The new rules have been in the works for months and will formally be rolled out in September, with Ford CEO Jim Farley confirming that these rules will create standards that are radically different than existing ones that are already in place. As expected these rules have ruffled the feathers of Ford's dealership network with some dealerships claiming that Ford's actions are potentially threatening the traditional franchise model that has been the default sales avenue for many decades.
Zero Inventory And Stronger Online Sales Define New Era
A key portion of Ford's plans center around two major goals with the company confirming that it not only wants dealerships to have zero inventory, but that all sales will be done online with the buildings themselves focusing more on service and repair. The idea of zero inventory is a jarring contradiction to what dealerships are known for with acres of glistening metal lined up perfectly in rows for all comers to see.
“I think our dealers can do it. But the standards are going to be brutal. They’re going to be very different than today,” Mr. Farley said at the time.
Farley's comments came during the Bernstein Investor Conference but while Farley and Ford are confident that their plan will go off without a hitch, dealerships are singing a very different tune. In interviews with the Wall Street Journal, multiple dealer reps expressed their concerns about Farley's recent statements and were quick to remind the publication that dealerships play a key role in the broader buying experience. A few of them went further in their remarks and confirmed that their attorneys will defend them in court pointing out that the franchise laws in many states are concrete, and Ford's actions might run afoul of those laws.
Ford Attempting To Smooth Things Over
Ford has noticed some of the pushback and has begun trying to work things out with its dealers with Farley himself holding four hours of group meetings with over 300 dealer owners to address the company's plans. These meetings were reported to have raised morale, but it also shows the figurative pickle Ford is in when it comes to pleasing customers, dealers, and investors.
The company is committed to following current franchise laws according to a statement by a Ford rep and it appears that we will not see anything come to the point of straight direct sales. Instead it appears that Ford is trying to create a no-haggle environment where prices are not negotiated and are instead set in maintaining a commitment with a customer.
While Ford is committed to rolling out its plan in September, asking the dealership arm to rapidly change formats after years of traditional franchise sales in a pre-pandemic era will not be an easy feat especially since it will require dealerships to revamp key aspects of the selling process while also pitching processes and redundancies that they might have taken for granted.
Carl Malek has been an automotive journalist for over 10 years. In addition to his specialization with Ford, he grew up in a General Motors household and is extensively familiar with their products too. Contact Carl on Twitter at @CarlMalek3, on Instagram and Facebook for automotive news to send news tips.
Image Credit: Ford Motor Company