Ford CEO Warns Dealers: Stop Markups Or You'll Be Punished

Industry News / 19 Comments

Dealers won't receive F-150 Lightning allocation if they're greedy.

By now, American consumers are all too familiar with dealer markups. Scarcity and high demand drive greedy dealers to place absurd premiums over the MSRP, with desperate consumers paying the price just to secure their ideal set of wheels. One such vehicle is the Ford F-150 Lightning. The Blue Oval's electrified pickup has proven popular, with the company having to double production to meet demand.

Dealers are taking advantage of this, with one dealership charging $30,000 above MSRP. This has angered Ford, the carmaker previously telling dealers markups are "negatively impacting customer satisfaction and [is] damaging to the Ford Motor Company brand and Dealer Body reputation," and now Ford's CEO, Jim Farley, has issued s stern threat.

2022 Ford F-150 Lightning Front View Driving Ford
2022 Ford F-150 Lightning Front Angle View Ford
2022 Ford F-150 Lightning Driving Front Angle Ford
2022 Ford F-150 Lightning Side View Ford

During an earnings call last week, Farley restated his commitment to abolishing troublesome markups that some dealers are charging in the midst of the vehicle shortage. Farley remarked it's only about 10% of the dealer network that is guilty of charging above MSRP. "We have very good knowledge of who they are, and their future allocation of [the] product will be directly impacted," said Farley. "This is quite an important topic because the margins that we want to build to in BEV are [going to] be heavily dependent on a different go-to-market and customer experience."

Fox Business also spoke to an analyst that estimated the total value of dealer markups at $3.6 billion - approximately half the increased revenue per unit reported by Ford last year.

Andrew Frick, Ford's head of sales, sent letters to dealers earlier this year, warning that they may lose F-150 Lightning allocations if they attempted to get reservation holders to pay more money to place final orders for the electric truck.

2022 Ford F-150 Lightning Driving Front Angle Ford
2022 Ford F-150 Lightning Side View Driving Ford
2022 Ford F-150 Lightning Front Angle View Ford
2022 Ford F-150 Lightning Headlights Ford
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Ford isn't the only carmaker to express frustration at dealer markups. General Motors has warned dealers about so-called market adjustments. GM's Steve Carlisle sent communication to Chevrolet dealers stating they are at risk of losing their Z06 allocation if excessive markups occur.

"It has come to our attention that in connection with some of these announcements and launches, a small number of dealers have engaged in practices that do not support a positive sales experience for our customers." The letter continues, with Carlisle noting the carmaker will have to take action if unethical sales practices are uncovered, with the letter serving "as notice that GM reserves the right to redirect your vehicle allocation or take other recourse prescribed by the Dealer Sales and Service Agreement."

Due to the chip crisis, the new car market has gone crazy, but self-indulgent dealers who put profit ahead of loyal customers need to be stopped.

2022 Ford F-150 Lightning Driving Front Angle Ford
2022 Ford F-150 Lightning Front Angle View Ford
2022 Ford F-150 Lightning Cargo Room Ford
2022 Ford F-150 Lightning Emblem Ford
Source Credits: Fox Business

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2022 Ford F-150 Lightning Driving Front Angle
2022 Ford F-150 Lightning Driving Front Angle
2022 Ford F-150 Lightning Front View Driving
2022 Ford F-150 Lightning Side View Driving
2022 Ford F-150 Lightning Front Angle View
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