Vehicle Prices 2021/2022

[heywardjr]

Well, we do need dealers for recalls, repairs, maintenance, and parts. This could be factory service centers but I detest the Tesla model where I would have to go 40-50 miles to the only Tesla location in Northern Virginia to get service. That is unacceptable to me. My Ford dealer is about 10 miles away. I believe Tesla will find over time their model won't work particularly when the customer base gets larger and the cars older which need maintenance. As we see they have had three recalls of late of really sizable numbers of cars and they are backed up for months at the stupid single location. It's not scalable, in my opinion.

 

[Vics 2024 Black Label]

Lincoln X-plan is 0.6% +invoice+$250, Just FYI

Yes on the invoice for my 2021 Navigator L the x plan price was listed at over invoice by about 800-900 dollars it depends on how much the vehicle listed for mine was 105,150.

 

[Vics 2024 Black Label]

List price is 105,150 Invoice price 98,371 X-plan 99,236.93 A-Z plan 94,492.50 D-plan 94,592.50 So X plan is 865.00 more than Invoice,A-plan is 105,150-94,492.50 a 10,658 dollar discount plus whatever rebates Ford is offering.On a Ford F250 Lariat I bought X-plan was 15.00 less than invoice.

 

[GrussGott]

Well, we do need dealers for recalls, repairs, maintenance, and parts.

The whole idea of dealers was, prior to global scale auto mfrs, it wasn't feasible to expect an auto mfr to open 3-5 sales centers in every state, but the states wanted to ensure auto were available, so independent dealerships (selling enough brands to have a business) were born.

We don't have those problems anymore as evidenced by continental-scale corporate publicly traded dealerships.

So I'd say we don't need independent-business dealerships anymore; we simply need mfrs who directly sell & support their products.

As an example, every BMW I've bought in the last 15 years I communicated directly with BMW on, including delivery. The dealership existed purely as an administrative paperwork service which I usually never even saw except to drive my car away from.

If a mfr can afford to make cars on a global scale, they can surely afford to sell & service them too ...

The dealership middle man profit is simply a cost burden to all.

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[Vics 2024 Black Label]

The whole idea of dealers was, prior to global scale auto mfrs, it wasn't feasible to expect an auto mfr to open 3-5 sales centers in every state, but the states wanted to ensure auto were available, so independent dealerships (selling enough brands to have a business) were born.

We don't have those problems anymore as evidenced by continental-scale corporate publicly traded dealerships.

So I'd say we don't need independent-business dealerships anymore; we simply need mfrs who directly sell & support their products.

As an example, every BMW I've bought in the last 15 years I communicated directly with BMW on, including delivery. The dealership existed purely as an administrative paperwork service which I usually never even saw except to drive my car away from.

If a mfr can afford to make cars on a global scale, they can surely afford to sell & service them too ...

The dealership middle man profit is simply a cost burden to all.

I agree with you 100 percent the dealers are a privately owned franchise and only care about there bottom line,Ford needs to step in and do something about this cost burden.

 

[RetiredCrewDog]

For any X-plan users, I have been putting all of the options I want on Kelly Blue Book website and it will give you the invoice price. Kbb.com

Take the invoice price x 1.006 + 275 = A Plan Price

 

[Action]

I agree with you 100 percent the dealers are a privately owned franchise and only care about there bottom line, Ford needs to step in and do something about this cost burden.

Maybe and all buyers are not the same. Some buyers want to do a test drive before a purchase. Some buyers would like to have the features explained. Some want to do a deal face to face.

Then there are parts and service needs that Ford Motor Company is not set up to handle. The direct from manufacturer Tesla sells a couple hundred thousand units a year. Ford will do that in most months. A dealership may not be for some however they do preform a function that is wanted by others. If Ford were to "step in" that may cause more issues than it solves, And trust me the company is always looking at how the retail process is handled. No one may every see or hear about it and the company does monitor that on a continuous basis.

Action

 

[GrussGott]

Maybe and all buyers are not the same. Some buyers want to do a test drive before a purchase. Some buyers would like to have the features explained. Some want to do a deal face to face.

Then there are parts and service needs that Ford Motor Company is not set up to handle. The direct from manufacturer Tesla sells a couple hundred thousand units a year. Ford will do that in most months. A dealership may not be for some however they do preform a function that is wanted by others. If Ford were to "step in" that may cause more issues than it solves, And trust me the company is always looking at how the retail process is handled. No one may every see or hear about it and the company does monitor that on a continuous basis.

Action

This doesn't make any sense to me - nobody is saying get rid of the services dealers provide, just get rid of them being provided by independent businesses; there's no value-add there at all.

Further, whether any us like it or not, Tesla put the lie to 40 years of B-school theory: "profit from the core" meaning 2 generations of leadership have been whittling away at the functions companies practice because maximum profits are supposedly only achievable when you only do 1 thing well and outsource everything else. BZZZT WRONG!

What all this outsourcing did was set the World up for a demand spike supply collapse that supply chain experts have been warning about for 10 years - covid isn't some special one-off, it's a vanilla demand spike and any other demand spike would/will have the same outcome. Well, guess who was least impacted? Tesla. Why? Insourcing.

Modern auto manufactures really don't manufacture anything; they're assemblers. It's gonna take Big Auto a decade to unwind all the ridiculous outsourcing, but now they have to because they won't survive if they don't.

Well, one of the key things Big Auto outsources is ... DEALERSHIPS! And that's going to be unwound & insourced because that's where retail is now; if a company loses control of their customer, they'll lose their customers and THAT'S why Farley is coming down hard on the ADMs from dealerships.

Same thing is happening in the luxury watch world; everybody except Rolex is unwinding their independent dealer networks in favor of manufacturer "boutiques"

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[Vics 2024 Black Label]

Maybe and all buyers are not the same. Some buyers want to do a test drive before a purchase. Some buyers would like to have the features explained. Some want to do a deal face to face.

Then there are parts and service needs that Ford Motor Company is not set up to handle. The direct from manufacturer Tesla sells a couple hundred thousand units a year. Ford will do that in most months. A dealership may not be for some however they do preform a function that is wanted by others. If Ford were to "step in" that may cause more issues than it solves, And trust me the company is always looking at how the retail process is handled. No one may every see or hear about it and the company does monitor that on a continuous basis.

Action

What I was referring to is all this ADM additional dealer markup on just about every car they sell it’s really getting out of hand!I wasn’t talking about replacing the dealerships they are needed for customer service.

 

[Action]

This doesn't make any sense to me - nobody is saying get rid of the services dealers provide, just get rid of them being provided by independent businesses; there's no value-add there at all.

There are something in the order of 3300 Ford/Lincoln dealerships. All owned independently many with agreements to Ford Motor Company that go back decades. How would you change thousands of businesses and tens if not hundreds of thousands of people that work there?

Most of the big ADMs are a result of the current supply situation. Which occurred from the pandemic. The market place will eventually fix that. Supply will increase and buyers will move to a source of lower cost solution. (If inflation doesn't wipe out some buying power) However, ADMs are a black eye on the industry,

As to non-US content, this is the result of price. The company does the same thing a retail buyer does, obtains quality content from what is thought to be a reliable source at the best price. It isn't perfect as nothing is. It is difficult to guess the market place for the future. Many have guessed badly and are no longer. The supply side does not come with an easy solution with a quick fix. Even Tesla does not have 100% US content. US content is a thing that is well tracked for all manufacturers. Both Ford and GM are in the 70% range.

And maybe I am wrong. The voting is done with dollars. Tracking those dollars is rather easy with publicly traded companies.

Action

 

[GrussGott]

There are something in the order of 3300 Ford/Lincoln dealerships. All owned independently many with agreements to Ford Motor Company that go back decades. How would you change thousands of businesses and tens if not hundreds of thousands of people that work there?

These are all the wrong questions to ask IMO; rather, are independent sales & service business networks the best way for a manufacturer to provide value to customers?

At the point where you have publicly traded continental & global scale corporations acting as 'independent' that answer is clearly no.

As to how I'd change it? I'd get the government out of the way (ridiculous state law over-reach) and let the market & capitalism work its magic!

Take Lithia, a Lincoln Dealer Group, for example, from CNBC:

Morningstar analyst David Whiston, who has covered Lithia for 17 years, called the company’s five-year plan “growth on steroids” and “jaw dropping.” He said one of the reasons Lithia is unique is because it largely grew in rural areas before moving into urban markets.​

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“They’re a perfect example of what at Morningstar we call efficient scale, … basically, a market that’s best served by only a few entrants or players,” he said. “It’s a great company.”​

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Lithia has acquired 83 stores in the past year through a mix of funding, including a $1.8 billion equity and debt offering in May. CFO Tina Miller said that should be the last funding needed to hit its 2025 plan, outside of a transformative acquisition.​

Basically every dealership will soon be owned by 1 of 5-10 publicly traded companies.

Tesla is simply saying that (a.) there's no customer value of a middle man, and (b.) why should they dilute their unit profit with a middle man?

And, I should note that Tesla beat both Ford & GM for 2021 operating profit! And, like, by A LOT; and Tesla in on track to beat both in EBIT in 2022. Morgan Stanley of Feb 3rd:

"Most auto investors we speak to still struggle with the idea that Tesla could ever be bigger than either Ford or GM. We expect Tesla revenues to be larger than GM + Ford (combined) by 2027. The zero sum game is hard to see today ... should become obvious over the next 24 months."​

If Ford wants to continue to give away their customer to Lithia and other corporations, eventually there'll be no Ford.

 

[Action]

I give up. You win.

Ford is closing in 2027

Action

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[GrussGott]

I give up. You win.

Ford is closing in 2027

Action

No need to victimize yourself, it's just a conversation.

Beyond whether we like dealerships or not, there's a 21st century business transition in flight that doesn't favor the auto retail environment of the 20th century and Ford is lagging that transition per their CEO.

Some love the in-person dealership experience, cool! But in the future they'll have to fully fund that experience rather than have others subsidize it; no different than ordering room service vs getting a pizza.

 

[Action]

If Ford wants to continue to give away their customer to Lithia and other corporations, eventually there'll be no Ford.

No need to victimize yourself, it's just a conversation.

I am not victimizing myself. Just giving up to your extremes. "eventually there'll be no Ford."

Your over the top exaggerations about Ford being gone versus a dealership! That dealership any F/L dealership does not exist if there is no product to sell from Ford the company that makes the product. There is so much more that could be said about the 119 year old company however the this thread is not about that. So yes I am giving up to your conversation

Action

 

[GrussGott]

"eventually there'll be no Ford." Your over the top exaggerations about Ford being gone versus a dealership!

Well, I'll tell you why I don't think it's an exaggeration: the last 56 years of history

This visualization of Ford market share loss only covers to 2016 ... and Ford has said to compete going forward they need a new factory which they still have to build (Blue Oval City), and even then they'll be fighting to be #2.

I can understand why someone would say, "Sears & Roebuck has been around for 130 years!" as justification for thinking a predicted demise is an exaggeration - it's always been here. But business transformations are company killers.

And Ford's demise won't be because "versus a dealership!", it'll be because they lost control of their customer's brand experience due to out of control dealership service & pricing, and/or noncompetitive products.

As an example, who says: "I'm proud to be a Lithia dealership customer!" or "I'll pay 10% more to buy from Lithia!"

Do you consider yourself a Ford customer or the dealership's customer?

If people don't consider themselves proud customers of the dealership, rather of Ford, then the dealership isn't adding any BRANDED VALUE for them, which means they have no loyalty to it. And if that dealership experience starts to suck compared to other brands well ...

Extrapolate the last 60 years of market share loss above: where do you see it ending up? shrinking or growing? Because Ford CEO Farley is saying in a perfect World, Ford can still be #2.

By the data, Ford has been dying for 60 years; the question is, will the transition to BEVs trigger new growth or a faster death?

Personally I've never bought a Ford in my life (or any American-made car), but now I've got a Lincoln on order, so I'm rooting for them.

 

[Black Label]

Interesting point. I certainly have no loyalty to a particular dealer.

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[GrussGott]

Interesting point. I certainly have no loyalty to a particular dealer.

Yeah - the premium segment is just dying for a "executive lounge" buying & ownership experience:

* Premium config & purchase experience (ideally MSRP *always*)
* Personalized delivery & turn over (e.g., appointment driven team ready for you to answer every question)
* Premium warranty maintenance service & repair work

If government wasn't forcing us to use these one-size-fits-all independent businesses, I'd bet manufacturers would be all over this ... Lincoln is already trying with their Black Label dedicated single contact for the sale & premium pick up/drop off warranty service. Now if only we could buy from Lincoln directly and get rid of the costly middle man.

Anyone who's ever done European / US performance center / factory delivery knows what I'm talking about with the premium delivery experience; why not simply extend that to buying & warranty maintenance experience?

Who'd like to take delivery of their new Navigator at the Kentucky factory or a dedicated performance center in, say, Detroit or Chicago? Or simply from a Black Label office with a team ready for them, dedicated to them for the duration, with refreshments on hand?

MFRs are leaving a LOT on the table here.

 

[GrussGott]

One more thought

It strikes me that we could think of a dealership's revenue as 3 sources:

1. Sales
   
   1. Premium vehicles
   2. Standard vehicles
2. Service
   
   1. Warranty service & repair
   2. Non-warranty work
3. Used sales & service

Because we're forced by the government to use dealerships, manufacturers aren't able to engage directly with customers in sales & service ... but if we change the laws, then mfrs could combine premium vehicle sales & warranty service & repair with premium delivery experience and provide a differentiated service for, say, Lincoln customers.

Existing dealerships could continue with their one-size-fits-all model for standard vehicles, non-warranty repair, and the used market.