The Blue Oval wants customers to know exactly what they'll pay long before they arrive at a dealer – if they even go to one.
At this week's Capital Markets Day – the first in-person investor conference Ford has held since 2016 – the Blue Oval's CEO Jim Farley told investors the automaker plans to move to non-negotiated pricing on new vehicles from January 2024.
This is not the first time such a strategy has been considered. The CEO has suggested that fixed pricing should be introduced several times over the past couple of years, most notably when introducing the new Ford e-Certified programs that dealers must sign up for if they wish to continue selling EVs like the Mustang Mach-E.
Excessive markups have been shown to affect customer sentiment toward manufacturers and dealers alike, and Ford has introduced several in-demand vehicles over the past two years that many dealers have overcharged for. Clearly, it's something that needs to stop if investors are to trust that the brand can breed loyalty.
“We're matching these [upcoming new] vehicles with a modern and simple customer experience that starts with one major breakthrough: non-negotiable price,” said Farley. He added that the automaker is “going to reduce physical inventories dramatically in Model e and deploy a new marketing model that focuses on loyalty and customer communication and building a community rather than spending billions on TV advertising and broadcast media.”
At the same event, Ford's advanced product development and technology officer Doug Field said that Ford's EV customers “will have flexible purchase options – online/in the store – with transparent pricing that they don't have to haggle over, and remote vehicle delivery, and later pick up as well. These better experiences make customers more likely to build a relationship and choose the same dealer again.”
Despite a planned reduction in EV inventory at dealers, Ford also promises it will be able to “deliver the right vehicle in less than 10 days.” How?
“Customers also want to get their dream vehicle, not settle for what's on the lot,” continued Field. “Soon, they'll have far more options available to purchase through their dealer from new retail replenishment centers. These centers can hold a couple of weeks of inventory and deliver the right vehicle in less than 10 days.”
Because of this, Ford believes it will be able to shift plenty more vehicles far more quickly, which is part of why it aims to manufacture some two million EVs.
According to Lisa Drake, VP of EV industrialization for Ford Model e, “From 2022 through the end of '26, Model e will grow from just under 100,000 units to well over one million. When you add Ford Pro, our total capacity will approach two million EVs. So we are wasting no time already increasing production in our first-gen EVs.”
This strategy is one that dealers will be reluctant to embrace, but it appears to be for the best in the long term. Ford is not cutting its dealer network out of the equation – the customer still pays the dealer directly – but they don't have to go to the dealer if they don't want to. This means buyers can shop around easily, and if they find an F-150 Lightning configuration they like at one dealer, they will only need to compare the specifications of vehicles offered by other dealers. Nobody will make a 300-mile trip to get their ideal spec only to be forced into a tense negotiation once they arrive. Heck, they could even have the vehicle delivered to their door.
This should help customers stick with the Blue Oval, especially if rivals like Chevrolet are hesitant to stop scandalous markups. Unlike Tesla's direct sales system, the dealer is still a part of the process and can continue to earn from accessories and maintenance. It's the best possible system proposed so far and should help Ford grow with ease.
Keyword: Ford Blocks Dealer Markups On EVs Starting Next Year