REPORT: Ford offering dealerships for $1
Ford's dealer development program works to help people become dealer principles who might not otherwise have the chance. The 64 members of the program, most of them black or Hispanic, are set up with stores by Ford and then buy out Ford's interest in the dealership with revenues. To give them a boost and, presumably, free up Ford money, Automotive News is reporting that Ford is offering dealers in the program an offer they'll have a hard time refusing: complete ownership of their stores for $1.
To take advantage, though, the dealers will need to have private financing for their operating capital in place by September 30. If they can prove to Ford that they have enough private resources, they will take complete control of their stores and Ford will forgive any money the dealer still owes to The Blue Oval. Even though Ford would technically lose money on any dealer who accepted the offer, the automaker would no longer need to be involved in the dealership or in its floorplan financing.
With the state of car sales, there are likely to be dealers who can't take advantage of the program. For those who haven't been able to pay Ford back at all, the decision will be taken on a case-by-case basis about what to do with their stores. For those dealers in good standing who simply can't get outside financing, the arrangement will continue as is.
[Source: Automotive News, sub req'd]
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Reader Comments (Page 1 of 2)
gt-racer 4:52PM (4/22/2009)
1$. . . wait there's gotta be a catch.
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jd_stvns 5:05PM (4/22/2009)
it is interesting though
Dunc 5:24PM (4/22/2009)
Did you even read the article or did you just look at the title?
larry a 8:23PM (4/22/2009)
He only read the title
gt-racer 9:11PM (4/22/2009)
or sarcasm, my friends.
jd_stvns 5:06PM (4/22/2009)
how do you apply?
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Sea Urchin 5:10PM (4/22/2009)
"To take advantage, though, the dealers will need to have private financing for their operating capital in place by September 30."------------Does anyone know how much that number is?
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tekd 4:01PM (4/23/2009)
It's a lot. Basically enough to cover the cost of holding an entire lot of inventory, and then extra money on top for legally required bonds and other operating costs.
And with the current lack of profitability I'd venture that very few dealerships would be able to pay back or get any private financing.
Still, if you have 10 million in credit burning a hole in your pocket it's a good deal.
Chris 5:13PM (4/22/2009)
The catch is that they don't want to finance the flooring of the vehicles anymore....meaning no free for 90 days inventory anymore for dealers. Usually, a dealer will order new units from Ford at which time they'll dole them out and depending on the model and incentives at the time, they'll provide the car to them to sell for free. For 90 days. After which time, the dealer pays interest on the value of the car until it is sold. For many dealers that might not have 1-4 million (depending on size of dealership) in the bank account just sitting there, this would pose a huge problem! Banks are squeezing credit lines left and right and so dealers would need to balance used AND new vehicles on just that. This may result in more difficult deals as dealers won't be able to take just anything in on trade.
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Ben 5:43PM (4/22/2009)
this is a very long drawn out way for Ford to say that their dealers within the dealer development program are not holding up their end of the bargain. If a large percentage of the dealer development dealerships are not paying Ford floorplan, then Ford can simply try to unload them without looking like they were dinscriminating against their own dealer principal. I suppose it's a clever way to reduce the number of dealers who are good for non-payment of loans. If the dealers cannot obtain their own outside financing, whats next? Ford will weed through all of their dealerships. Survival of the fittest.
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GEO 5:58PM (4/22/2009)
Ford is not selling dealerships for a dollar. During this financial crisis they have lost many dealers, including some of the minority dealers they have been nurturing. This offer is a gesture to help some of the remaining minority dealers (who are already part of their Dealer Development program) to survive. Those dealers, who have already made sizeable investments in their businesses, are now being offered the balance of Ford's shares in thier stores for $1 - if they can secure the neccessary financing to operate the business. Ford is merely recognizing that the 'blue sky' value of all auto dealerships has disappeared in this market, and is giving a few of their minority operators a break in hopes that they can survive the crisis. Good on them.
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Jeff Johnson 6:04PM (4/22/2009)
Alright so it's cool they are "giving a break" to dealerships, but why is even the mention about this break mostly applying to black and hispanic dealerships?
Why does the race card always pop up on either side? I personally don't care if a dealership is white, black, brown, or purple the only color that matters here is green.
If you can't do business and more importantly pay your bills - you need to be smart enough to fold and not be a burden on the system.
Racism, reverse racism, blah blah blah how about the whole country judge someone on their actions and thoughts and the way they handle business instead of having to pull the color thing out to spark a debate.
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GEO 6:11PM (4/22/2009)
I think Ford's response would be that their percentage of minority dealers (same as all other manufacuturers) doesn't come anywhere close to those minorities' percentage of the population. They believe it's good business for their dealers to be more representative of the population in general, and have created a program to help that process along - if only in small numbers.
Dan 7:10PM (4/22/2009)
They believe it's good business to not have Al and Jesse and the rest of the race hustlers running boycotts and protests. If the price of that is subsidizing token dealerships because their owners are the right color then that's what they'll do. It's cheaper than the alternative.
Overt racism is alive and well.
GEO 7:17PM (4/22/2009)
Well, Dan, you have certainly proven your own point, albeit perhaps not as you intended:
"Overt racisim is alive and well"
c.haynie 8:14PM (4/22/2009)
Hey Jeff... sensitive much? if you bothered to actually read the article: black and hispanic was mentioned because this article directly pertains to Ford's "DEALER DEVELOPMENT" program which is/was specifically designed to develop and grow MINORITY (read: black, hispanic, etc.) owned dealerships. i'm not sure how you are reading "racism" into the fact that the two main minority groups that have been assisted by this program are mentioned. i believe a more accurate term would be "affirmative action".
quote: "Ford's dealer development program works to help people become dealer principles who might not otherwise have the chance. The 64 members of the program, most of them black or Hispanic, are set up with stores by Ford and then buy out Ford's interest in the dealership with revenues."
Chris 8:43PM (4/22/2009)
I agree with GEO, here.
UltimoDragon 12:52PM (4/23/2009)
@ Jeff Johnson: The program was explicitly set up to encourage minority dealer ownership. If you possessed proper reading and comprehension skills, you could have at least figured that out on your own instead of getting needlessly offended.
Furthermore, those who complain about the 'race card' are often the ones who aren't very knowledgeable on how 'the game' got started in the first place.
Vik 5:38PM (4/23/2009)
jw, dan- must be nice to ignore history and live in a vacuum, especially when that history doesn't affect you, and when it didn't affect your parents or grandparents. I take great pleasure in your whining.
Jake 6:26PM (4/22/2009)
Maybe GM should open a bunch of Ford dealerships.
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