Why is Dealer Allocation even a thing?

[DaveH]

Allocation makes some sense in the context of selling dealer stock. If dealer A sells twice as many vehicles as dealer B, then Dealer A should get twice as many of the in-demand vehicles. Since with dealer stock, the vehicle is delivered to the dealer before it is sold, you need some method to allocate who gets what. My guess is that Ford did not predict that with Bronco reservations, some dealers would use this as an opportunity to grow. I suspect that Granger, in particular, put a lot of thought into this and saw the Bronco rollout as a great opportunity. When the high volume dealers saw what was happening, they cried foul, and Ford had to apply the allocation formula to the Bronco to keep them happy.

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[Montana Bronco]

It rewards dealer who give Ford the most business the most Broncos. Allocations are nothing new and is a standard practice in a lot of industries. You want to give the dealer who sells the most the most product. Because they will sell the most product.

So explain what Ford is doing to Granger’s customers ?

Granger has more Bronco customers than any other Ford dealer. So using your logic, Granger should get more Broncos. But they aren’t.

This situation is completely f-ed up. By Ford Corporate. This “allocation “ deal is screwing Ford’s customers, and Ford does not seem to care.

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[BDSteelies]

I disagree that dealerships are unnecessary. They are no different than a hardware store, grocery store or drug store, with the exception that they usually only carry the products of one manufacturer. If manufacturers only sold direct to the consumer they would only service major centres and that would leave millions of people without access to new vehicles. Tesla is an outlier because they are a boutique manufacturer who do not cater to the general public; and their customer base is in major urban centres.

Respectfully disagree, and would argue that OEMs selling direct to customers reaches more customers than the dealership model. Someone who lives in the middle of nowhere and wants to buy a car doesn't need to drive 500 miles to a dealership to do so. They can place their order online or over the phone, and even have a company sales representative bring a vehicle to their door for test drive beforehand and walk them through the features and options. When their vehicle is built it's delivered to their driveway instead of having to drive in and spend 4 hours with some weird middle man before the sale is finalized.

 

[RunninRiot]

So explain what Ford is doing to Granger’s customers ?

Granger has more Bronco customers than any other Ford dealer. So using your logic, Granger should get more Broncos. But they aren’t.

This situation is completely f-ed up. By Ford Corporate. This “allocation “ deal is screwing Ford’s customers, and Ford does not seem to care.

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Attrition? Screw 700 customers to make 70,000 happier.
Also, you could argue Ford could use the Apple model. Rollout Corp owned stores to city centers and let dealers fill in the gaps. Then you have an msrp issue. Most people will drive 10 hours to save a couple grand, a la Granger. Maybe markup is the issue?

 

[DaveH]

Completely agreed - which is why in the rest of my comment I stated that the dealer model is outdated and needs to change.

To say that that just end customers or just dealers are Ford's customers is over simplified.

End customers are clearly important. If no one buys the vehicles, then Ford and the dealers go out of business. The very fact that Ford does direct to consumer advertising shows they understand this. However, they need to keep dealers happy as well. Many dealers sell multiple brands. Those dealers are going to gravitate toward selling whatever is easiest and most profitable. If a Blazer takes twice as much effort to sell as a Bronco, the dealer is going to stock more Broncos and have more sales people assigned to Ford than Chevy. Even for dealers who carry on one brand, they are typically owned by folks that are smart enough to look for other investment opportunities if the dealership isn't giving the desired return. Why invest in a larger showroom if there is a better opportunity investing in condo rentals?

Bottom line, Ford needs to try to balance the needs of end customers and dealers.

 

[West1]

Many years ago, a dealer told me that the allocation system exists so Ford can sell unpopular models of vehicles. For example, if a dealer sells 5 of an unpopular model vehicle Ford will allocate 10 F-150s. Made sense to me at the time. The dealer then told me if I had a choice I would only stock F-150s.

 

[John Auer]

You are correct in the whole dealers are fords customers, and yes, that is why allocation makes sense. The whole High Vehicle demand is removing the need for dealerships New auto manufacturers are going without dealers and instead going direct to consumer. As an example, Tesla has no dealers, and you are Tesla's customer if you purchase a Tesla - dealer model is gone, and my friends who have purchased this route have very little bad to say about the purchasing and service model sans dealers.

There’s a place for dealers, just not the one they currently occupy. They’re protected by non-competitive franchise laws that protects their business model. I don’t expect any radical changes anytime soon.

 

[Exomodo]

We are not customers of Ford, we are end users of Ford products. This word you keep using, it doesn't mean what you think it means

 

[Booback]

No, your totally wrong. Dealer allocation is used by every manufacturer and every vehicle. Especially high demand. When you understand that the dealers are Fords customers and not you, it makes more sense.

Dealers are pass thru to customers. If we don’t buy cars, dealer die and ford does too. It’s like saying sick people aren’t customers of the healthcare system, the insurance is…..oh wait…

 

[Hopeless Diamond]

The lack of understanding this represents the majority of the frustration I read in comments on here.

That said, it's refreshing to see companies like Tesla and Rivian start to eliminate a very unnecessary and frustrating part of the auto industry and this point.

Many states have laws preventing direct sales from auto manufacturers. The dealer system is baked into states systems. Tesla finally found a loophole in New Mexico where they opened a location on tribal land.

 

[HotdogThud]

No, your totally wrong. Dealer allocation is used by every manufacturer and every vehicle. Especially high demand. When you understand that the dealers are Fords customers and not you, it makes more sense.

I think the point that OP is going for is that it heavily favors existing large dealers, and essentially tells small dealers that they only way they get more is to sell more, leading to a nice chicken/egg conundrum.

It's as asinine as telling a job seeker in 2013 that the job requires 10 years of experience with Windows Server 2012.

 

[swooshdave]

So explain what Ford is doing to Granger’s customers ?

Granger has more Bronco customers than any other Ford dealer. So using your logic, Granger should get more Broncos. But they aren’t.

This situation is completely f-ed up. By Ford Corporate. This “allocation “ deal is screwing Ford’s customers, and Ford does not seem to care.

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Because they don't base it on just one model, it's on the overall portfolio. In which case Granger does not have more customers.

When it comes to terminology you have to realize that dealers are Ford's customers and we are Ford's consumers. We are the dealer's customers.

 

[Russ1Bronco]

Ford allocations have been around for a long time...In the summer of 2010,when I walked into my Ford dealer in Fairfield ,NJ to buy my '11 Shelby ...Ford was only building 5k a model year...4.5k coupes,and 5 hundred rag tops...With 3k plus dealers in the US..some dealers were not getting even one unit..While other dealers were getting more than one..the dealers who were selling more regular Mustangs were allowed one more...I'm an A/Z buyer,and the dealer would not give me the A/Z discount..but he didn't charge me 5k to 25k over sticker.price,like all the other dealers were doing...buying a current model on allocation,took me 4 weeks...buying a model that was not even being produced at the time...with no limit on production..is taking some people 500+days...

 

[Sighlense]

When the high volume dealers saw what was happening, they cried foul, and Ford had to apply the allocation formula to the Bronco to keep them happy.

 

[PleaseDontRoll]

Heres the problem with this model. Ford has not recently offered a vehicle that can compete with the Wrangler.

In the Northern Sierras where I am there are a TON of wranglers and 4runners/Tacoma's and not a lot of Fords on the road outside of F series. There is major demand for the Bronco here where people actually offroad but all of the Broncos are going to the cities where people don't buy nearly as many off road focused vehicles.

My dealer has over 400 orders and is only getting 2 allocated per month so far, not because they tried to game the system like Granger, but simply because this is the first big wrangler alternative in the middle of off-road country.

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