Ford CEO Responds to Price Markups

[LSchicago]

I just went to the dealer to pick up a Maverick that I ordered about a year ago. They wouldn't sell it to me for anything less than $8,000 over MSRP. I had to walk away.

Local dealer tried that with us in July of 2019 for a Hyundai Palisade before car shortages began. $8,000 over sticker for any of them. We walked. Went to another dealer and found just what my wife wanted at $1,000 off MSRP. (they were new and hot) We bought it. Sold it 2 years later to Carvanna for $1,300 more than she paid.

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[JayinMilwaukee]

I just got a quote from Wickstrom Ford of Barrington IL (Chicago suburbs) for $8000 over MSRP for a Lariat Hybrid they have on the lot. I hope this wasn't a situation where someone made an order and Wickstrom raised the price after the fact.

 

[Cad]

you left out the Intelligent part of your reply Ford Sales Guy was asking for.

What whit you have. You left out anything that would resemble intelligence in your reply. What intelligent part are you looking for. Rah, rah, let’s feel bad for the poor dealership. The playing field is already rigged in the dealers favor just like Vegas. Limited supply, they control the inventory. They are not hurting for profits today.

 

[mtd14]

I understand quite well that for over a hundred years dealerships were equally as important as Ford motor company itself in selling and building the Ford brand. What you and nearly everything other person almost definitely don’t know is that Ford has been and continually cuts the holdback that dealers make behind the scenes on sold vehicles. That’s the “secret” money Ford pays
The dealer after the sale and sometimes it’s nearly the only money they make depending on the sales price. On some of the cheaper vehicles, dealers make less than $1000.00 and that’s before they go through the shop, get fueled, delivered or the salesperson is paid. I worked 30 years in grocery, so there’s few people that understand it better than I. I’ve worked 7 years as a Ford sales manager, so I have a better than average understanding of that. If your supplier cuts your margins behind the scenes, it must be made up somewhere. If your supplier reduces your available inventory by 90% or more, the light bill still must be paid.
I wait patiently for an intelligent response to a subject you very likely know zip about.

Sorry it sounds like the dealer doesn't want the dealership model either based on what you're saying? And they can just be a showroom, maybe even with a referral fee, instead? Since it could streamline logistics and make things cheaper for Ford, the dealer, and the customer?

If you're acting as a showroom instead of a point of sales, you can have a smaller space, fewer employees, and a lower light bill. If you're offered a referral fee or similar, you can still get some money out of it and since you're being great and doing it all for less than $1k now, despite all your costs, that seems good. And for the customer, they get a less stressful purchase process and avoid the times where dealers turn that <$1,000 number to $5000-$10000.

Since you've worked in a grocery store before and probably purchased from one, you know logistics can be different for the scenario where you need to buy a variety of items weekly than when you need to buy one item every 6 years.

 

[NJBob]

I wonder if the Ford policy is why I saw a brand new Cactus Gray FX4 on my dealer lot with a "sold as-is, no warranty" sticker on the side window. I was surprised to see two Mavericks for sale and a line of five Broncos. All way, way above sticker, of course.

GM talked about doing this. Did not think Ford was too.

 

[cavemold]

Then maybe. We can cut out those “greedy” grocery stores marking up milk. Those “greedy” department stores marking up clothes and shoes. And those “greedy gas stations marking up fuel. We’ll show all those greedy jerks that were on to their scams.

Its when you charge over 10k msrp for 20-39k truck is where people start to get angry Also when you lie to people. Who likes that? Do you like it when customer lie when they will come in and say you will buy something and just waste your time instead? no you dont. . With your example it would be like the only gas station was charging 4 dollars over the normal price. You can since your the only compact truck in town for most people that can afford a 20-40k. Ford mission statement was to make affordable truck. If that wasn't their goal they wouldn't have priced it at 20k-23k starting prices . That's taking advantage of the situation. Plus you know service is how dealers make their money anyhow.

 

[Old Ranchero]

What whit you have. You left out anything that would resemble intelligence in your reply. What intelligent part are you looking for. Rah, rah, let’s feel bad for the poor dealership. The playing field is already rigged in the dealers favor just like Vegas. Limited supply, they control the inventory. They are not hurting for profits today.

Try educating yourself on the history of Henry Ford and the original sales model of buying from a catalogue where the only color choice was Black. Then research Cal Worthington who invented the showroom sales model and why it was successful as more options became available and it wasn't 1 price fits all anymore. Who are you to decide if a business is hurting for profits or not? Seems Clueless on the reality of a complex industry that creates and supports 100s of Thousands of jobs.

 

[NJBob]

Cad, I agree that many dealers and salesmen are jerks. As you’ve probably noticed, the world is densely populated with jerks these days. Every industry has good and bad players in it. I happen to be in one where complete strangers come in and tell me in the first five seconds how they “hate” car salesmen. I generally reply with “well, I don’t hate you yet, but we’ll see how it goes I guess”. In what other business do people walk in and tell the person working there that they hate them when they say their first hello?
I understand that a lot of of people who post on this and many sites, would be comfortable ordering online and that’s fine. At my dealership, about one in twenty customers would consider doing that. Most want to talk with someone who knows and understands the product and can help them make the best decision to fill their needs. If you order online, you get what you ordered, even if you misunderstood what you actually ordered. Very few people will be comfortable ordering a ninety thousand vehicle without being absolutely positive it’s exactly right for them. Some customers spend months tweaking their orders until they finally have it perfect.
I sometimes text and email a hundred times over a year with a customer in the process, before and after an order is placed or a vehicle is delivered. I enjoy selling cars and most of my customers enjoy their experience at my dealership. Not all of them do, of course. That might be the people who’ve decided to hate someone they’ve never met?

Good for you. Every experience with car salesman is that I know more than them. When a new model comes out is there any mandatory training for the sales people? I doubt it. Once when looking to buy a car I gave them my keys so they could evaluate my trade. When I could not make a deal. I had to threaten to call the cops to get my keys back. It is stuff like this that gives car dealers a bad name.

 

[Ford sales guy]

Sorry it sounds like the dealer doesn't want the dealership model either based on what you're saying? And they can just be a showroom, maybe even with a referral fee, instead? Since it could streamline logistics and make things cheaper for Ford, the dealer, and the customer?

If you're acting as a showroom instead of a point of sales, you can have a smaller space, fewer employees, and a lower light bill. If you're offered a referral fee or similar, you can still get some money out of it and since you're being great and doing it all for less than $1k now, despite all your costs, that seems good. And for the customer, they get a less stressful purchase process and avoid the times where dealers turn that <$1,000 number to $5000-$10000.

Since you've worked in a grocery store before and probably purchased from one, you know logistics can be different for the scenario where you need to buy a variety of items weekly than when you need to buy one item every 6 years.

Ours and every shop in the area is booked out weeks or even months right now. Good luck with service after the sale if you have your vehicle dropped in your driveway by a drone. Not to mention, Ford pays less to the dealer for warranty work than the industry standard calls for. We do it because we sold the vehicle and want to treat “our” customers right. No dealer that’s been screwed by Ford will be interested in helping “Fords” customers for a reduced rate when their shops are booked for months with full rate paying actual customers.
Your point is taken though.

 

[aitch-2-oh]

Ford has been and continually cuts the holdback that dealers make behind the scenes on sold vehicles. That’s the “secret” money Ford pays the dealer after the sale and sometimes it’s nearly the only money they make depending on the sales price.

Soooo...there's a kickback [or 'holdback' as written] that Ford pays "behind the scenes" [ie - hidden]? Shocking.

More shocking is the statement "it's nearly the only money they make depending on the sales price", which glosses over the 800# gorilla in the corner that is the crux of the Car Buying issue: the exorbitant above MRSP market adjustments, some added after and onto the agreed upon amount, that Dealers tack on that are pure profit into that Dealer's pocket.

These Market Adjustments are far more than 'nearly money', as they add a "pay dearly" amount to a commodity with a known (and published) baseline value.

Current guidelines: Buyer Beware, walk away if something/anything doesn't smell right, "get the terms in writing".

 

[NJBob]

Good for you. Every experience with car salesman is that I know more than them. When a new model comes out is there any mandatory training for the sales people? I doubt it. Once when looking to buy a car I gave them my keys so they could evaluate my trade. When I could not make a deal. I had to threaten to call the cops to get my keys back. It is stuff like this that gives car dealers a bad name.

Remember Saturn? They had a no Hagle price. Wonder how that would have worked out in times like these.

 

[teh603]

Ford buried the horse and buggy industry so they know the score. My entire life the idea of car dealerships and salespeople annoyed me. Why is it that I can go 5 miles away and save $3000 to $5000 on the same vehicle with the same build? I don't want to hear the excuse that you have to do your research. The car buying experience is so exhausting and it could have been streamlined and saved what we are debating right now. Anything that happens to dealerships will be self inflicted.

That still doesn't justify the dealer's (or the parts guy's, or the service tech's) family winding up on the street because somebody decided to shake up the market. But that's what some of these people are literally demanding.

A given economy only has a finite number of jobs. And when you tie having one of those jobs to being able to have a space to live and put food on the table, as we do in America, losing your job isn't just being out of work for a few months. You also have to factor in how much competition there'll be for the remaining jobs, how those people will pay their bills, the collateral impact on other sectors from large numbers of people who can now only (maybe) cover essentials.

Yes, the dealership model needs an overhaul. But doing away with it or cutting most of the associate jobs isn't the answer.

 

[MLowe05]

I understand that a lot of of people who post on this and many sites, would be comfortable ordering online and that’s fine. At my dealership, about one in twenty customers would consider doing that. Most want to talk with someone who knows and understands the product and can help them make the best decision to fill their needs.

I'm not doubting your story here, but I do want to express my surprise by this. I have purchased probably 20 cars in 25 year for myself and did the entire deal process for about 20 more for family and friends. I've bought cars from Mercedes and Porsche, and also from Kia and Nissan. I think, with the exception of Audi, I have purchased a vehicle from every German, Japanese, and Korean automaker at some point and more than one from most. I have never, ever came across a salesperson at any of these dealerships that was even slightly helpful. That I would consult with one of them about which car to buy is an absolutely hilarious idea. I can't honestly believe people still shop that way.

The two positive experiences I have had...

I did buy a Ford Maverick already, and that experience was good. I didn't need to consult the dealer but it was a positive experience with Long McArthur. And so far so good with Chapman Ford in Philly.

We recently purchased a 2023 Integra. MSRP, nothing added, breeze of a purchase. But why did I need to go to the dealer for this? Why couldn't they just ship it to my home?

That's the problem and why this industry needs an overhaul. If I am going to pay MSRP from now on, then I want it delivered like everything else these days. I don't want human interaction at all. I strive to avoid that.

I hope we come to some solution that works for folks like me and for people like you and your clients. What that will be.. I don't know.

 

[MD_Maverick]

From what I’ve read the European model of ordering online and cutting the dealer out is where companies might go next. Dealers should be working hard to keep their purpose but we will see. Mine has been pretty great to work with while I get bumped to a 2023. Ordered my Maverick Hybrid late in the ordering cycle bc I had to financially wait to commit. Hopefully my dealer will continue to be great and not screw me on my 2023 Hybrid Maverick.

 

[22Ford XL Basic]

On June 16, 2021 I reserved my Maverick XL Supercrew on the Ford Site. Advised by Ford to contact Tamiami Ford.
I contacted Tamiami Ford regarding my reservation. Communicating with their sales representative Timothy Stack. I ordered my Maverick XL with co pilot and was assigned order number 7047 On August 2, 2021 quoting a net price of $22,185
During my conversation with Stack I specified that the vehicle was not to be modified in any way and he assure me it would't be. Further that the only added costs to my order would be tax and title as well as the processing fee.
As my estimated time of delivery in November was constantly changed I contacted my newly assigned agent Wayne Weis many times concerning the delays and possible delivery as I needed a car in January.
Finally on April 17' 2022 at 0930 in the morning my long awaited order received a vin 3FTTWB8E33NRA66434 was to be produced the week of May 9.
This was followed by another notice that the vehicle was in shipment on May 18, 2022
On Monday morning July 11, 2022 I received a call from my newly assigned sales agent that my Maverick was in and the window tinting looks good. I told him tinted windows in my home state were illegal and I instructed him to have them removed for that reason and the fact that I specified in my sales agreement with Timothy Stack.
I was subsequently contacted by Weis who refused to remove the tinting telling me he could get "$12,000 more for my truck on the lot.
I was then notified that Tamiami Ford was returning my deposit and check and that the truck was immediately sold for $7,800 more.

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