Specifically, Ford seems intent on taking a page from Tesla’s playbook, and shifting its sales model to permit customers to buy Ford’s new line of electric vehicles (such as the Mustang Mach-E, the F-150 Lightning, and the E-Transit electric van) entirely online.
From Ford’s perspective, this is a logical move, because (as The Wall Street Journal reports), it costs Ford about $2,000 more to sell a truck via its dealer network than it does when that same truck is sold directly to the consumer. That’s $2,000 potential profit Ford is giving up by sticking to the old dealership model for selling cars – or $2,000 worth of discounts the company could dole out in order to underprice competitors and win market share.
Selling direct may be popular in Dearborn, and on Wall Street and Main Street as well – but it’s not necessarily going to go over well with Ford’s nationwide dealer network. Ford must also tread lightly if it wants its new policy to adhere to the terms of franchise agreements it has signed with these dealers, and state franchise laws as well.
Selling direct may be popular in Dearborn, and on Wall Street and Main Street as well – but it’s not necessarily going to go over well with Ford’s nationwide dealer network. Ford must also tread lightly if it wants its new policy to adhere to the terms of franchise agreements it has signed with these dealers, and state franchise laws as well. PT
If Ford is able to do that in every State (franchise laws are State level… and vary), it’ll be the end of dealerships over time.
Supposedly, dealers make their money on warranty work, but warranty work should drop substantially with EVs. If they can’t mark up vehicles (like many are now doing), they lose that revenue as well. That leaves regular non-warranty repairs and dealers have trouble competing there. Oh yeah… they also make money on used cars… but there is already a ton of competition there too.
Get your popcorn!
This should eventually be quite a battle between OEMs and dealers. I hope the dealers get what they deserve… which they won’t like…
Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
Rob, that better be big bags of $COST popcorn because this is going to make the other car companies think about improving their margins using similar methods.
Hey, on another note, some questions: I’m seeing mentions about Dave Gardner is no longer with Motley Fool? Or did he just step down from letter writing? Also, did Motley Fool sell their biz to someone else?
The other day, someone in a thread on Fool said there are about a million subscribers to MF newsletters. Does that sound right to you? Is that even possible? (I ask because I see continuing decline in new posters on discussion boards.)
Last I heard, David is still with the Fool but isn’t doing recommendations.
And I’ve never heard of the Fool being sold.
A million subscribers? I never was privy to such info. I know there are a lot of whiners though…
Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
Thanks for the response. I really like Dave and Tom and hope they never sell this business. But I keep seeing off-hand remarks by rabble on other boards saying someone has bought into this business, etc.
I know nothing about MF politics, but, as long as Dave and Tom are still working together, I feel the biz is still in good hands.