As Ford transforms its model lineup, dealerships will have to rethink the way they sell cars.
Earlier this month, Ford made a major announcement in its drive to electrify its lineup and streamline that side of its business while continuing to build profitable ICE models. Essentially, Ford will be splitting its business into two halves: Ford Blue will handle conventionally-powered models and Ford Model e will take care of EVs like the Mustang Mach-E. CEO Jim Farley explained to industry analysts why this move was necessary, and now he'll have to convince around 3,100 Ford dealerships in the United States of the same. Some are worried about the cost implications of Ford's new business model.
Essentially, Ford is looking to work with dealers to implement changes such as selling at non-negotiable prices, scaling down facilities, and committing to carrying no inventory. These new operating standards are driven by EV sales growth. "It's going to be much more efficient, a lot more online," said CEO Jim Farley when speaking to Automotive News. "It's going to be a really different model."
According to Ford, its US-based dealers will have the option to "opt-in" to sell EVs alongside traditional models under these new standards. Dealers that can't afford to or elect not to sell EVs will still sell ICE models only. Only once the rules are finalized will dealers be made aware of how much they'd need to invest in the new structure.
"There's a level of respect and trust that's going to allow us to have those tough conversations as we move into the next world we're going to move into," said council Chairman Tim Hovik from the Ford National Dealer Council. "I honestly feel we have honest brokers involved in the conversation. I don't think there's hidden agendas."
Because Tesla doesn't carry new-vehicle inventory and sells directly to consumers, its costs are around $2,000 less per vehicle than Ford's. This provides further justification for Ford switching to an order-only business model.
Some stakeholders expressed concerns about the changes that are coming to dealers, while acknowledging that it could also be a step forward. "I love the concept but am anxious to see how it plays out," said Vadim Makhlis, dealer principal at Monadnock Ford in Swanzey, N.H. He specifically pointed to the potential cost of the changes and wondered whether it's what consumers actually want.
With potential big-selling EVs like the Ford F-150 Lightning on the way, Ford's new sales model - combining the best of its existing retail network and a more modern approach that takes cues from the likes of Tesla - could give it a significant competitive advantage over both new EV startups and traditional rivals from the likes of Toyota and Volkswagen.