Ford Cuts EV Dealer Price Markups 2021

Know Your Price Before Setting Foot in a Dealer

This week saw the inaugural in-person Capital Markets Day event hosted by Ford since 2016. CEO Jim Farley informed shareholders of plans to transition to an unremitting pricing setup for fresh cars as of January 2024.

It is not the lone instance when such a plan is deliberated. The president of the company has recurrently declared that predetermined costing should be inaugurated in the years that immediately followed the arrival of Ford’s e-Certified plans, which dealers have to accept if they intend to keep vending EVs similar to the Mustang Mach-E.

Surplus mark-ups have been determined to have a negative impact on client opinion of makers and dealers similarly, and in the most recent two years Ford has launched some sought-after automobiles that many distributors have imposed surmountable prices for. Definitely, this is something that must halt if shareholders are to trust that the brand can create allegiance.

“We’re pairing these [forthcoming] vehicles with a modern and easy customer experience that begins with one major breakthrough: fixed pricing,” stated Farley. He further noted that the car manufacturer is “looking to drastically reduce physical stocks of Model e and introduce a new marketing strategy that emphasizes loyalty and customer interaction and constructing a community rather than investing billions in TV commercials and broadcast media.”

At the same event, Ford’s advanced product development and technology officer Doug Field stated that EV customers of the company “will have flexible purchase options – online/in the store – with transparent pricing that they don’t have to haggle over, and remote vehicle delivery, and later pick up as well.” He went on to emphasize how these improved experiences will make customers more likely to form a bond and opt for the same dealer once again.

Ford is taking steps to ensure that, despite a reduction in its electric vehicle (EV) inventory at dealers, it will still be able to “deliver the right vehicle in less than 10 days.” The automaker is doing this by utilizing its network of dealers and suppliers in order to quickly source and deliver the requested vehicle. This includes working with local dealers to identify and locate available vehicles in the region, as well as working with suppliers to ensure that the necessary parts are available. Ford is also leveraging its digital tools to more effectively communicate with dealers and customers, which will further reduce delivery time. By streamlining its processes and utilizing its resources, Ford is confident that it can meet its goal of delivering the right vehicle in less than 10 days.

“Customers have long desired to attain their ideal car, rather than settle for what’s available on the lot,” Field continued. “Now, they will have far more choices to buy through their dealer from new retail replenishment centers. These centers can store a few weeks of stock and deliver the desired vehicle in less than 10 days.”

As a consequence, Ford is confident that it can shift more cars with increased speediness, therefore intending to produce about two million EVs.

“As stated by Lisa Drake, VP of EV industrialization for Ford Model e, ‘From 2022 to the end of 2026, Model e will expand from approximately 100,000 units to more than one million. With the inclusion of Ford Pro, our total production capacity will approach two million EVs. We are already taking action to upsurge production in our first-gen EVs.'”

This plan is one certain dealers may be reluctant to get behind; however, it looks like it will pay off in the end. Ford has not removed dealers totally from the equation – buyers still pay the dealer fundementally – but this marks a shift in that customers don’t have to travel there if they don’t want to. This allows purchasers to shop around effortlessly, and if they spot a F-150 Lightning version they like from one vendor, they just have to look at other traders’ specs. No more forcing oneself on lengthy trips only to get into a difficult discussion when they show up. If desired, they could even get the auto brought to them.

The Blue Oval should still adequately attract customers, especially those wavering from competitors such as Chevrolet given their dilemmas related to price-gouging. Compared to Tesla’s approach of direct sales, dealers remain a crucial element and will still be able to generate income emanating from additional features and renovations. This is the most sensible blueprint presented yet and must certainly assist Ford in its advancement.