A year later, Ford dealers continued to play games

It’s been almost a year to the day when news outlets started covering some out-of-the-box Ford dealer scams. It was the Ford Mustang Mach-E and the frantic demand for the all-electric pony car from Blue Oval that was the focus of most of the stories, with our very own Steve Hanley covering a “really awful electric car horror story” that included – get this – a $5,000 dealer profit .

A year later, that $5,000 price tag seems almost bizarre. In a car like the Mustang Mach-E, this is about 10% of the car’s price. today? Almost every new Ford car carries a huge It has gotten so bad that consumers who are tired of it have started a website to track dealer brands called markups.org.

According to this site, a Golf Mill Ford outside of Chicago had a profit of $15,000 on a new Ford Maverick recently on April 5th…a staggering 75% increase on a $20,000 truck! (!!!)

Manufacturers are starting to put pressure on dealers, but with car dealerships reaping record profits and pumping out record amounts of political contributions and lobbyists, the consumer doesn’t seem to be making much progress. However, at least some of them get their own.

Check out Steve’s original article below, then tell us what you think has improved, what has become worse, and what you think can be done to help bring traders back down to earth in the comments section at the bottom of the page.


Written by Steve Hanley on April 11, 2021.

A really awful horror story for selling electric cars

Ford Mustang Mach-E customers find that many dealers add a “market modification” fee to their MSRP or vehicles.

Photo courtesy of Ford.

Every morning, while I savor my first cup of Lipton tea, I browse the electric car reddit to see if there have been any interesting developments in the world of electric cars in the past 24 hours. Recently, I found one that I want to share with our readers. Here is the original post from Reddit user (and Audi e-tron owner) David Maybury, who wants to buy a new Mustang Mach-E:

“We picked the car, bid for our trade-in from CarMax, and offered my financing. The dealer could get a better rate of interest, so that’s fine, but the payments don’t seem to add up. So I asked for the breakdown. First they “forgot” to include the trade Then they said they couldn’t match CarMax.(The seller said they would.) Fine. I’ll take it to CarMax.

Then they did ‘Has your salesperson talked to you about pricing?’ They admitted that they marked the car with $5,000. But there was a $1,600 deduction. I told them I wasn’t going to pay a single dollar of profit margins. They added another $3,000 deduction, bringing the net profit to $400. So I told them we went out and started Walking in. They tried so hard to get us to stay that I started to feel peeing. They made one last call to the general manager, who didn’t give up $400, so I walked.

“Driving from Riverside to Culver City at rush hour (more than an hour) to get this treatment was not worth it. I still have one booked at an agency that promises to do well, but I’m now reconsidering my options. Just need to vent a little.”

Maybury’s post has received more than 365 comments, many from people who have had similar experiences with other merchants. It’s by no means limited to Ford dealerships. There are even a few Tesla owners who have found their buying experience to be somewhat less than the company’s promised “no hassle” process.

Image courtesy of Ford In theory, Ford is putting pressure on its dealers not to pull this “market-adjust” stuff with Mach-E shoppers. Mark Levine, Ford’s director of communications, recently posted a tweet promising to help any Mach-E buyer with dealer coding issues. He’s also taking the opportunity to take a shot at Tesla but that’s okay. That’s his job, I think.

Maybury has tweeted Levine but hasn’t gotten any response yet. In an update to his original post, he reported similar hoaxes at two other Ford dealers he contacted. Part of the problem may be that he lives in California, which is ground zero for the electric car movement in America. Would someone in Peoria or Poughkeepsie have similar problems? If you have anything to add to this story, please let us know in the comments section.

Traders at it for the money!

Horrors! It turns out that car dealers are for the money. Who’d thunk it, huh? It may sound strange, but there is not a lot of money to sell the cars themselves. The fact The money is made in the services department and in the finance office. Changing the oil, brakes and tires is profitable items. So do the commissions credit unions and finance companies pay for work that F&I departments send their way. Undercoating, paint protection (a nod to that famous scene from the Fargo movie), LoJack, extended warranties – these are just some of the extras dealers rely on to keep their profits. Then there are all strange Financial dealings between manufacturers and dealers that can affect the profit of the merchant and about which few customers know.

You can bring The Incredible Hulk with you to help you negotiate with a dealer, but you are an amateur. They do this for a living and have a complete list of selling techniques that have been perfected over decades. Dealer schools operated by NADA and others teach dealers how to extract the maximum amount of dollars from each customer. Whatever strategy you think you have, they’ve heard it all before and have a response that was manipulated years ago. They do this 7 days a week. Do it once every three years or so. If you were a tennis player this weekend and faced Serena Williams, who do you think would win?

In the bad old days, the seller would ask for your keys as soon as you walked in so he could “rate your trade”. At some dealers, they were actually throwing keys on the roof and saying you need to buy a car from them in order to go home. Things aren’t quite as wild in the Wild West as they are today, but the customer is definitely at a disadvantage in most new (or used) car negotiations.

The opposite view of the merchants

Last month, we made a story about how dealers are a major roadblock on the highway to the future of all electric vehicles. Someone using DealerVoice’s Disqus username posted a comment on that story defending the agency’s model and industry. I give him a lot of credit for entering the lion’s den. Every story has at least two sides and we rarely get input from actual dealers. This is what he said in his comment:

“Thank you Steve for this article. As the owner of a family business spanning 4 generations.. I can assure you that it is not the dealer who is the barrier to electric vehicle sales. We welcome change. We have invested in EV displays, technical training, charging stations, etc. I think you give us more power than we already have. Transportation in America is a system, dependent on roads, fuel, service, etc. Dropping a square peg representing an EV into the round hole of ICE’s private American transportation will cause slow adaptation.

“The truth is, the majority of Americans don’t demand electric vehicles…and it’s not the dealers who make these millions of ICEs every year. We sell what’s available and what’s needed, service them when they’re broken, and take them on trade. And if their dealers weren’t independent, there would be Factory owned stores, operating according to the same model as a traditional merchant – selling ICEs.The consumer will have less power in this scenario, and price competition will be reduced (there is no intra-brand competition between agents)

Instead of pointing fingers at agents, here are the questions you should be asking:

1. Can the average American citizen afford an EV?
2. Do they have time to wait 30-45 minutes to recharge pure electricity?
3. Do they have an accommodation where they would be willing to drop $$ at a charging station?
4. Will electric vehicles fit their needs? How long do they travel?
5. What does the secondary used car market for electric vehicles look like (btw it’s where most people buy their cars in America)
6. How much does it cost to replace a battery in an electric vehicle? What is the value after 10 years
7. What will my electric bill be in the world of ALL EVs? Who will I pay?

“Most electric vehicle buyers who walk into our dealerships also own an ICE. An EV is a second car, a toy — because when they need to take long trips, or an EV charging fails, they know they can start their reliable old ICE and get the job done.

“So the real barrier is consumer demand. Dealers aren’t creating demand… they’re meeting it. Manufacturers are now claiming that all lineups of electric cars are raising stock value in response to Tesla’s rising market value…

“Traders sell cars because people need convenient, private, and affordable transportation… they can use fewer cars than drive wheels with ICE or EV COAL…..

“Thanks”

Again, give this person high marks for taking the time to express their position. I’ve been in the Car Giving myself for a number of years and know that the people I worked with ran an ethical process that didn’t stop them from making a living. Have We Offered Customers Paint Protection, LoJacks, and Extended Warranties? Yes we did. Some bought it, some didn’t, but they weren’t strong enough to buy it. During my five years with that company, no “market adjustment” was applied to any vehicle in the MSRP. Not one.

Brave New World

The issue is not whether Ford (or any other dealers) have the right to feed their families. The problem is that EV shoppers are engrossing in the new experience and fiercely resistant to the old ways. Apple does not negotiate the price of the iPhone and iPad. Amazon does not negotiate the price of the products it offers. Best Buy does not negotiate the price of its digital TVs. People who used to do business online expect to be treated a certain way. The traditional merchant model collides with them as in the last century and goes against their needs and expectations.

The electric vehicle revolution will disrupt the traditional dealer model just as it will certainly disrupt the car manufacturing business. The traders who thrive are the ones who recognize and accept the new market realities. Some well-established car companies will go out of business as electric vehicles capture more and more of the market. no escape. And some well-established proxies will stop operating as well.

It doesn’t have to be this way. The only constant in life is change and those who refuse to acknowledge this principle are doomed to fail. As Bob Dylan says, “Your old way gets old quickly. Please get out of the new if you can’t reach your hand, the times they change.


 


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