Flaw in Fords allocation system?

[2pmader]

Don't flame me, but this is the allocation model in a nut shell. I'm not defending it, really. Just explaining it. But this is why...

Normal Every Day Selling Fords:

• Low Volume Dealer sells 1 Ford a Day.
• High Volume Dealer sells 15 Fords a Day.

All Day Long. Every day. If Ford made $1000 per transaction, Low Volume Dealer makes Ford $365k a year. High Volume Dealer makes Ford nearly $5.5M.

But it can get much more askew than that. What if the Low Volume Dealer sells more cars that have less margin? Maybe their margin average is $1000, but the High Volume Dealer sells lots of expensive SUV's and trucks. Maybe their average is $2500 for Ford? Maybe it is comparing $365K to $13.7M a year?

So, if there was no allocation model, in a normal year they would still after a year be a ratio difference of 15:1 between the low volume and high volume dealers in total sales. Just letting the chips fall where they may.

Popular model comes along. It's constrained in the number of units it will produce the first year. A Low Volume Dealer may be able to quadruple their normal sales volume due to that popular model. The High Volume dealer would see anything less than a 15:1 ratio as cutting into their sales. And that would be true.

They have been there, year over year, producing high numbers of sales for Ford. And now, when something popular comes along, they are supposed to live with less than what they normally receive? Meanwhile, low volume dealers get a sudden windfall, but the high volume dealers, are supposed to fund their windfalls.

The allocation system is designed to keep things in check, that dealers can't suddenly just take constrained and popular vehicles at a much higher quantity than normal. It's a stop gap to keep the field fair for dealers.

And you have to ask yourself, "Why does a dealer do such low volume and have a low allocation?" In many instances it is because they provide poor customer service, have bad reputations, overcharge or have ridiculous ADM's or shistery business practices. Do we really want a greedy high ADM low volume dealer getting a much higher ratio of Broncos and Mavericks? Each one there will be at the expense of another dealer with better business practices. If it was first come, first served, they are much more likely to put in fake ID names and get a larger share. Or turn on their customers and demand ADM on retail orders that were not disclosed. If you can't get more units than your allocation, it doesn't matter how many orders you put in...illegitimate or otherwise.

I'm sure there are lots of small dealers who are professional and price fairly, but they are small. And they will get popular Fords in roughly the same quantity they always sell Fords.

High volume dealers sells lots of cars. They generally are good dealers with good reputations and reasonable prices. That's why they are a high volume dealer. You can't force mass numbers of people to purchase a great quantity of vehicles.

If only 50,000 Mavericks end up being produced, the allocation system is designed to make sure that they are awarded out to dealers at roughly the same rates that they normally purchase vehicles. The only way to game the system is to sell more vehicles. That's what Granger was doing selling their Mavericks at low prices. To change their ratios and get more future allocations.

This process, though the fairest for dealers, is not fair to a customer. A customer would probably happily go to another dealer if they knew the end result for them would be different. Customers want to be treated fairly and similarly. In a dealer stock situation, customers wouldn't be harmed by the allocation process. They would go to the low volume dealer lot and see little to no inventory and move on to other lots until they found what they were looking for.

But in a retail order model, the allocation system does not work for customers. Because the low volume dealer is not injured that they are getting vehicles in roughly the same quantity ratio they always have. Their final sales numbers will end up similar at the end of the year. But all those extra customers they ordered vehicles from beyond their normal allocation are stranded.

The way I see it, they need to either...

• Modify the allocation system on the order end. Instead of scheduling allocations, make order allocations. The low volume dealer can schedule their 1:15 share (or whatever it actually is). Then they have to tell customers they are out of order allocations for the month when they want to place an order beyond their monthly allocation. Then the customer can decide to look elsewhere for a dealer with order allocations, or go on a waiting list, or check back in next month. In this method, everyone who gets an order in will be scheduled in a month or two. Customer is in control, and not subject to an undeterminable and prolonged order/waiting process.
• Or scrap the allocation system all together. But something will need to be done to protect the high volume dealers from having their inventory raided on popular models. A first come first served system will just cause all the dealers to commit funny business to try to get a greater share for themselves. The only way to game the system now is to sell more (and all the time).

Ford does need to do something though. This is just killing the customers. Who did nothing wrong except want to buy a Ford. I'm sure Ford never thought this kind of information would ever get out there and understood by the public. But it is.

I know people that won't buy Chevys, or Fords, or Dodges, or Volvos, or whatever, and they say it's because something minor or obscure that happened to them 30-40 years ago. Or sometimes they do not even remember why. But they are still holding a grudge.

I've seen some of them in these forums. They will be hating Ford 40 years from now. And they may not even remember why.

Ford, do something for the customer! You can't win here. But you certainly can lose!

Thanks for the explanation very informative and helps ease some of the frustration in the non communication from Ford, and my dealer when I asked about allocations he did a little dance and I went away without an answer. I have been assured by Tim Bartz that my FE has to be built this year, which may help me with a small dealers small allocations.

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[Bad Actor]

You really can't fail with balanced administrative concepts. Their exploratory research points to systemised reciprocal paradigm shifts. The consultants recommend facilitating organisational consulting.

Easy for you to say....

 

[nickmav]

It is extremely flawed. You can still reward strong performing dealers without overly punishing customers. Ford doesnt seem interested in that.

Or maybe they are, but in normal times its not as noticeable of an issue. But during covid / shortages / long list of reservations, its definitely causing trouble.

 

[Champ]

Easy for you to say....

We need to cascade memos about our deconstructed modular time-phases.

 

[Kookie70]

Got a email from Ford today was hoping that it was a build date for my Hybrid Lux Maverick, but nope just saying they have delays in production. Oh really!

 

[DutchErnie38]

I live in a rural community and my Ford dealer sells a lot of F-150's, a bunch of them, lots of farmers here. The demand of Mavericks is low. So I am getting punished because a lot of F-150 are being sold, but not too many Mavericks?

 

[The-Beast]

I don’t think it matters much either a small dealer or large volume dealer, if you order from a large volume dealer who may get a lot more vehicles a month, you are also in the back of the line with that dealer because of the the volume a head of you. The dealer I ordered from had over 400 orders ahead of me, even if they get 20 to 40 vehicles a month it’s still a long wait, they told me they had months where they only got one vehicle.

It absolutely matters. If it didn't you wouldn't have so many people complaining about their week 1 orders still not having been filled or worse even scheduled. Compare that to large dealerships having orders filled into August/September/November.

When you go out to dinner with a group of 8. You don't want to see two groups of four seated right next to each other that arrived after you. There is a reasonable expectation of the restaurant to hold the table open until the other one is available to accommodate your party. Just as there is a reasonable expectation of Ford not to fill constrained parts orders on Ecoboosts ordered in November. Just because that is what is directly available to them. Passing over that Week 1 Hybrid order indefinitely. Just as the restaurant can do to the party of 8.

 

[pigsareus]

Ford stopped taking orders when they reached totals they thought they could build. This shows intent to build all of them. So what do allocations really have to do with anything @Ford Motor Company ?

I"d guess that the allocations are more time sensitive - indeed they'd make all the vehicles but the most of the small dealer with more orders than typical vehicles would be built at the tail end, whereas the larger dealers would be getting more of their orders fulfilled sooner and not have a glut of them delivered towards the end of production.

 

[pigsareus]

This is very true. I have even seen Long McArthur customer complaints about waiting. Because LM also has placed orders at a rate greater than their allocations. It's all about ratio, orders to allocations. We want a dealer in that sweet spot. But that's just impossible to know in advance.

Ford has those number, they COULD advertise what dealers have pending orders for the Mav that are proportionally lagging other dealers and point you in that direction. They have all this data, it's just simple numbers, there's likely some anomolies out there where some dealers for whatever reason have gotten way fewer Mav orders and if you happened to order one today you might just get it in a couple months.

 

[Oldopelguy]

Car dealerships and realtors are the last two big industries that refuse to acknowledge that the internet exists.

I honestly don't care which dealership I order the truck from. I have zero loyalty to any of them, and I expect zero back from them in exchange. If I had allocation information available to me I would have absolutely gone with whichever dealership could have gotten me the truck first.

But I can't get that information because it's weird and shady and hidden in the back room of some mysterious bs process. That's what sets me off; that in the information age a huge company still operates like some creepy club and it's affecting my order based on factors I can't even research.

 

[dalola]

The allocation system was based on the old sales model of large dealer inventory, and worked well for that purpose.

But it's completely off point for Ford's push to custom orders, which deal with pre-sold units. In this model, a sale is a sale, regardless of where it comes from, and should be prioritized by order date first, then manufacturing constraints. For pre-sold customer orders, allocation should have -ZERO- influence.

 

[stoptothink]

Got a email from Ford today was hoping that it was a build date for my Hybrid Lux Maverick, but nope just saying they have delays in production. Oh really!

Our order confirmation date is June 24th. Finally got a build date for March 7th about a month ago. Then 2 weeks ago it was pushed to March 21st. Woke up and checked my email this morning, pushed to March 28th.

At this point, I'll believe when I see it. I've been very patient to date, but having the date changed 2 days before scheduled build really irked me for some reason. The truck we put $500 down on, 9 months ago, is vaporware as far as I am concerned.

 

[Spook]

Our order confirmation date is June 24th. Finally got a build date for March 7th about a month ago. Then 2 weeks ago it was pushed to March 21st. Woke up and checked my email this morning, pushed to March 28th.

At this point, I'll believe when I see it. I've been very patient to date, but having the date changed 2 days before scheduled build really irked me for some reason. The truck we put $500 down on, 9 months ago, is vaporware as far as I am concerned.

I understand your frustration. I suspect that it would be much worse if they never updated you on the delays when they came up. Imagine how you would feel if you didn't see any activity on March 7th and they didn't tell you that something had delayed it to another date.
BTW, I am still waiting on any activity on my order and don't have any dates on anything.

 

[Bruinman]

Got a email from Ford today was hoping that it was a build date for my Hybrid Lux Maverick, but nope just saying they have delays in production. Oh really!

Same here. Received the same email.

 

[Zman1966]

Thanks for the explanation very informative and helps ease some of the frustration in the non communication from Ford, and my dealer when I asked about allocations he did a little dance and I went away without an answer. I have been assured by Tim Bartz that my FE has to be built this year, which may help me with a small dealers small allocations.

Applause! Please post on as many Ford forums on social media as possible!
Customers made to wait should be compensated! It's good business to reward patience and loyalty!

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