Ford CEO Responds to Price Markups

[jesusdad]

That still doesn't justify the dealer's (or the parts guy's, or the service tech's) family winding up on the street

There are other additional possibilities besides the current model, and homeless auto guys.

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[Jmav2152]

So it's better that dealers are charging $54,000 over MSRP

Put the last year into context of the past 5-10 years where getting below msrp was extremely common place. People didn't cry then about it. In fact you were a dummy if you paid msrp for anything. We are in a bubble and the market is literally adjusted to what is happening. Whether it pops or not I don't want to try and guess but I don't like knee jerk reactions to something that relatively is going to be a blip in a bubble when parts supplies catch up Inna year and there's lots full of Mavericks.

It absolutely sucks that dealers are doing legitimate bait and switches but that's few and far between. Most people's transactions on orders have been at what was promised from the day of ordering.

 

[teh603]

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.

Again, this only results in fewer jobs. Fewer jobs means fewer people who can afford new cars. Keep the corporate death cycle going long enough, you get something like Robocop. Which, ironically enough, fits a lot of peoples' dreams of having a dystopian society to fight against just like the tween action/adventure novels they've grown up reading.

There are other additional possibilities besides the current model, and homeless auto guys.

Almost all of them result in a net decrease in available jobs.

There is a reason so much stuff gets outsourced to china. One is that in the worker's paradise, unions are illegal.

That's a related problem, but most of the policies that claim to solve it, also lead directly to authoritarianism.

 

[NJBob]

Please share dealer name so we can all avoid them.

I have noticed that many of these posts fail to specify the dealer. I am starting to wonder if the forum frowns on doing this. Although I have seen dealers mentioned in other posts. Or if the poster is just full of it. If I got screwed I would certainly let everyone know who the offender is.

 

[Ford sales guy]

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".

I don’t disagree with anything you’ve said. Only shop where you are treated with respect.

 

[Decayed]

That's a related problem, but most of the policies that claim to solve it, also lead directly to authoritarianism.

Nonsense. Unionism leads to authoritarianism. For instance the teacher's unions get taxpayer dollars funneled to them through school districts. Parents do not get a choice where to send their kids to school. The unions in turn funnel money to support politicians who keep the gravy train running. And guess what happens if you refuse to pay your taxes because you don't want to support this scam? Eventually, men with guns (whichever LE agency that serves the warrant) come to your house and throw you in jail. It's how the system works right now.

School vouchers are the answer to that but the teachers unions would rather crash the entire system than allow that. And how exactly do school vouchers cause authoritarianism?

Not saying unions are all bad - in some cases workers badly need advocacy. But your blanket statements are clearly not true.

 

[Ford sales guy]

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.

Well said. As I’ve stated, some people will definitely prefer home delivery and that’s great for them. From my personal experience from 7 years selling Fords, only a tiny fraction of my customers would be interested or even willing for that matter to order from home.
I’m sorry you’ve had such limited success with salespeople in your car buying experiences.

 

[Ford sales guy]

Nonsense comparison. No one is complaining about typical markups.

Some items in a grocery store are sold at below cost and others are marked up 50% or more. You just don’t know the difference. There are discount grocery stores with the lowest margins and high end stores with very large margins. Typical is in the eye of the beholder.

 

[teh603]

Nonsense. Unionism leads to authoritarianism. For instance the teacher's unions get taxpayer dollars funneled to them through school districts. Parents do not get a choice where to send their kids to school. The unions in turn funnel money to support politicians who keep the gravy train running. And guess what happens if you refuse to pay your taxes because you don't want to support this scam? Eventually, men with guns (whichever LE agency that serves the warrant) come to your house and throw you in jail. It's how the system works right now.

School vouchers are the answer to that but the teachers unions would rather crash the entire system than allow that. And how exactly do school vouchers cause authoritarianism?

Not saying unions are all bad - in some cases workers badly need advocacy. But your blanket statements are clearly not true.

Ok, so a lot to unpack here. So I'm going to split the issues.

"Unionism" isn't a thing. There are no "unionist" political parties or politicians in the US. And unions are supported by member dues, not taxpayer money. A teacher's wages and the union union dues deducted from them are no longer taxpayer money once the teacher has been paid. The fact that you seem to consider them to still be taxpayer money, has some really troubling implications.

"School choice" and school vouchers solve no problems. Every state has hundreds of religions schools, and parents send their kids to them by the tens of thousands. And sure, their kids outperform public school kids.

What you're not seeing is that the public schools *have* to accept all students in their district. Not so with religious schools. They get to pick and choose only the best and the brightest kids, and have no geographic boundaries. They also only take kids with parents rich enough to afford them. When you have one group that can pick and choose, and another that has to take everyone, the picky group will always outperform.

Now, you mentioned vouchers? No voucher is going to cover full tuition at a religious school. Again, there's large numbers of kids those religious schools don't want. So while that voucher will cover a kid going to their neighborhood public school- which only gets tax dollars from the neighborhoods its zoned to- religious schools will make sure it will never cover full tuition. Ever.

I went (more like, was forced to go) to a Christan school, and I got stuck working as a substitute teacher for almost exactly ten years. I've seen how it all fits together. There's a whole lot more that I probably should be going into, but this is getting close to the limits of civility for a truck board and I don't want to piss off the moderators.

I'm going to set this thread on ignore/unwatch once I've clicked the post button. I don't know which way the moderators lean, and I really don't want to find out.

 

[CTYankee]

My Maverick was a retail order that was refused by the ordering couple because the wife decided she didn't like the color (Velocity Blue). I spotted it the next day and bought it for MSRP. The dealer was a smaller one (Gervais Ford in Ayer, MA) about 40 miles from me. The experience was seamless; there were no gimmicks, no sales pressure, no sleight of hand. It was very much like the small dealer close to my house that was gobbled up by a dealer group several years ago.

Almost all of the Ford dealers near me now are multi-store dealer groups with the attendant focus on volume, hidden fees, etc. There are a couple of small ones left in closer towns but they didn't have, and weren't expecting to receive, any Mavericks.

If the dealer network didn't exist beyond delivery and service, would the original customer have had the option of refusing delivery? Maybe or maybe not depending on how Ford structures the go-forward dealer agreements relating to new car sales.

Our pre-owned 2018 Fusion Titanium was a similar deal. My wife had found a 2018 Fusion SEL she liked at a mega dealer near us, so she brought me down to look at it after I got off work. We tried to make a deal on it until the dealer sprung a $1K trade-in fee against our 2011 Fusion (to compensate them for taking in trade a car they wouldn't keep on their used-car lot). We walked out and ended up at a small dealer (Lombard Ford near Torrington, CT) 80 miles away, where we purchased the Titanium after the sales manager drove 40 miles back to his house to get it and bring it in for us to see. No-haggle price. no tricks, etc.

The good dealers exist and they personalize their sales approach to what the customers need. Almost all of them could do a better job of product training, but so could most sales forces across all industries. The mega-dealers and their tricks exist because too many customers want to spend as little as possible and don't attach any particular value to high-touch service levels.

I think a hybrid model is needed. Allow customers to purchase directly from the factory and take delivery from the local dealer of their choice while also allowing the dealer to stock local inventory on which they retain pricing power. For direct customer orders have the factory structure a progressive commission structure that's tied to customer satisfaction ratings. The dealers with the best customer ratings get the best commissions, which means they are being paid for the value they add to the transactions and the customer experience. That also adds value to the brand.

Our job as customers is to walk out of a dealership as soon as they do something shady. If we don't, we're part of the problem, IMHO.

 

[AutobahnSHO]

That's not what I said.


Atleast dealer model you can always find another dealer to play ball. If ford Says it's X price, that's it. You can find or do anything better. Pros and cons to both.

You go to a different brand.

 

[Vols44]

Nonsense. Unionism leads to authoritarianism. For instance the teacher's unions get taxpayer dollars funneled to them through school districts. Parents do not get a choice where to send their kids to school. The unions in turn funnel money to support politicians who keep the gravy train running. And guess what happens if you refuse to pay your taxes because you don't want to support this scam? Eventually, men with guns (whichever LE agency that serves the warrant) come to your house and throw you in jail. It's how the system works right now.

School vouchers are the answer to that but the teachers unions would rather crash the entire system than allow that. And how exactly do school vouchers cause authoritarianism?

Not saying unions are all bad - in some cases workers badly need advocacy. But your blanket statements are clearly not true.

You contradicted yourself when you said not all unions are bad, but unionism leads to authoritarianism. Open shops are led by authoritarians who preach safety unless it costs them money.

Less than 10% of the workforce is organized. Most union bashers have never been part of an organized workforce. Teachers are in the profession because they want to make a difference in spite of complaints from students, parents and administrators. Their organized representatives give them some job security, but nothing great.

Side topic aside and getting back to the thread title; Jim Farley knows about the 10% of dealers who's ADM's are out of control. The three strike rule and name match policies are in place. Getting old school sales managers to change their tactics is a long winding road. Impulse buying customers have enabled ADM's.

Customers who plan ahead pay MSRP (or less) with MTC knowledge, a preview order and a co-signed buyer's order. Those customers also screened dealers ahead of time to avoid the long winding road that ended with a dead end (ie, unconfirmed COVP/ROVP, "lost orders", dealers playing dumb about price protection, damaged in transit claims and related poor communication tactics/techniques).

 

[Delzona]

I have no sympathy for dealers… they have done it to themselves with greed and shady practices for years.

Autoline reported yesterday that dealers are having their most profitable year EVER, by exploiting the shortages. Hardly any need for sympathy there.

Also, individual dealers have been bought out to create a small number of dealer supergroups that only add an expensive corporate overhead layer to car sales. Dealers have nothing to do with small business these days.

Jim Farley has stated dealers add $2-3,000 to the selling cost for each vehicle, strictly overhead with no added value. He wants to move to a model whereby sales are done online and selected former dealers become delivery and service centers only. He will have to in order to compete with direct selling manufacturers.

The writing is on the wall… if you are a car salesman, get rid of those checked sport jackets and look for a real job.

Suddenly the market of checked sport jackets gets flooded!

 

[cavemold]

I am not sure how the name match policy is going to prevent price markups.

Well it basically forces the dealer to sell at msrp to the customers order . No adding xyz plans no adding extra without the customers say so . They have to match what the order sheet says when you put in your order . You can change it , of course that means the dealers has to submit your changes and let ford know .

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