Ford's Huge Restriction On Dealerships (Automotive News)

News.

We do have news.

This is, this is gonna be fun.

Yeah, this is great.

The gift that keeps on giving. Kind of like the question or the pre authorization Ford is the gift that keeps on giving. So yeah, why this is so, so fun for me is I feel like I've been saying this for I don't know, seven years. When was it? The nada told me I couldn't talk about this.

Like 14, 15 somewhere around there.

Yeah. So I've, I've kind of seen this coming.

Yeah.

Not that I'm expecting anybody to say, oh, you were right because I don't want to be right. Actually.

Ford's talk of new EV selling rules rattles some dealers and essentially it's kind.

Of the only dealers that aren't rattled are the ones that.

Are, you know, not in their business every day.

Right. The ones that are like, it'll be.

Fine when passive dealers.

Yeah. So essentially the, it's more discussion about the, that that Ford is, is making between internal combustion engine and then the electric division. And essentially those coming into the electric division are going to have some, some extra rules and regulations, a little bit of control from the manufacturer. The, the best quote in the article is from Jim Farley and it says I think our dealers can do it, but the standards are going to be brutal. Not just bad but like brutal.

So this is a Wall Street Journal article and Farley is the CEO of Ford. You got to give him context. So what is. Read the, read the quote again.

I think our dealers can do it, but the standards are going to be brutal. They're going to be very different than today. And it just says, it just says they will control everything. Just.

So the, the idea here is that Ford is going to keep dealers, but the Ford is going to sell vehicles, electric vehicles, direct to consumer through a website.

So they call. Let's, let's, let's role play this, this.

Let'S do that theory a little bit. Okay.

So to be the manufacturer, the dealer.

Want to be the manufacturer.

You want to be the manufacturer. Okay. Okay. So Ford, let me get this straight. I'm still the dealer. I just don't sell the car.

You will 100% be the dealer and yes, yes, you will be the dealer.

Okay. And now I don't have any inventory, but customers are going to go to my website. Well, buy the car.

Yeah, they're going to go to your website but you won't have any inventory and you will not actually sell the car. But you're still a dealer.

But it's my website.

Well, yeah, of course it's your website. If it's in small print, you can have the name of the dealership in there. We'll use our marketing company to kind of put all the content on the website. But it's totally your website. Yeah.

So I can, I can change my website to give me an advantage on other dealers.

No, no, no, no. Let's not get crazy here. The. We'll, we'll, we'll make sure the marketing company does a really good job of making a great website.

So you're going to control my website. So then you're going to pay for the website?

No, that'll, we'll bill that to your part statement. I would normally put it to your new vehicle account, but you won't have one anymore.

You'll be a, you'll be a dealer.

Okay. Okay. So then let me get this straight. So if I don't have any cars, but they're going to buy on a website that you control, Anybody who buys a car in my market where I can service them, those will be my sales, right?

No, but you'll be a dealer. I think that what we'll do is our marketing company and our crack team of retention specialists will assign the customers to a dealer based on how that dealer does in the market.

So how, how do I do better in the, in the. Well, let me ask you, let me ask you this question. Can I have a demo of one of the cars? Like, can I get one of the cars to demo and show, like, could I drive one around? You know, I'm really, as a dealer, I'm really influential in my local market. And so if I'm driving around one of these electric cars, a lot of people are going to want them. And I, you know, I, I'm good at selling cars. I could sell more of them and so could I have one.

Yeah. No, but what we will do is we will have our Ford Elite dealer group, which currently comprises of 0 dealers, but those dealers will have access to demos.

How do I, how do I become an elite dealer?

We'll pick, we'll pick the people that will be part of the dealership.

How do I get picked?

That's classified right now. I don't know that you'll be a dealer.

That's how it's going.

Right?

It's exactly like people are like. That was 15 minutes to get to that. Yeah, that punchline was great. Oh, goodness.

No, it is. It's like the Norm Moth joke, in a sense. So Norm MacDonald has this famous joke on Conan O' Brien, where it goes on for like five minutes, but in the end it is what it is. Right.

Like, so that, that's the news.

What's the, what's the quote from the dealer in there? There's a dealer.

There was a really good one.

We love Ford says.

I like this guy's quote. When things are bad, they rely on us to make them decent. When things are great, then it's easy for them to say we don't need them.

Yeah, that's, that's how the dealers feel.

Yeah, there's no doubt.

It's an interesting time in the sense that they're.

They'Re doing what they're doing. They're going direct to consumer. But they, they don't want it.

Like they've broken up and started dating someone else, but they don't want to tell the old girlfriend that it's over.

Right.

That's how it seems. But used car sellers, not running out of gas yet. This was, this is another thing. Talking about CarMax, for instance, last quarter revenue grew 21% even though they sold less vehicles. So that's consistent that that's still kind of going on. We're waiting. I don't know. I mean, you and I have talked about this a lot of times that at some point in time the bottom falls out of this whole thing with the used cars. I don't know when it's happening, but it feels like it's getting a little bit closer. So they've still got some cars and they're still selling them.

So just, just two days ago, my future mother in law is moving across country and she sold her car to CarMax for I think a couple thousand dollars more than she bought it years ago. So she drove it, put miles on it and sold it for more, which is my experience with my X6 when I sold it, because I sold it for more than unbelievable to me.

Yeah, I'm good for her, but it's.

Still good as we sit here today.

Yeah.

So used car grosses are up. So what? Doesn't it say CarMax's.

Revenue is up even though their volume's down?

Yeah. So revenue up, car sales down. So the unit sold is less, but the revenue is up. Their gross per car was at 23, 2339 per car seems low. I think for them that's probably, that's probably better than what they normally do. It says it's up and then the average price paid for a used car is, is 6,311 more per vehicle. So it's a lot that's definitely changed. All right, and last but not least, not much of a shocker here, but this is another Wall Street Journal thing that talks about.

Electric vehicles and trivia question for you. So what do you think's happened to the demand for electric vehicles over the last, say seven months?

Gone up.

Gone up. When the demand for something goes up, what do you think happens to the price goes up.

All ships rise.

22% increase in electric vehicle prices.

So from the manufacturer, not the dealer.

Yeah, so the manufacturer. So huge thing. And then it talks about other manufacturers are starting to make a little bit of a dent. Like Tesla sells 61% of all electric vehicles, but Ford, Hyundai and Kia are all making a little bit of a dent in that. So the manufacturers are coming in and really starting to make a difference with the electric market.

But when gas prices are as high as they are, people are going to gravitate towards electric just because of, you know, like when I go to fill up where I live, the gas pump shuts off at 125 bucks.

So it gives you half a tank.

I haven't filled up. It's a little over three quarter, but I haven't filled up in a long time because it shuts off. Like there's a, some sort of a governor on it. And so if you, if you think about people that are commuting, that would make a big difference for them, the electric thing.

Well, I also think it'll increase the amount of charging stations people put in their homes.

Yeah, for sure they'll do.

They're not going to rely on the infrastructure of like the public charger. I think a lot more people just do it in home and then they can justify it at seven and eight dollars a gallon like it is out here. Say, okay, if I spend five grand on my charging station at home, I'll pay it off in a year. Right.

Yeah. I've heard for years in meetings that if gas in America costs what it cost in Europe, the world would have gone to electric cars a lot sooner. Yeah, but because we have, we've historically have two or three dollars gallon gas, we have bigger cars. Right. Because when you go to Europe, you don't see Escalades and you know, everything's smaller and they drive less, they have better public transportation. The, you know, it's a completely different marketplace. Also, like a lot of people just drive scooters like.

Oh, and bicycles. Yeah, huge.

Like it's weird when you're, when you're sitting in a stoplight in Europe and all these scooters pull up in between the cars. But, you know, maybe a third of people are just on a little Vespa.

Yeah.

Thanks so much for watching this clip.

Of Service Driver Revolution.

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