Ford Wants Dealers to Focus on Commercial Repairs to Make Up For Lower Profits from Direct Sales
Ford is trying to get dealers on board with the changes that EVs will allegedly bring, including direct sales and a smaller role for dealerships, which have long stood as middlemen between Ford and its customers in the U.S. Dealers aren’t happy with the proposed changes that Ford and CEO Jim Farley are suggesting, with some going as far as to sue the carmaker, as Automotive News reports.
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But these changes don’t have to affect the bottom line of certain dealerships, according to Ford, which the carmaker wants to more or less turn into commercial service centers whose main source of revenue will be fixing commercial vehicles that plumbers, HVAC and construction workers rely on.
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Rather than making most of their money on sales, certain dealers will instead focus on the maintenance and repair of working vans and trucks, be they EVs or ICE-equipped. It’s a small consolation prize for dealers who feel that Ford is pushing them aside as it transitions to a different sales model. As if service departments weren’t already lucrative for dealers, given their high hourly rates.
But Ford is now eyeing the commercial sector to partially make up for the lower profits that direct sales could yield at dealers. Ford tells Auto News it expects to open 120 new “Elite Commercial Service Centers” in the coming years, which all must have 24 service bays or more, must be open at least 72 hours per week and must have a minimum of five mobile service vans.
The vans are a good example of the push to make up for lost profit: they’re not just for the sake of convenience; they’re also meant to free up service bays for expensive repairs and to “reduce the amount of in-store work spent on lighter, simpler maintenance jobs.”
The cost of building the new Elite centers varies, but Auto News cites two dealers who say that building the facilities — or expanding upon their current ones — will cost around $9 to $15 million. Ford is going to pitch in some of its own money (possibly, as a way of extending another olive branch) but the amount Ford will provide dealers is far less than the projected costs of building the Elite service centers.
Ford will help a few dealers by giving them $250,000 to convert their existing service departments by the end of this year. And the company will provide another $300,000 if dealers add more service bays than the 24 required to bear the “Elite Commercial Service Center” name.
That brings the reimbursement from Ford up to $550,000 for ambitious dealers. One of whom plans to have 100 service bays — which sounds like a lot until you factor in the number of open work orders at any given time. Another dealer in Cleveland says their store has 350 open repair orders daily, and the dealer expects that to double once their service department makes the switch to an Elite center.
Ford says commercial customers are underserved, and it sees service for these work vehicles as an untapped market that some dealerships can easily turn to once direct sales become the norm. But even 120 new Elite service centers are hardly enough to appease the roughly 3,000 dealers that Ford has in the U.S.
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