Ford Motor Company (NYSE: F) is preparing new regulations regarding the sale of electric cars, a change that is concerning dealers and expected to challenge the traditional franchise model.
Ford changes its sale strategy for electric cars with a preference for online transactions
For months executives from the Detroit-based giant have been alluding to these changes highlighting a future that will see less inventory on dealer lots and more on digital transactions. Such plans expect no-haggle pricing and more focus on dealerships as repair and service centers. The automaker will release the new EV-sale rules in September.
CEO of Ford Jim Farley has been among the outspoken company executives that have proposed the change to EVs as a strategy for how cars are sold. Earlier this month, at the Bernstein investor conference, he discussed not having inventory at dealers and concluding all transactions online.
Dealership owners expressed their concerns about Farley’s remarks in conversations with The Wall Street Journal and emphasized the critical role that dealers play in dealing with consumers and offering them maintenance, repair, and training. Additionally, dealers and their attorneys cite current franchise statutes as another obstacle to Ford’s ability to impose more limits.
According to Tim Hovik, head of the Ford National Dealer Council, Farley met with around 300 dealers this week for four hours in order to answer questions and talk about their worries over the sustainability of EV sales.
Ford adopts a strategy similar to Tesla’s direct sales
As per some analysts, Farley’s claims that there was no inventory at dealerships and that all purchases were conducted online were similar to the direct-sales strategy used by Tesla Inc. and most EV startups. According to Farley, Tesla’s direct-sales technique saves the company about $2,000 per vehicle.
Some of the dealers indicated that the company was trying to appeal to consumers, dealers, and investors. The CEO of a dealership chain based in Ohio that sells Ford cars and other nameplates, Rhett Ricart, said, “They’re caught in between Wall Street and Main Street. His intentions are to motivate dealers to change, to survive.
