Ford hasn’t built a Mercury in six months and 98 percent of its erstwhile dealers have signed termination agreements with the parent company, but the remaining 31 dealership owners are digging in their heels for a fight. Automotive News [sub] reports that these Mercury dealers recently spent huge amounts building or renovating their Lincoln/Mercury stores, and that Ford’s termination offers are embarrassingly tiny in comparison.
For example, the owner of Francis Scott Key L-M Inc. in Frederick, Md. claims to have spent $5.5m on a dealership expansion which was completed in 2007, but only received a termination offer of $181,026 from Ford. Liberty Lincoln-Mercury in Clifton, N.J spent $7.7m upgrading its facilities in 2004, only to receive a $733,575 termination offer from Ford. So far, AN counts four dealers who are suing Ford in federal court, and an undisclosed number have filed complaints with their state DMV. Ford, meanwhile, is trying to engage the holdouts in mediation, and though some have settled others are reporting bad experiences. Meanwhile, there’s another problem that underlines the the entire dispute: can a standalone Lincoln dealership even survive?
One of the greatest things about the internet is its ability to disseminate information that levels the playing field in relationships that have long been defined by asymmetrical information. Our buddies at TrueCar are tackling one such informational imbalance by posting its dealer holdback calculation for every brand on sale in the US. They note
Dealer Invoice is generally the amount the dealer pays the manufacturer for the vehicle. Because Dealer Holdback is paid to the dealer after the vehicle is sold, it represents an additional profit center for the dealers that is not immediately available to consumers. This is one reason why some dealers are able to sell some vehicles below Invoice and still make a profit.
Kent, WA, resident Johnny George owned and ran a used-car lot. Paul George worked as a sales and financing manager at Pacific Auto Zone. For some 30 years, both convinced authorities that they are mentally insane. (Read More…)
How many former Saturn buyers do you figure have come back to GM for their next car? What about consumers who last purchased a Pontiac? How about HUMMER? Since we’re not bound to a strict inverted pyramid around here, why don’t you think of an answer (in terms of percentage of customers retained) for each brand and then hit the jump to see how close you were.
OK, so it’s a somewhat facetious headline: as an auto manufacturer, Saab either builds and sells cars or it disappears. But in the aftermath of Saab CEO Victor Muller’s pledge that “We will definitely ensure that this [production stoppage] will not happen again,” Saab’s most recent shutdown sent shockwaves of concern through the Saab community. After all, Saab’s official line is that “we knew this would happen,” a position that’s more than a little at odds with Muller’s now-broken promise. And though the just-signed Youngman deal could mean more cash with which to get production at Trolhättan back up and running, there’s a bigger question that remains unanswered: why restart production at all?
Just a week after GM CEO Dan Akerson slammed Ford’s Lincoln revival, Ford is asking its Lincoln dealers to put big money down on the brand’s future. Automotive News [sub] reports
A group of 120 Lincoln dealers had been invited to the meeting to hear Ford’s plans to rebuild its remaining luxury brand, say dealers who attended.
Ford expects stand-alone Lincoln dealers to spend an average of $1 million on renovations, dealers say. Owners of Ford-Lincoln duals are expected to spend about $1.9 million to remodel, dealers who went to the meeting say.
If dealers do not invest in renovations, Ford says it will seek to take back their franchises in exchange for compensation. The investment requirement applies only to urban dealers — for now.
And what do the dealers get in return for their hefty outlays? Hot new Lincoln product, or, in the words of a Lincoln rep “seven new or significantly refreshed vehicles coming out in the next three years.” Which means that if you want to get aboard the Lincoln express (destination:viability), you’ll have to get your store to Lincoln standards by the end of 2013, when a redesigned MKZ and a Focus-based Lincoln compact hit dealers.
I missed the latest twist in Chrysler’s California dealer drama when I was traveling in Iowa last week, but because it’s such a significant story (and because Ford recently proved how expensive dealer drama can be), we’ll commit the cardinal rule of blogging and take a look at some week-old “news.” California’s DMV won’t report the findings of its investigation into Chrysler’s allegedly non-compliant “company store” until September 29, but the Detroit News has reported that “about 75 percent” of these dealer complaint cases end in settlement and that
Chrysler Group LLC may be on the verge of selling its company-owned flagship dealership in Los Angeles to a private retailer, which could appease angry franchise dealers in California.
So much for ChryCo leaving the state in an angry huff. In fact, angry is about the last thing CEO Sergio Marchionne sounds about the whole thing…
Is Cadillac a European-grade maker of world-class, dynamically-focused and fashion-forward driving machines, or the small-town America symbol symbol of petty-bourgeois success, with an emphasis on the old-school American values of wide seats, big power, and a cosseting ride? The brand’s product line displays this identity crisis (compare CTS and DTS) as much as the dealer network does.
The answer: yes. GM is keeping a lot of small-time Cadillac dealers on the roster, and is asking them to upgrade their facilities to a new design created by San Francisco-based architecture firm Gensler. GM talks up the new look’s “contemporary architecture and premium materials” in its presser, but it too seems to try to bridge the yawning gap between a fashion-forward, Euro-inspired look and a more traditional, conservative look aimed at a more “traditional” customer (see image above?). But does it work? Does the new look communicate “Cadillac values” to you, or does it strike you (as it does me) as a bit of a compromise?
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…
GM has announced details for the 2012 Model Year Chevrolet Volt, and for the second year of production The General is already addressing the Volt’s most controversial feature: its high price. The base MSRP for the Volt will drop from $41,000 to $39,995 for the 2012 year of production, an accomplishment that GM explains
is possible in part because of a wider range of options and configurations that come with the expansion of Volt production for sale nationally.
Wider range of options and configurations? According to the Detroit News, this means navigation and a Bose speakers are no longer standard features on the base-price Volt, but that seven options configurations are now available compared to the 2011’s three. And, on the other end of the pricing equation, the Volt’s fully-loaded price has increased to $46,265 from the $44,278 that Chevy’s configurator tops out at for a loaded 2011. Keyless access with passive locking is the only new standard feature for 2012. With more choices and a slightly lower price of entry, GM is clearly trying to move the Volt away from the “novelty” image that CEO Dan Akerson referenced earlier this week, as it ramps up Volt production for 60,000 units next year. But until the Volt’s price starts dropping without simply offering a less-contented version, the road to mass sales will continue to be a tough one.