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Ford addresses dealer concerns about the separation of EV and legacy businesses

Ford CEO Jim Farley poses on the Ford F-150 Lightning Pickup Truck on May 19, 2021 in Dearborn, Michigan.

Rebecca Cook | Reuters

Ford Motor Company dealer Mark Makeber was regained when he heard about the automaker’s plans to separate the electric vehicle and legacy businesses as part of a restructuring under CEO Jim Farley.

The owner of Oreisa Ford Lincoln, near Kansas City, Kansas, heard the news last Wednesday around 6:30 am and within 15 minutes, “I was calling Detroit,” what’s happening. I tried to understand.

“When it was first announced, I was pretty retreated. Before shaving that day, I was surprised.”

But after talking to Ford officials since then, Makeber, whose dealers specialize in commercial and fleet vehicles, is now excited about the plan.

“After talking to some people in Ford, I feel much better. It’s all pretty original,” he said.

At the company’s franchise dealers’ meeting at the National Automobile Dealers Association show in Las Vegas, it is expected that it will be important for Ford executives to ease the concerns of dealers such as Makeber on Saturday. Retail company.

Farley shook Wall Street and the automotive industry when it announced its separation plan last week, “specializing” in certain vehicles, including dealers who “specialize” in them in the history of a company with a history of more than 100 years. One of the biggest changes. “

Some dealers, such as Makebar, specialize in fleet vehicles, while others only sell to electric vehicles or retail customers, Farley said.

“We’re going to bet on the dealer franchise system. It’s a different bet than I hear from others, but we’re going to do it by asking them to specialize.”

“Better than Tesla”?

Farley’s plans have put a lot of pressure and change on franchise dealers, and many Wall Street analysts consider EVs to be negative for legacy automakers such as Ford. Start-ups and Tesla own stores and sell directly to consumers.

Those who want to sell EVs need to operate in entirely new ways, such as online ordering, commitment to not having inventory, and selling at transparent, non-negotiable prices. price.

“In the next 60 days, we will talk to all dealers around the world to create a concise list of standards for new experiences that are better than Tesla,” says Farley.

Ford and other legacy automakers are contractually required to sell through franchise dealers. Many states also have laws prohibiting automakers from selling cars directly to consumers.

Franchise dealers have been fighting for decades to maintain their traditional sales system. Traditional automakers consider dealers to be particularly important partners when it comes to vehicle maintenance and community involvement.

Big meeting

Ford will try to address all sorts of concerns about the plans announced at the NADA meeting on Saturday, spokesman Debra Hottering said.

“That’s why we do this. We’re really working hard to talk to and listen to them,” she said, about working with dealers on these plans. Repeated Farley’s comment.

This change can cost millions of dollars to upgrade, depending on the size of the dealer. Also, some individual dealers may be forced to sell to large listed companies such as AutoNation and Lithia Motors.

With the coronavirus pandemic and automakers increasing their investment in EVs for dealers, the integration of dealer networks has become a major trend in recent years.

Ryan LaFontaine, CEO and co-owner of the LaFontaine Automotive Group in Michigan, says she is excited about EVs but wants to know more about Ford’s plans and requirements.

“This is a big change, but it will be something we accept. We are excited. It makes sense, but as a dealer we are still waiting to understand the full impact.”

LaFontaine said his company, which has three Ford dealers and 26 other stores in Michigan, is “all-in” when it comes to EVs.

The company, which sold nearly 44,000 cars last year, has already invested nearly $ 1 million in the transition to EVs, with franchises ranging from Detroit carmakers and Toyota to Volvo-backed EV starters Polestar. It covers a wide range.

“It’s all-in-play. Every manufacturer, now or in the near future, has almost all of its portfolio in EVs,” he said. He says he has no intention of moving Ford forward or believing in the vision they have. Not just Ford, but all manufacturers. “

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