesla has, to get away from the (ford) dealer model of sales really does say a lot, doesn't it?

It does. but it seems the novelty wore off for my friends (even in CA) that discovered that road trips aren't really Tesla's thing. Great for sterile commuting, lousy for freedom for whatever.

and if you're not in CA, road trips are like Apollo 13

 

[North7]

It does. but it seems the novelty wore off for my friends (even in CA) that discovered that road trips aren't really Tesla's thing. Great for sterile commuting, lousy for freedom for whatever.

and if you're not in CA, road trips are like Apollo 13

WAIT! You mean the gospel of EV does not include range, some people will be very unhappy if that story ever gets out.

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