Ford Hit With $2b Ruling In Commercial Truck Case
An Ohio judged has ruled [full ruling in PDF here] against Ford in a 2002 case alleging the automaker overcharged dealers by selling commercial trucks at unpublished prices between 1987 and 1998. According to the summary judgement, Ford’s “CPA” program violated its contract with dealers by publishing “unrealistically high” wholesale prices and using “secretive, unpublished discounts” on an uneven basis, thereby overcharging some 3,000 dealers by an average of $1,650 for each of the 474,289 medium- and heavy-duty trucks sold in the applicable time period (about $1.2b of the ruling is for unpaid interest). The story is intriguing in its illustration of the differences between consumer and dealer incentives: while consumer-end incentives can be applied on a market-by-market basis, dealer invoice prices must be evenly applied across all markets according to Ford’s contract with its dealers. The story is also of major significance considering Ford’s still-shaky financial position, with automotive gross cash exceeding total debt by a mere $1.4b. Ford will appeal the ruling, but because the damages awarded are material rather than punitive, an expert tells the Cleveland Plain Dealer, Ford’s appeal could be “interesting.” Which doesn’t sound like great news to us…
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@pacificpom2- Manufacturers sell to dealers only. Dealers in turn sell to retail and fleet customers. Dealers are independent businesses with a large body of federal and state laws to protect them from unfair treatment by manufacturers. Federal law requires a "Monroney"(after the sponsor of the law) label which lists Manufacturers Suggested Retail Price, but dealers can sell for whatever price they can get. Even large fleet purchases such as Avis or Hertz are handled by a dealer. In the U.S. historically about 80% of new vehicle sales are from Dealer stock. Dealers order those vehicles equipped as they deem appropriate and pay the manufacturer for them a fixed time after shipment. The beef in the subject lawsuit appears to be that Ford did not have a defined "dealer price" for these commercial vehicles. Dealers sometimes "trade" another dealer for a car if they have a customer for that specific vehicle. Typically, they do not pay a premium to the other dealer, with the expectation that they will return the favor in the future. In the case of hot selling cars, the other dealer may decline to trade, forcing the dealer to order a car to be built to the specification the customer desires. . The remaining 20% of new sales are customer orders, similar to your Falcon example.
But... but.... it appears to my biased Disgruntled point-of-view that the USA Supreme Court adores the corporate entity despite the occasional slap-on-the-wrist slowly but steadily altering corporations into both "human" and business entities having the benefits of being both but with the business aspect creating a human aspect akin to an economic Superman!!! Oh, and a Superwoman. Bow down to your economic masters!!!!
GM actually just jumped past Ford in revenues. As for profits, well they gotta pay the loans. Poor Ford. Whatever it does GM outsells it everytime. The General ruled the sedans last month. GM sells more cars in Europe.
@MikeAR- I am with you with regard to knocking your competitor down, though I think it is fair to compare data. Reminds me of an old phrase, "standing on someone else toes to make yourself taller", or Jimmy Olsen's "pocket full of kryptonite".