Ford upending the US car market
Discussion
Interesting article.
https://insideevs.com/news/610114/ford-modele-deal...
Someone ran the numbers and found that 98% of the population in the US lived within 20 miles of a Ford dealership, so by mandating that the dealerships install fast chargers is a great way to get customers through the door and negate the 'range anxiety' issues.
But not only that, they are changing the business model with the dealerships to mimic Tesla. Fixed prices, technician training, ordering on line etc.
An analogy to explain how it works here.
Imagine your next door neighbour is a carpenter and he's made a chair, that is exactly what you want. But because of the monopoly that the woodworking dealerships have you can't ask your neighbour the price of the chair and you can't even sit in it. The only way you can buy it is if the chair is shipped to a dealership, where they set the price no matter the price paid to the carpenter.
That's how it works with cars and many states don't allow auto manufacturers to sell cars directly. Tesla has either had those laws changed or have set up on tribal land where such laws don't apply.
Ford dealerships have had a nasty habit of taking an order from a customer but when the car was ready for delivery hitting the customer with a new revised price, often to the tune of several thousand dollars. They are losing a lot of customers because of this, and Ford is fed up.
https://electrek.co/2021/12/30/ford-dealers-taking...
Interesting times
https://insideevs.com/news/610114/ford-modele-deal...
Someone ran the numbers and found that 98% of the population in the US lived within 20 miles of a Ford dealership, so by mandating that the dealerships install fast chargers is a great way to get customers through the door and negate the 'range anxiety' issues.
But not only that, they are changing the business model with the dealerships to mimic Tesla. Fixed prices, technician training, ordering on line etc.
An analogy to explain how it works here.
Imagine your next door neighbour is a carpenter and he's made a chair, that is exactly what you want. But because of the monopoly that the woodworking dealerships have you can't ask your neighbour the price of the chair and you can't even sit in it. The only way you can buy it is if the chair is shipped to a dealership, where they set the price no matter the price paid to the carpenter.
That's how it works with cars and many states don't allow auto manufacturers to sell cars directly. Tesla has either had those laws changed or have set up on tribal land where such laws don't apply.
Ford dealerships have had a nasty habit of taking an order from a customer but when the car was ready for delivery hitting the customer with a new revised price, often to the tune of several thousand dollars. They are losing a lot of customers because of this, and Ford is fed up.
https://electrek.co/2021/12/30/ford-dealers-taking...
Interesting times
True, but since Tesla started to be prominent it's got the big manufacturers worried, especially their fixed no haggle pricing and the direct sales.
And of course Tesla's plan to introduce the Model 2 at $25,000 new has really shook the manufacturers up. I know Musk has a record of not always following through but this time I believe it will happen.
https://www.tomsguide.com/news/tesla-hatchback-dol...
And while the other automakers are bleating about supply chains for semiconductors and using that as an excuse to hike prices, musk starts a $3.3 billion factory to make his own semiconductors for Tesla cars.
And of course Tesla's plan to introduce the Model 2 at $25,000 new has really shook the manufacturers up. I know Musk has a record of not always following through but this time I believe it will happen.
https://www.tomsguide.com/news/tesla-hatchback-dol...
And while the other automakers are bleating about supply chains for semiconductors and using that as an excuse to hike prices, musk starts a $3.3 billion factory to make his own semiconductors for Tesla cars.
NMNeil said:
True, but since Tesla started to be prominent it's got the big manufacturers worried, especially their fixed no haggle pricing and the direct sales.
And of course Tesla's plan to introduce the Model 2 at $25,000 new has really shook the manufacturers up. I know Musk has a record of not always following through but this time I believe it will happen.
https://www.tomsguide.com/news/tesla-hatchback-dol...
And while the other automakers are bleating about supply chains for semiconductors and using that as an excuse to hike prices, musk starts a $3.3 billion factory to make his own semiconductors for Tesla cars.
Have to see how it pans out. Direct selling is an easier way to save money than reduce production costs. Interesting the us don’t allow it. But how things have changed Tesla was once the butt of many poor design jokes and Now leading the way.And of course Tesla's plan to introduce the Model 2 at $25,000 new has really shook the manufacturers up. I know Musk has a record of not always following through but this time I believe it will happen.
https://www.tomsguide.com/news/tesla-hatchback-dol...
And while the other automakers are bleating about supply chains for semiconductors and using that as an excuse to hike prices, musk starts a $3.3 billion factory to make his own semiconductors for Tesla cars.
Regards building your components is a very risky business, many companies have come unstuck trying to do that.
Selling price are what people are willing to pay for something and nothing more. I am sure ford is the Big Mac and Tesla the fine dining of the car market.
The flip side of the argument about the Tesla model is:
Dealerships are often franchises. They buy the cars at an internal price, often involving discounts the more they sell. They can decide to undercut the dealership down the road to sell more cars if they wish.
At times when demand is greater than supply, then higher prices can occur, but when the reverse is true, the prices will fall.
Their customer service performance will also mean the better they are, the more likely customers will be to go to them. You may find a dealership offers better customer service but the quid pro quo is there cars may be slightly higher. Some custoemrs will be happy with this.
Dealers that are the most expensive and have the worst customer service will eventually fail, and so it should be.
A market where the manufacturer sets all the prices, just means they are setting the margin, removing flexibility, and they also reduce the capability of the dealerships to be creative. Anyone thats owned a Tesla and been at the mercy of their customer services, either the experience of collecting a 60k from souless carpark where the handover is worse than buying a drive through burger, or have a fault with a car and can't actually talk to a human at a service centre will know that "one consistent way of working" doesn't necessarily mean it's a good one.
Neither is perfect, but we need to be careful what we wish for. The cosumer rights organisations have fought for years to remove the concept of an RRP, and to a large extent they have done. Yes you can look at companies like apple and the prices are usually the same everywhere, but they simply won't supply people who undercut. That said, companies do offer more value, John Lewis for instance will offer more warranty than the others - so competition can come in many forms.
Dealerships are often franchises. They buy the cars at an internal price, often involving discounts the more they sell. They can decide to undercut the dealership down the road to sell more cars if they wish.
At times when demand is greater than supply, then higher prices can occur, but when the reverse is true, the prices will fall.
Their customer service performance will also mean the better they are, the more likely customers will be to go to them. You may find a dealership offers better customer service but the quid pro quo is there cars may be slightly higher. Some custoemrs will be happy with this.
Dealers that are the most expensive and have the worst customer service will eventually fail, and so it should be.
A market where the manufacturer sets all the prices, just means they are setting the margin, removing flexibility, and they also reduce the capability of the dealerships to be creative. Anyone thats owned a Tesla and been at the mercy of their customer services, either the experience of collecting a 60k from souless carpark where the handover is worse than buying a drive through burger, or have a fault with a car and can't actually talk to a human at a service centre will know that "one consistent way of working" doesn't necessarily mean it's a good one.
Neither is perfect, but we need to be careful what we wish for. The cosumer rights organisations have fought for years to remove the concept of an RRP, and to a large extent they have done. Yes you can look at companies like apple and the prices are usually the same everywhere, but they simply won't supply people who undercut. That said, companies do offer more value, John Lewis for instance will offer more warranty than the others - so competition can come in many forms.
ashenfie said:
Have to see how it pans out. Direct selling is an easier way to save money than reduce production costs. Interesting the us don’t allow it. But how things have changed Tesla was once the butt of many poor design jokes and Now leading the way.
Some States have banned direct sales, and every time they try and change the law there's an uproar from the dealerships who fear losing their monopoly, and of course, money talks.Musk is in open conflict with the states where he, and other EV makers can't sell their cars directly to customers.
https://www.reuters.com/legal/tesla-seeks-overturn...
NMNeil said:
True, but since Tesla started to be prominent it's got the big manufacturers worried, especially their fixed no haggle pricing and the direct sales.
And of course Tesla's plan to introduce the Model 2 at $25,000 new has really shook the manufacturers up. I know Musk has a record of not always following through but this time I believe it will happen.
https://www.tomsguide.com/news/tesla-hatchback-dol...
And while the other automakers are bleating about supply chains for semiconductors and using that as an excuse to hike prices, musk starts a $3.3 billion factory to make his own semiconductors for Tesla cars.
Not sure it got them worried directly but rather it gave them ammunition to break away from the dealership model which most manufacturers want to get away from but in the US is backed by various local laws? And of course Tesla's plan to introduce the Model 2 at $25,000 new has really shook the manufacturers up. I know Musk has a record of not always following through but this time I believe it will happen.
https://www.tomsguide.com/news/tesla-hatchback-dol...
And while the other automakers are bleating about supply chains for semiconductors and using that as an excuse to hike prices, musk starts a $3.3 billion factory to make his own semiconductors for Tesla cars.
liner33 said:
The days of car dealerships as we know them are numbered, I reckon within 10 years most will be service centres and sales will be all online
I think that in 10 years time quite a bit of the customer facing side of the industry will have changed. They want to get rid of the dealers in the middle, they want to own the cars for much longer than the average 6 years and they want as much as possible on subscriptions. liner33 said:
The days of car dealerships as we know them are numbered, I reckon within 10 years most will be service centres and sales will be all online
I hope so, hate car sales people. Never met one I would deal with again.If they could have the sales centres where you can go and test drive a car but pricing is all the same as online and no one is on commission to sell you anything that might help.
I think it may all be upset when someone starts importing affordable Chinese (or other Eastern) EVs and selling them either directly or via a retailer like Halfords or Tesco.
The concept of 'ownership' needs to be thought about in the context of long warranties, where even if you 'own' the car, the manufacturer (?) owns the risk of it breaking down and has a deal of control over it with servicing, software updates and WHY.
The concept of 'ownership' needs to be thought about in the context of long warranties, where even if you 'own' the car, the manufacturer (?) owns the risk of it breaking down and has a deal of control over it with servicing, software updates and WHY.
somouk said:
I hope so, hate car sales people. Never met one I would deal with again.
If they could have the sales centres where you can go and test drive a car but pricing is all the same as online and no one is on commission to sell you anything that might help.
Who do you negotiate your discount with?If they could have the sales centres where you can go and test drive a car but pricing is all the same as online and no one is on commission to sell you anything that might help.
DonkeyApple said:
Not sure it got them worried directly but rather it gave them ammunition to break away from the dealership model which most manufacturers want to get away from but in the US is backed by various local laws?
No, they are worried.https://insideevs.com/news/609726/ford-ceo-out-con...
https://www.newsobserver.com/news/business/article...
They can't compete on quality or gadgets, so are relying on getting the prices as low as possible, and this means changing the dealership model and selling direct.
Not seeing the 'worried' bit to be honest. Why would any business want an entity sitting between its product and its customers and taking a slice of the action?
I think those articles are hyperbolic, if no seeded to add weight to the long standing desire of manufacturers to get rid of the dealers and keep that margin for themselves, not pass it on to the consumer.
The problem the likes of GM and Ford have is brand perception. They're bottom of the market manufacturers and both are going to get annihilated by Asian EVs. Typical
Ford and GM customers in the US will be among the last to convert to EV and in Europe is the Ford brand even going to exist in ten years time? The Tesla brand is more an issue for the more premium European manufacturers.
I think those articles are hyperbolic, if no seeded to add weight to the long standing desire of manufacturers to get rid of the dealers and keep that margin for themselves, not pass it on to the consumer.
The problem the likes of GM and Ford have is brand perception. They're bottom of the market manufacturers and both are going to get annihilated by Asian EVs. Typical
Ford and GM customers in the US will be among the last to convert to EV and in Europe is the Ford brand even going to exist in ten years time? The Tesla brand is more an issue for the more premium European manufacturers.
DonkeyApple said:
I think those articles are hyperbolic, if no seeded to add weight to the long standing desire of manufacturers to get rid of the dealers and keep that margin for themselves, not pass it on to the consumer.
.
Rather than read the articles the interview is on YouTube so you can hear it from the horse's mouth . It's not an ev issue per se but as car sales are likely to drop significantly following the introduction of EVs it's a problem that they need to address now so the systems are in place for the future.
I do find some irony in the statement that dealerships are a significant part of the overall cost. I suspect that much of this is due to the manufacturer demands for certain amounts of space around cars etc that force dealers to be the glass palaces we see.
As for negotiating discounts, I suspect the idea is that you do not do this and pay list.
As for negotiating discounts, I suspect the idea is that you do not do this and pay list.
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