Ford is going to a 100% fixed price online sales model for EV's

JHZR2 said:
You didnt say what is fair. But what do you think they are trying to do in trying to train the population to accept paying full MSRP for a negotiable asset?

A negotiable depreciating asset at that.

Tesla margins are a proof of the ripoff of the public. They could lower their prices, but instead are claiming insane margins compared to other automakers. I get it that is the market, they CAN do that. But I can also NOT buy one, and wont. Precisely why while I appreciate and like Musk, I wont buy an overpriced Tesla car. When their margins decrease, which implies a better value to me the consumer, Ill consider one. Since there are plenty of options for cars on the market, and I own over ten cars as it is, I have all the options in the world. So as an example since you mentioned them, they have to appeal to me, to provide me perceived value for my money, in order to get me to buy. If they dont, they lose a sale. If theyre smug, theyll fail. If theyre smart, theyll reduce price/margin and provide value.

The auto business fixed price will not be variable, it will be like buying a bag of chips at a convenience store. Do you think the automakers will offer a sale? Or sell less cars because of deteriorating conditions to do anything, including find worthy workers? They already operate on a model of laying off workers, idling the factory at the MY changeover, etc. Theyll just stop producing and furlough the workers to keep production meeting demand.

Im against training people to think that paying MSRP is fair. Everything is negotiable. Being able to walk is a person's greatest strength and asset. They buyer's cash is the valuable thing, not a depreciating car. And even the case of paying a premium.... A tesla isnt a car worth a premium. Its artificially propped up by tax breaks perhaps. 30 years from now a 911 will be a valued item that can operate liek day 1 if maintained. An EV will have battery degradation so bad, that coupled with other typical failed systems that EVERY car has (AC, rubber bushings, interior materials, paint, seals, etc) that it wont be worth the battery replacement. Thats physics, not opinion.
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There is no fair. Fair just depends on which side of the deal you are on. And perception is always a biggie.
MSRP, in my opinion, has been a number set to get the buying public to think they are getting a great deal. Paying MSRP today is a good deal in the current market.
The "fixed price" will always be a variable; it depends on the market.
Products in demand, with few viable alternatives, will increase in price. The converse is true as well.

Certiainly cars are depreciating assets; over time they are consumables. I am not sure how that affects selling price. I may be missing your point...

"Tesla margins are a proof of the ripoff of the public." IMO, if I feel ripped off, I have one person to blame. No one twisted my arm to sign that paper. Is it a better decision to buy something with a lower margin? That depends. Is it a viable alternative? Then sure. Again, that's the market.
You may think Tesla (and Porsche?) is ripping off the public, but the public doesn't seem to think so, based on sales demand. I believe Porsche enjoyed it's biggest number of sales units in 2021. The gorgeous Taycan outsold the incredible 911.
Personally, I do not fault a company for maximizing profit; I admire good business plans and execution; I have benefited by being part of a profitable business.

"Theyll just stop producing and furlough the workers to keep production meeting demand." Yep. That's the cruel truth of any for profit business. Workers are consumables. If you need 'em you pay them. Otherwise you don't. By the way, shutting factories is a horrible business decision as the fixed costs continue; you only saved the variable cost and you lose the revenue stream.

"Im against training people to think that paying MSRP is fair." I am not sure who is doing that. Customers do their research and proceed accordingly.

"Everything is negotiable. Being able to walk is a person's greatest strength and asset." Agreed. But if you believe you will win a deal for a given product when there are better offers out there, I wish you luck. Negotiation, by definition, is a 2 way street. It just depends on who has the power.

Good conversation.
 
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Rod Knock said:
Automakers who needed massive bailouts little over a decade ago are now suddenly kings of the hill. How did it come to this?
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Smart people with forward vision helped them when times were tough. Now we still have GM Defense and GM, Ford manufacturing prowess. Although Ford got no bailout money. Not just for EV cars, but trucks for war and all that. But I watch local antenna broadcast not opinion driven news so I tend to not be swayed from facts.
 
Skippy722 said:
Public discourse isn’t a bad thing. But I’d rather spend my time doing things I want to do (like post on BITOG) rather than the back and forth game of a dealership.


I don’t either, but in that moment my time and anxiety level is worth that much if not more. I’m not saying “Direct sales only! Down with the dealerships!” I simply want the option.
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I think you were saying the dealer wastes your time. Even if you love to do something, it can be a waste of time. Addiction sort of means loving to do something, but doing it too much it isn’t healthy.
So liking something is not a waste of time, and since the dealer is something not liked, it is a waste of time? Ok
 
Vern_in_IL said:
...and it is not the free market doing the "push".
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In large part it absolutely is. EVs will be more profitable for the manufacturers in the long run because of massively reduced labor costs.

Back in 2017: Here’s Ford themselves saying EVs mean 30% less labor hours. 50% smaller factory footprints and 50% reduction in capital investments.

Page 47
http://s22.q4cdn.com/857684434/files/doc_presentations/2017/CEO-Strategic-Update-12.pdf

Fast forward to 2022: The labor gap is up to 40% or more now. Here’s VW panicking to reduce their labor to match Tesla. A Model Y in Germany can be built with 10 hours labor vs 18 hours for an ICE Tiguan in Germany. That’s a 44% reduction.


https://www.reuters.com/business/au...-trinity-aims-catch-up-with-tesla-2022-03-31/

It’s almost all about labor costs for the car makers. Cutting even 25% of the manufacturing staff is beyond massive. VW had 670,000 assembly workers worldwide in 2019. Imagine being able to lay off even 100,000 of those people (that’s only 15% reduction), but still make the same number of cars and sell them at similar (or higher) prices.
 
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E365 said:
In large part it absolutely is. EVs will be more profitable for the manufacturers in the long run because of massively reduced labor costs.

Back in 2017: Here’s Ford themselves saying EVs mean 30% less labor hours. 50% smaller factory footprints and 50% reduction in capital investments.

Page 47
http://s22.q4cdn.com/857684434/files/doc_presentations/2017/CEO-Strategic-Update-12.pdf

Fast forward to 2022: The labor gap is up to 40% or more now. Here’s VW panicking to reduce their labor to match Tesla. A Model Y in Germany can be built with 10 hours labor vs 18 hours for an ICE Tiguan in Germany. That’s a 44% reduction.


https://www.reuters.com/business/au...-trinity-aims-catch-up-with-tesla-2022-03-31/

It’s almost all about labor costs for the car makers. Cutting even 25% of the manufacturing staff is beyond massive. VW had 670,000 assembly workers worldwide in 2019. Imagine being able to lay off even 100,000 of those people (that’s only 15% reduction), but still make the same number of cars and sell them at similar (or higher) prices.
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There is more than the labor component; there is the advanced manufacturing including vertical integration.
I believe CEO Farley was furious at the dealer price markup for the Mustang Mach-E; the brand got a black eye outta that one.

Tesla has shown the cost savings and success of the direct sales model. Ford has some hurdles coming their way; every online sale is a sale the dealership did not get. And if the EV market grows, which is likely, the dealerships are gonna want their cut.

Everything changes... Interesting times ahead!
 
JeffKeryk said:
I believe CEO Farley was furious at the dealer price markup for the Mustang Mach-E; the brand got a black eye outta that one.
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But, hey, that's the market, no? People were willing to pay... A fool and their money are soon departed...

Training people to pay MSRP vs working to negotiate a better price is another way to tack on markup and not have anyone think twice... Which was my original premise.
 
JHZR2 said:
But, hey, that's the market, no? People were willing to pay... A fool and their money are soon departed...

Training people to pay MSRP vs working to negotiate a better price is another way to tack on markup and not have anyone think twice... Which was my original premise.
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No one forced them to pay. They made the choice. Premuim pricing is added onto high demand, low supply products. In fact, some companies use premium pricing to keep their products "exclusive".
And yes, that's the market. MSRP is just a number; it is generally not the selling price. Are they fools? Just because you or I might not enter into such a deal does not make them fools. I cannot say; that's their business. Personally, I was a fool for one of the Corvettes I bought, a fully loaded new 90 black on black 6 speed, which I got for $29K out the door. A screaming price at the time but I could not afford the car. Guess I twisted my own arm on that one...

Like you say, potential customers are free to walk away from a deal if it is not acceptable. Likewise sellers...
Direct sales prices will reflect customer demand. In business, pricing strategies generally follow demand levels. Of course, regions and other factors tend to determine build configurations and resulting pricing. There is rarely a single price.

I am not sure who you believe is being trained to do do something. Peope are free to make their choices, good or bad. I don't like to call people fools.
CEO Farley is doing what he believes is best for the ongoing success of his company. That's his job. If he fails, the Board and shareholders can hold him responsible. If potential customers do not like what Ford is doing they don't have to buy his vehicles.

As much as I like the new Corvettes, I would not play that game. I did see a beautiful red metallic one up in Marin today.
 
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JeffKeryk said:
There is more than the labor component; there is the advanced manufacturing including vertical integration.
I believe CEO Farley was furious at the dealer price markup for the Mustang Mach-E; the brand got a black eye outta that one.

Tesla has shown the cost savings and success of the direct sales model. Ford has some hurdles coming their way; every online sale is a sale the dealership did not get. And if the EV market grows, which is likely, the dealerships are gonna want their cut.

Everything changes... Interesting times ahead!
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Isn't this why Ford is splitting up the EV line into it's own entity? Enables them to circumvent the dealership sales dept?
 
BMWTurboDzl said:
Isn't this why Ford is splitting up the EV line into it's own entity? Enables them to circumvent the dealership sales dept?
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Could be... Bring out the dealership contracts!
It has got to make the dealerships livid as they are losing their cut, and watching their business fade away.
It is thought that one reason new cars drop so much in their 1st year is their selling price does saves the dealership cost component. That component is baked into dealer selling price.
I'm sure we have not heard the last of this. It's only the 1st qtr, as they say.

I do salute CEO Farley, as he is moving his company into the next business phase. Bold steps, including vertical integration which this is part of.

Right now, EVs are too expensive for much the public; if Ford, Tesla or whoever can deliver a $30K SUV or whatever, watch out legacy carmakers.
Unexpectedly, EVs are getting a huge push from big oil and Mr. Putin. Gas has pretty much doubled everywhere.
There will be winners and losers. Tesla, with their charging network, is in the driver seat. Others are chasing...
 
It appears the dealership sales model is nearing the end of its life cycle. The value added does not justify the cost. Not to mention the general distrust of car salesmen... Everything changes, and the Internet technologies have accelerated the rate of change.

I used to love to go to bookstores to browse and purchase computer programming material.
 
Last 3 paragraphs of your article are key:

I asked Marin Gjaja, COO of Ford Model e, if the decision to end the program only six months after it officially began was because of the intense pushback and lawsuits from dealership associations across the country. I was told that wasn't the case, but it's hard to believe that didn't play a major role in the decision to pull the plug.

I can't help but see this as a major missed opportunity for Ford and its dealers. Consumers aren't happy with the current dealership model, and Ford was trying to improve that while toeing the line of the archaic but strong dealership laws in the U.S.

Everyone loses here. The dealers may think they won, but they didn't. Short-term gains will be overwhelmed by long-term losses as consumers look to EV startups that work around the dealership laws and offer a set pricing model. That will eventually erode Ford's EV market share as consumers seek a better purchasing experience and the security of knowing they can pull into any Ford dealership and charge up when needed.

E365 said:
This whole program is now cancelled.

“Ford announced today that it is sunsetting its Model E dealer certification program, effective July 1.”

https://insideevs.com/news/723205/ford-cancels-modele-dealership-program/
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Also a pretty tough ask for Ford since they have little EV “future” currently. Mach-e and Lightning are getting pretty old, and besides the mythical and delayed “T3”, there’s not much on the horizon for new models and growth. Have dealers invest $500k-$1M for what?
 
The problem with dealerships is the mentality of the public. I too hate walking on a lot, but I let them know right upfront to leave me alone.
Yet for some reason, the public thinks car prices are negotiable and that is the dealerships fault
I like the idea of the price is the price but I hate and stress hate dealer, add-ons, and additional dealer costs and processing fees and whatever else they could throw in there that’s what makes them so miserable to visit.

Stepping on to a lot of a dealership is like going back seven decades in time with the sales tactics that are used. About a month back I posted I was looking at a VW ID 4
As soon as we stepped on the lot and open the car door, there was a pushy sales person there. Loudmouth fast talking I didn’t even know people like that still existed.
Needless to say, someone else came out of the dealership, another sales person and I walked over to him and I said I don’t even want to speak to that guy and I know he heard me and stayed back. Just the fact that you have to do that is crazy.

However, they serve a function, but it’s just a miserable experience for people who can easily afford a vehicle and it’s a godsend for people who cannot … go figure. It is what it is and it obviously works or they wouldn’t do it
With that said, it does make used car dealerships such as Carmax and Carvana a much more pleasurable experience and why they are so popular for the used car market
 
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This will go much further than EV sales. The dealership sales model offers little benefit and a lot of cost.
Brick and mortar is past its prime.

From a customer standpoint, who do you think is paying for that big shiny showroom, personnel and inventory? You think that lousy coffee is free?
 
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