Ford dropping 600 dealerships
It is well known that one of Ford's biggest problems on the consumer front is a bloated dealer network that saps resources from the mothership. In an effort to streamline things on the street, Ford is trying to eliminate at least 600 dealerships throughout the country.Much of the issue centers on too many dealers in condensed, urban areas, which have the tendency of creating unnecessary competition and, in turn, drive prices south. The plan is for larger, more affluent dealers to "buy out" their smaller, less profitable counter parts, bring the dealer network down to manageable levels.
According to some dealers, Ford has offered on-the-block dealers as much as $300,000 to alleviate the pain of being bought out by their competition. One dealer, quoted in Automotive News, called the offers "chicken feed," saying that a sum that small would do little to persuade owners that have invested several times more in upgrades and equipment over the years.
Currently, Ford insists that dealers who close their doors do so of their own free will, however, if things continue to slide downhill at the Blue Oval's headquarters, voluntary closures may quickly become a thing of the past.
[Source: Automotive News - Sub. Req.]
Reader Comments (Page 1 of 3)
Richard Warren 9:12AM (9/18/2006)
Let the class action lawsuits begin. In the end this saves Ford nothing. 600 less outlets=600 less chances to sell the product, besides, it's the dealers money, not Fords.
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_O ^ O_ 9:21AM (9/18/2006)
Woo; go Ford! This is gonna get nasty with upset dealers and such...but, its soooo long overdue.
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cade 9:32AM (9/18/2006)
#2 fewer dealers means that you will pay more for your next car not less. Free market will always benefit the consumer, closing small 'mom and pop' stores to let the mega dealers have complete control over an entire market area will do nothing but drive down customer satisfaction and drive up prices.
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GEORGE SMITH 9:47AM (9/18/2006)
Is this the end of Ford? personally Ford has served up crappy and dangerous cars over the years, from the Pinto catching fire easily, crown vic blowing up and explorers rolling over. the most car US lawsuits in history. Does Ford deserve to live? just ask the hundreds of families who lost a loved one to a poorly engineered ford. Yes, close 600 dealerships because it is well over due...long live GM
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JJ 9:55AM (9/18/2006)
Well Ford is going to run into some problems with this, because as the dealer said, They've sunk the money into the dealerships, not ford.
and 300k for a store that costs many times that a year to run and maintain IS chicken feed.
I mean seriously, if you owned a ford dealership, and it was your ONLY business and you've sunk millions into it and its doing fairly well, but its on the chopping block because a mega dealer wants your territory, but refuses to buy you out for how much the dealership is worth... WHY would you WANT to sell it?
Its like the dealer i work for, its her only dealership and to bigger dealers wanted to drive her out of business but not buyout her store for what she was asking. Why should she have to sell her store if its doing better than the mega dealers store and has a higher customer satisfaction rating and such? Just because the mega dealer has more disposable income and 8 more stores gives him the right? I dont think so.
Ford is in for some tough times ahead if they FORCE people to close down, it wont be pretty, because the owners of those dealerships, WILL get their money.
Well george smith just ask the 100's of families whose paychecks come from those dealerships if they deserve to be shut down. You know GM is trying to do this to their dealer network too ya know.
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Buzzsaw 9:55AM (9/18/2006)
Way to be informed George. The Pinto and Crown Vic were/are no more dangerous than other cars in their segment and vintage.
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Zo 10:19AM (9/18/2006)
This is about time for Ford.
The 300K is on top of whatever another dealer is willing to buyout the smaller dealer. So, its the price of the buyout + 300K. Not 300K for the buyout.
I find it funny that just like the unions believe that they deserve the same job for life, that dealerships believe they deserve the franchise for life. Besides, if someone is really as good as they claim, they can always open another dealership for another type of car.
Yes, prices will go up but that is what Ford needs, more margin fewer incentives.
Is this the end of Ford as someone suggested? Who knows but maybe the fact is there are far too many automobiles Mfg. and far too many legacy and healthcare costs that between Ford and GM someone should go out of business because it is no longer economically viable.
Since the mid-80s all the US Auto companies have been playing catch up with the Japanese and Europeans and the unions have made sure that they will never catch up. Combine that with poor quality, poor management and lack of understanding of what people want in a car and it has setup what we have today.
There will be a lot of people who will get hurt, and the same time there will be a lot of people that will prosper. The people on the short end of the stick will not like this but it has been slowly building to this point and now the balloon has popped and it is going to hurt.
Just like the dinosaurs, you have to evolve or die.
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Debbie - former Ford Dealership Office Manager 10:36AM (9/18/2006)
The best thing FORD could do is do away with the "DD" program. This was FORD's answer to solve their Equal Rights problem in the 90's. My dealership owner/manager was forced out of business so that Ford could put in their "designated dealer". So if Ford wants to close down some dealerships, let them be Ford owned "designated dealer" dealerships not independently owned dealerships.
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Harold Berman 10:45AM (9/18/2006)
I had a Mercury Topaz that I gave to my daughter when she turned 16 or 17. The alternator had to be replaced about 5 times. It just kept burning up. That was my last Ford product. I have rented about three Ford products since and had no trouble. I really liked the Ford van that I rented and my wife suggested we buy one. Then I looked under the hood. I found three spark plug wires draped over the air filter. I assume those spark plugs would have to be removed just to change the filter. With that little observation, I decided to stay away from Ford products, no matter how good the rentals are. Maybe Ford should just stick to making F150s, their biggest profit maker. Does anybody actually buy their sedans besides Hertz and the other rental companies?
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Stephen Reynolds 10:52AM (9/18/2006)
Ford, et.al. is/has become an albatross with the autocratic managment that listens with a deaf ear. The automarket is changing as the buyers become more sophisticated and informed (these are the people that still have jobs).
Profits will diminish for the dealer and Ford unless and until they begin to respond to consumer needs.
Moreover, trying to get the Mfg to own up to its' faults, build something safe, durable and that someone wants to buy is asking too much. With a market based economy as we have, money is king. Not a bad choice except safety, enviornment and social responsibility must compete with profits. Do you really need to guess who wins?
Stated in another way:
One evening an old Cherokee told his grandson about a battle that goes on inside people. He said, "My son, the battle is between two "wolves" inside us all.
One is Evil...It is greed, anger, arrogance, envy, jealousy, sorrow, regret, self-pity, guilt, resentment, inferiority, lies, false pride, superiority, and ego.
The other is Good... It is personal character, joy, peace, hope, serenity, humility, kindness, benevolence, love, empathy, generosity, truth, compassion, faith and doing the right thing no matter if someone is watching or not."
The grandson thought about it for a minute and then asked his grandfather:
"Which wolf wins?"
The old Cherokee simply replied, "The one you feed..."
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GEORGE SMITH 10:53AM (9/18/2006)
Where is our PRESIDENT? who is standing up for our jobs, our rights our American future. Well it was HIM that signed the free trade agreement allowing KIA,and HYUNDAI to become GIANTS now bigger than Ford and pay way less taxes than Ford and GM to sell there cars here, it was HIM, under his watch has allowed and is still allowing thousands of jobs to leave America who is allowing hundred year old companies to merge, complete non-sense when there is enough for everyone. We are already past the Great Depression it is bound to get Worst ----blame BUSH and Republicans lets get him out of office and get our America back!!!!!!!!!!!
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Jason 11:03AM (9/18/2006)
I have a friend who bought a Taurus. It already has needed the valvetrain replaced (55K miles), it leaks (I rented another Taurus and it leaked in the same place). We owned a Contour that we liked a great deal -- 5 speed, decent power, Euro-style handling and AWESOME gas mileage from the 2.0L 4-banger. Then it ate 3 wheel bearings, and the air conditioner at 55K miles. $2000 in repair costs ... hell no. We bought a Honda. 88K miles later, an NO extra reapir costs, just routine maintenance. My parents have a 91 V8 Explorer on it's 3rd engine (the 5.0 engine Ford's had about 3 decades to "work the bugs out of"), and the A/C has died twice ... and my dad babies that rig like you wouldn't believe ... I bet the engine's never revved higher than 3K. Good thing they bought the extended warranty on that so Ford is paying for all that. My in-laws are on their 3rd Focus, they turn them in at the end of each lease period because something's always about to go -- wheel bearings, strange noises and so on. Which is a shame because the Focus is fun in a lot of the same ways the Contour was -- easy on gas, handles great and has decent power.
Ford better get the basic systems worked out in this latest quality push. They seemed to hit a pretty good stride in the late 80's/early 90's in terms of quality, but they have definitely slipped off that mark. I hope they can find their feet, they have a lot of potential good ideas out there, but it takes a long time to rebuild a reputation .... and I'm off Fords for a while till they come back.
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Yvo van Doorn 12:21PM (9/18/2006)
#11 As much as I hate the president, that is complete BS you are spewing.
Ford and GM facing problems is not because of the free trade agreement. The free trade agreement only increased competition and the playing field for Ford and GM. If Ford and GM had been making a good solid product, say for example something like a Toyota Camry, Ford wouldn't be in this situation. Old business tactics and ways is what ruined Ford today. Their unwillingness to grow and their "smug" attitude up until the last moment ruined their chances. The Ford Focus was too little, too late in my book. Had it come out during the mid 90s after many of Ford's failures, things would look mighty different today.
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JJ 11:22AM (9/18/2006)
Well Zo, as far as i know, you can just go and open another dealership at the drop of a hat, with the way the dealership economy is now, you either have to petition for a new one or be chosen by said company of whatever brand you want to own.
Like I said Zo, Some dealers have ALL their assets tied up in their dealership and if you think a mega dealer is going to pay the dealer the fair price for their dealership when this pressure is on the smaller dealer, you ahve another thing coming.
This is going to wind up hurting both parties i feel.
Just because someone is bigger, doesn't automatically mean their better.
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AZMike 11:41AM (9/18/2006)
a lot of simple answers for some complex problems here.
these are the facts:
1) all states have franchise laws; these protect businesses in their state from heavy-handed tactics by manufacturer. and for those who know the car business, you are well aware that the ones on the proverbial "chopping block" are not necessarily the lowest selling dealers, or the ones with the lowest CSI. this is where the franchise laws will protect dealers, as a lot of this will be politics.
2) this proposal by Ford is much different than the Project 2000 plan by GM. in Project 2000, GM was trying to eliminate stand-alone Pontiac and Buick dealers, rolling them into a single Pontiac/Buick/GMC franchise.
the big difference here is that the GM franchise buying the other (Pontiac dealer buying a Buick dealer, or vice-versa) was getting something that they didn't have before. in Ford's case, buying a competing dealer would be getting nothing they already didn't have.
I owned a Dodge dealer in the Los Angeles area for ten years, from 1983-1993. Chrysler felt this particular area was "overdealered", and wanted to eliminate three dealers, with mine being one of them. in ten years, I had taken it from selling eleven new cars per month to just under 100 units per month. they offered me ridiculous money for the place; ten times what I paid, which pretty much equalled the increase in sales. I certainly couldn't say no, although at no time was I ever even remotely pressured to sell out.
the case with Ford is quite different; they don't have the cash to do this kind of thing, especially considering that the dealers they've targeted are in major metropolitan areas, which will mean big $$ for the land as well...and there are 600 of them.
Mike
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guss scarbrough 11:47AM (9/18/2006)
RE#4 Oh get real! You talk like Ford is the ONLY MOTOR COMPANY that has ever produced a questionable vehicle! Perhaps you are too young to remember the Chevy Corvair or the VEGA, but I am not. Ford has problems for sure, and dropping some of their dealers that are competing with each other may help get prices up. But the biggest things they need to do is quit paying some clown 25.00/hr to put a nut on a bolt and get a more complete warranty. If two items cost the same, and one come with a 90 day warranty and the other with a 5 year warranty, which would most people buy? As for Explorers rolling over, nonsense. I've driven my Explorer over 130,000 miles with no major problems. Of course I dont try to drive it like its a SPORTS CAR , and I do keep good (NOT FIRESTONE!) tires on it inflated to 40 lbs. It drives good, and responds well to sudden steering changes caused by idiots on their cell phones driving on the wrong side of the road or just stopping in the traffic lane so they can have an arguement with their phone!!! I would sure hate to see a lot folks up north out of work, but I would rather it be a buch of Yankees out of work than a single God Ol' Boy.
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Mike 6:56PM (9/19/2006)
I hope they close the dealers with the terrible sales staff. Some sales staff I had the misfortune to talk to were either absolute sharks (try every trick in the book) or just plain downright annoying and desparate. I think I met one Ford salesman who I was comfortable dealing with out of about twelve.
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speed-6 12:12PM (9/18/2006)
They can start with all the greedy dealers marking up the GT500 $20 plus. I know they are all doing it. But, just start with the ones that are well over $20K and don't even use the lists they take for the the car. Then work through the rest of the bastards that treat buyers like crap and ignore the fact that we might help them sell more cars. I have no sympathy for them and Ford should prevent this and won't.
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Edsel 11:59AM (9/18/2006)
I don't give a damn what you doom-sayers say about Ford. I'm buying as much Ford stock as I can afford at
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Baumann 12:11PM (9/18/2006)
Scarbrough,
Don't even try to bring up the Corvair. It was a rear engine car that had a tendency to oversteer whereas all of the other boats of the era had a tendency to understeer. As a result, people just didn't know how to drive it properly. However, it was one of the best handling cars ever built by Chevy. Nader was just looking for attention when he wrote his book. In fact, he didn't even have a driver's liscense at the time.
If you actually investigate, in 1971 the NHTSA came out with a report clearing the Corvair...
"The handling and stability performance of the
1960-1963 Corvair does not result in an abnormal
potential for loss of control or rollover and it is at
least as good as the performance of some
contemporary vehicles both foreign and
domestic."
Three years later, Ford got slapped on the wrist for the Pinto...
"Ford estimated 180 people would burn to death at a cost of $50 million per year to Ford, and the $11-per-vehicle fix would have cost $138 million. Ford made a business decision and got slapped for it."
There is simply no comparison between the lies that Nader started about the Corvair and the deathtrap that was the Ford Pinto. As for the Vega, comparing a piece of crap car that breaks down a lot and has problems with the engine overheating to cars that will explode or roll over and KILL the passengers... equally off-base.
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