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Ford to Impose Non-Negotiable Pricing on EV Sales as Part of Model E Plan
- hughes 5y agoWhat value do you think dealerships provide?
- arduinomancer 5y agoTest drives? I don’t get how people buy a car without trying it
- lostlogin 5y agoVarious companies offer very easy returns or various other forms of testing directly.
- filoleg 5y agoTesla doesn't have dealerships in the traditional sense (aka third party places where you can buy the cars), and you can totally test drive their cars. You just show up to their storefront or gallery, express interest, and they let you test drive them.
- deleted 5y ago[deleted]
- zamfi 5y agoI think the GP here means test drive the particular vehicle you're buying, not just some other vehicle of the same make & model (and possibly, but possibly not, trim level). With Tesla, the most you can do is refuse delivery, but you won't get to drive it before you do that... GP's not wrong, but as someone who only started driving frequently well into my 30s, I've personally never had the "I must kick the tires" mentality -- and Tesla's at-the-time "7-day return policy" helped a lot with concerns about a lemon.
- speby 5y agoMost states (maybe all?) have a common 3-day "regret" clause for many types of transactions, including car buying, mortgages, etc. So you can, in many cases, still 'take delivery' and then if you change your mind in 72 hours, you can return it. Again, I forget if all states have a similar set of laws for this or only a subset.
- tahoeskibum 5y agoThe same way people buy a phone without trying it. Electric cars will be appliances. Some will pay premium for Tesla like for Apple, and others will find that Hyundai's are a good bang for buck too.
- analog31 5y agoI figure the car companies would provide enough pictures and dimensions to make a test drive unnecessary, at least for me. The seats are adjustable, and I never have a problem fitting into the various rental cars that I've driven. I just want to know if it will fit a double bass.
- beamatronic 5y agoBecause of the reputation. I've bought two cars without driving them first.
- travisporter 5y agocarvana, carmax and tesla all give you an option to return in a certain timeframe no questions asked. on paper anyway.
- Johnny555 5y agoI bought my past 2 cars without test drives, relied solely on internet research and reviews. Haven't been disappointed yet. But then, I drive a car for transportation, not for a driving experience.
- bm-rf 5y agowho else is going to explain the value of paint sealant and an extended warranty?
- jbigelow76 5y agoWell the robo callers have the extended warranty market covered.
- soperj 5y agoAs someone who has actually done the job, paint sealant absolutely has utility, but the bottle of paint sealant costs $20, and you apply very little of it to each vehicle. I got paid like $9 to actually apply it (it took very little time). So while it has utility, the consumer is absolutely being ripped off.
- topspin 5y agoPolitical. Dealerships are an invention of government. Look into the history of auto manufacturers and their relationship with US states. Also, I predict Ford is going to experience some legal difficulties with this. States govern the operation of dealerships, including pricing regulations, and they are not uniform. The dealers themselves are not powerless either, some being large, well heeled enterprises and associations that have fought and won against manufacturers.
- mooreds 5y agoInteresting history here: https://driving.ca/auto-news/news/rearview-mirror-the-evolution-of-car-dealerships https://driving.ca/auto-news/news/rearview-mirror-the-evolut...
- cptskippy 5y agoI imagine that's why they split into two separate companies. They can run the electric business much like Tesla as a competitor to their ICE business and let it slowly die with the dealerships.
- topspin 5y agoMany dealers sell products from more than one manufacturer. That affordance is the result of legal battles fought and won by dealerships. There will be few incumbent Ford dealers that won't also sell Ford's electric products, legal fictions notwithstanding. While it is true that Tesla has managed to operate under a double standard, I suspect the entry of traditional manufacturers and dealerships into the all electric market will lead to some resolutions of that. That story is still being written.
- cptskippy 5y ago> There will be few incumbent Ford dealers that won't also sell Ford's electric products Assuming it's an option. The Ford electric company could go the same route as Tesla and dealerships would have the same recourse they have now against Tesla, because it's a new company.
- deleted 5y ago[deleted]
- czbond 5y agoAgree - I recently bought a vehicle (jeep) out of state. Did everything from pricing, sale, logistics, and delivery over email. It was fantastic!
- xyst 5y agoTo extract as much money from the buyer as possible.
- vkou 5y agoWhy do you think the manufacturer is just going to leave that money on the table?
- na85 5y agoTraining for boiler room salesmen.
- ec109685 5y agoCapital by financing cost of stores, repair shop and whatnot.
- jeffbee 5y agoAs a Californian I have specific consumer protections when buying from dealers that I wouldn’t have when buying direct from the manufacturer. If nothing else, they are a manageable-size target for individual litigation.
- somethoughts 5y agoAs I understood it, historically the primary value dealerships provided is when the automakers had a glut of supplies that they needed to get off the books to make quarterly sales targets for Wall Street. They could stuff the dealership channel with all that excess inventory and count it as sold. [1] With EVs and the current semiconductor shortage, batteries/semis are in short supply and so production volumes are lower than demand, so there isn't a use case for dealerships that's apparent. Once EVs mature and excess inventory builds up and has to sit on the books of the automakers and depreciate on the lot waiting for buyers - the dealership model will look more interesting. The bean counters will then team up with marketing department to (re)introduce independent dealerships under a different branded customer UX name. [1] Chrysler adds dealer incentives to clear stock https://www.nbcnews.com/id/wbna12691116 https://www.nbcnews.com/id/wbna12691116
- ajross 5y agoSerious answer: buffering. Right now, cars are undersupplied and so dealerships seem like a waste. But in times of excess inventory, dealerships guarantee that every market has a supply of cars available for shopping and testing on local lots, and guarantee the manufacturer a less "bursty" revenue stream. That doesn't justify their existence in a world where cross-continent orders over the internet are possible. But historically they've had a real role to play.
- awb 5y agoThis is the way things are moving anyway with used car sites like Carvana, Shift, etc. offering non-negotiable pricing. A welcome change as there’s no reason to charge different prices for the same product in the same state, same county and sometimes even the same town.
- MBCook 5y agoAs I remember that was part of the sales pitch for the Saturn brand.
- mywittyname 5y agoThis doesn't mean that the idea itself is a bad one, or that it will never succeed. Saturn isn't the only brand to try this -- Scion did as well. Tesla has a few major advantages. First, they aren't tied to a dealership network. Second, since they sell online, they can dynamically change pricing with demand, something Saturn and Scion couldn't really figure out.
- MBCook 5y agoOh I totally agree. Despite Saturn eventually failing the fixed pricing was extremely popular the whole time it was offered (can’t remember if they gave up). I’d be happy to have it with my next car.
- jeffbee 5y agoOne of the first models of the non-negotiable car sale was carmax. They always said it was non-negotiable, but if you looked at their sales the actual selling prices were often slightly lower than the list price. So, “non” negotiable.
- mwint 5y agoHow do you “look at their sales”?
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- adamqureshi 5y agoThe franchise dealer model in the USA maybe coming to an end. “Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars,” CEO Elon Musk writes on Tesla’s site. “It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business.” Tesla also points out that its prices are fixed, and its salespeople are paid primarily on salary, not commission. “Customers will never be rushed into a purchase, haggle over the price of the car, wonder if they could get a better deal across town, or puzzle over confusing add-on products, like GAP insurance or rust-proofing.”We think that it’s absolutely critical that we have a direct relationship with our customers,” Todd Maron, Tesla general counsel, said “We look at our stores as educational centers. There are all these questions people have; we view our salespeople as teachers who can patiently answer them.”
- judge2020 5y agoThe only real conflict of interest is that dealer service centers are often the profit centers of most dealerships, so a 50% maintenance cost reduction[0] will likely translate to declining revenues for the dealerships. 0: https://www.transportation.gov/rural/ev/toolkit/ev-benefits-and-challenges/individual-benefits https://www.transportation.gov/rural/ev/toolkit/ev-benefits-...
- SEJeff 5y agoTesla claims they operate their service centers at cost and the goal is that they are explicitly not a profit center. This is why so many dealerships are disincentivized to sell EVs however. Less maintenance (due to less physical moving parts. No fan belt, no fly wheel, no alternator, no pistons, etc) means less service that can be marked up. The recommended service on tesla's best sellers (the model 3 and model y) is only every two years.
- TylerE 5y agoTesla claims a lot of things that end up being...less than 100% true.
- allthecybers 5y agoThis is the only way they can compete with Tesla and other direct-to-consumer EV manufacturers. Glad to see Ford doing this. As a Tesla owner, I’d be open to buying a Ford EV but have no interest in dealer markup or the dealer buying scenario.
- thenewwazoo 5y agoIf you're willing to wait, ordering a Ford EV online isn't much like buying from a dealer. They're involved, but it feels only incidentally. Of course, if you're not willing to wait, the "price" is dealer markup and the usual experience.
- dangrossman 5y agoOrdering online doesn't guarantee you a non-dealership experience. There's no stopping them from adding a $5,000 "market adjustment" to the price of the car you ordered online 9 months prior when you go to pick it up. You cannot force them to sell it at MSRP. This has happened to people that ordered Mach-E's, multiple times.
- istorical 5y agoIf they change the price last minute can you renege on your side of the deal and get your money back and cancel?
- amir734jj 5y agoGood question. I'm interested to know the answer as well.
- enragedcacti 5y agoyeah but you go to the back of the line for another one at a different dealership who hopefully won't screw you.
- dangrossman 5y ago
- pkdpic 5y agoAnybody else get the feeling that some business savvy al gore replicant terminator might have travelled back in time and infiltrated ford.
- thenewwazoo 5y agoI recently took delivery of a Mustang Mach-E GT, having ordered it online. There are still some "opportunities" for a dealer to "add value", but Ford has it pretty well streamlined, and it was not hugely different from the process of ordering our Tesla Model 3. The biggest stressor was being uncertain of whether the dealership would try to screw me. Which is a low bar, to be sure. I hope Ford can also adopt Tesla's remote service model (or force dealers to offer it).
- vvanders 5y agoTesla has stopped doing the mobile service thing(at least in our area). Used to be able to get a mobile appointment at a cost, this time I couldn't even get them to come out to swap a battery(much less an LTE upgrade). If they can't provide service I'll be going to other brands that's have a larger service network.
- mwint 5y agoI assume 12v battery, not the big one?
- vvanders 5y agoYup, the really frustrating part is you can't even order parts. It's easy enough to replace but I just couldn't source it.
- fuzquat 5y agoI just bought an after market 12v lithium battery: https://www.ohmmu.com/ https://www.ohmmu.com/ Shouldn't have to replace it for a long time (if ever) and seems to work fine. More expensive than lead acid but more convenient than service appointment for a 12v battery.
- agent86 5y agoI just double checked and Mobile Service is still available in my area. I could actually get an appointment 2 days from now. One thing to note though is that not all repairs are mobile serviceable. For example, when my Model 3 needed its front control arm replaced part of that service involves doing an alignment. The Mobile Techs aren't going to be able to do that one.
- gzer0 5y ago> Ford envisions a new process that will result in a non-negotiable price for EVs and rely on customer orders, rather than dealer inventories It's worth noting that Ford was one of the major automakers who funded the lobbying effort against the very Tesla model they now seek to join.
- judge2020 5y agoDo you have a general source? I know in many places it's the dealerships themselves contributing to some PAC that advocates for banning it, eg. Oklahoma HB 3994, but I haven't heard of Ford directly doing this. If anything, Ford has locked themselves into the dealership model via historically partnering with them, so now and forever they have to share profit margin with them while Tesla is able to enjoy the full 29% of their automotive gross margins[0]. 0: https://tesla-cdn.thron.com/static/WIIG2L_TSLA_Q4_2021_Update_O7MYNE.pdf#page=3 https://tesla-cdn.thron.com/static/WIIG2L_TSLA_Q4_2021_Updat...
- gzer0 5y agoIn the United States, direct manufacturer auto sales are prohibited in many states by franchise laws requiring that new cars be sold only by independent dealers [1]. This source provides some historical context as to where the franchise laws originated from, albeit, I cannot find anything that directly links Ford to my original assertion [2]. The National Automobile Dealers Association (NADA) is responsible for representing 16,500 dealerships across the nation. While NADA abstracts away the ties between dealers and automakers, the vast majority of NADA participants are the legacy/typical automakers [3]. [1] https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes [2] https://www.cato.org/regulation/summer-2014/tesla-car-dealers-lobby#origins-of-automotive-distribution-restrictions https://www.cato.org/regulation/summer-2014/tesla-car-dealer... [3] https://en.wikipedia.org/wiki/National_Automobile_Dealers_Association https://en.wikipedia.org/wiki/National_Automobile_Dealers_As...
- dangrossman 5y agoThose franchise laws were written by and lobbied for by the dealership associations in direct response to Ford and GM dabbling in company-owned stores in the 1990s. They were not pushed for by Ford but against Ford, to make it illegal for Ford to directly compete with its franchisees.
- PierceJoy 5y agoShould do it for all models. The new Ford Bronco is in high demand with low supply. Some dealerships are adding anywhere up to 40k on top of the MSRP as a “market adjustment”.
- clircle 5y agoWhy not charge the market rate to remove the shortage ?
- StillBored 5y agoWell in the manufactures case they aren't making any of the extra margin, they would be better off knowing there is increased demand and making more of that particular model.
- TylerE 5y agoThere is little incentive for them to do so. It takes a lot of money and time to spin up a new production line, and you don't really effect total sales that much... as someone willing to spend an extra $50k for a C8 Corvette or a Bronco will also happily pay sticker and wait 12-18 months.
- mywittyname 5y agoThey get sued. This happened with the SRT Viper. Dodge overestimated prices in the first year of new model production, so they dropped MSRP by like 15k the next year. Owners sued successfully to get $15k back. Now these $80k cars are selling for ~$150-250k. People who purchase Vipers made out like bandits.
- StillBored 5y agoYah, I just about died when I saw the $40k dealer markup on the ford raptor a couple years ago. It was a hard NO on my side at that point. I guess post cov19 with all the shortages there is an economic argument for it, but in the past you would think ford/etc would be more than happy to eat chevy/toyota/etc's market share if their dealers weren't playing games with the retail values of these cars, because in may locations the same company owns a whole bunch of dealerships for different companies. Buddy of mine, ~15 years ago, bought a couple cars by spamming the sales department via email what he was looking for in a 1000 mile radius then playing them against each other. I tried it to a lesser extend a few year after that though and they basically weren't playing ball. There is a reason a lot of auto communities call them the "stealership" and then post their $1200 radiator replacement quotes.
- post_break 5y agoMaybe they are learning that any hot vehicle made by Ford, Chevy, or even Hyundai is an absolute joke to purchase. Focus RS? Hell I was trying to buy a Fiesta ST and the dealer treated it like it was a Shelby signed by Carrol himself. I had to call so many dealers to buy a Honda Accord at MSRP last year and not get the seat protector, nitrogen tires..., tint, wheel locks that do fuck all, etc.
- elSidCampeador 5y agoDealer margins on the cars themselves are actually super thin* - they make their money on optional add-ons plus service * unless the car we're talking about is _really_ expensive
- parkingrift 5y agoHistorically true, but not true during the pandemic. Dealers are relishing the supply constraints and charging significantly above MSRP. I’d happily get in line to buy a particular car at MSRP directly from the manufacturer. If I won’t get it for a few months that’s fine. I will not overpay a dealer.
- mywittyname 5y agoThe cars the GP is talking about haven't been in production for years. The Focus RS ended production in 18, while the Fiesta ST held on for another year. And I can say that '19 was the best year in recent memory to purchase a vehicle. Cars like that are weird though. Some dealers dump them for a steep discount, since they don't sell in volume, can sit for multiple model years, and bring in a lot of tire kickers, while some lock them up in a showroom and ask 30% over market value for them.
- emacsen 5y agoSince all the comments I've seen thus far have been anti-dealership, I thought I should provide one single solitary reason for dealerships. Before I do- I've never worked at a dealership, or a car company, nor owned a car, nor have I driven a car in over twenty years, so I have almost no skin in this game other than my wife and I bought a car last year. The one thing dealerships do is that they do have a very slight incentive to address issues related to recalls. This is because dealerships are incentivized to do recalls because these service calls are covered by their agreements with the manufacturer as an independent entity, where as a company owned site would not be. It could then be argued that dealerships provide some level of accountability to manufactures to be independent in reporting defects. I think this is a weak argument and does not justify the existence of dealerships, but it is a real argument nonetheless, even if it's not sufficient to justify its own existence.
- MBCook 5y agoI like that dealerships exist for maintenance and browsing. They’re fine for used car sales. I think they have a place. It’s the games they play with new cars, especially popular/hard to get models like EVs or the new Bronco that make people hate them. I think things would work better if the brands owned/ran the dealerships. But I don’t know we can get there from here, at least with traditional cars. EVs may give brands leverage to change the rules. But dealerships may fight back with more regulations from friendly state governments. I bought a Mach E in part because I knew the dealers existed. They’re not perfect, but they’re there.
- whoisjuan 5y agoI think this is a bug of the system, not a feature. Manufacturers and Dealerships have a co-dependent relationship where manufacturers provide a franchised business and the supply of a very unique product and dealerships provide distribution/footprint, last mile logistics and support. This is where Tesla has an incredible position. They can invest in becoming a logistics company in every possible part of the chain and maximize value at every point. The other manufacturers have to undo their dealership footprint which is predicated on a +60 year relationship. That divorce will eat alive most classic manufacturers and will permanently block them from making good progress in direct to consumer. This is what being disrupted looks like.
- rdtwo 5y agoThat’s good ripoff pricing at the dealer is a problem.
- baltimore 5y agoThis made me think of the Saturn GM brand in the 90s, which made the "no haggle" price and salespeople NOT working on commission a refreshing proposition.
- jalgos_eminator 5y agoYeah, I barely remember my dad buying a Saturn in the 90's and he bought a Tesla for similar reasons just before all this craziness started. I'm looking forward to buying a car in the next couple years since these sales models have popped up like Tesla, Ford's, Carvana, etc.
- robbiet480 5y agoInteresting to note that I can't find that paragraph in the WSJ from Friday, even when looking at the writers articles. He wrote one article about the Ford EV split on Friday but made no mention of dealer changes. https://www.wsj.com/articles/ford-creates-electric-vehicle-gas-engine-divisions-in-company-reshape-11646222458 https://www.wsj.com/articles/ford-creates-electric-vehicle-g...
- aquigley 5y agoThe lobbying organization of dealers, NADA, actually stopped publishing profit numbers for the first time in the nearly decade I've been watching. [0] It can't help their lobbying effort with data that makes them look bad. I consider that pretty telling of the markups they have been getting during the pandemic. [0] https://www.nada.org/nadadata/ https://www.nada.org/nadadata/
- WheelsAtLarge 5y agoIt's about time. I hope it carries over to all cars. Having to negotiate a car's price is such a waste of time and resources. I always feel like I got ripped off after a car purchase.
- Noumenon72 5y agoI went to CarMax so I could pay a sticker price I found acceptable without that feeling of having been tricked. Carvana is similar I believe.
- IgorPartola 5y agoWhere I think this comes from: the F150 is currently the most sought after consumer truck on the market. You cannot get a new one at the dealer. To help the process Ford has set up a way to order them online directly from them. The process isn’t ideal but you generally get the VIN assigned, get notifications of when it’s manufactured, etc. and then eventually delivered. Due to the stupid high demand for these they say that the direct sales like this work and work well. Electric vehicles are similarly hot so they might as well repeat the process and even improve it.
- olliej 5y agoHow is this a bad thing? I hate having to go to dealers to buy a car, they will actively change pricing every opportunity. It’s wretched. The last couple of times I asked for the exact amount for the car, told them I was getting a cashiers check for that amount, got said check, and then left if they tried to change the price afterwards.
- chrisjc 5y agoThis is fantastic news and a sign that Ford is taking EVs and competition seriously. Once this change is implemented, what will the experience at "dealership" be like for customers? I can't help wonder if they'll be met with deep resentment and frustration. Just a bunch of "deadbeats" coming in stealing dealers' time and money preventing them from selling "real" cars and trucks that have predictable kickbacks, incentives, add-ons, service-costs, etc. As if the experience isn't horrible enough, I can only imagine what it will be like in the near term as these employees' livelihoods as they know (or expect it) are in jeopardy. (owner of a Ford Explorer, VW eGolf and Tesla stock)
- lucas_membrane 5y agoEventually, this policy, if it succeeds, will lead to generic-brand cars. Big discount retailers will be selling store-brand cars, perceived as slightly inferior, for a little less than the brand-name manufacturer prices, perhaps purchased by the retailers under confidential deals from the same manufacturers selling the premium cars, or perhaps made by very low-wage manufacturers who do only final assembly and obtain components/assemblies from the same suppliers who supply the brand-name makers. It works for soda pop and corn flakes, and people gotta have cars.
- robert_foss 5y agoI'm not seeing any off-brand Teslas sold at Wallmart. I think this is a bad take.
- lucas_membrane 5y agoWhen I wrote, "Succeeds," I meant becomes a standard practice of all the major car manufacturers. It is the elimination of some forms of price competition that will drive the development of other forms of the same. Maybe etsy and alibaba will start selling automobiles, or maybe you will be able to assemble your own car from legos; maybe the dealers or manufacturers will be able to offer bargain seekers discounts on open-box or previously returned vehicles, or free floor-mats, or inflated values on their trade-ins, or special financing, etc. Those cars aren't going to sell themselves.