Ford: Dealer "Consolidation" Not Cuts

Edward Niedermeyer
by Edward Niedermeyer
ford dealer consolidation not cuts

Ford is basking in its “last man standing” status this week as it holds its annual shareholder meeting. Automotive News [sub] reports that Ford expects to break even or turn a profit by 2011 without the help of government bridge loans. So confident are stockholders in the success of Ford’s current strategy that they have voted down reforms that would wrest voting control from Ford family preferred stockholders for the fifth time in as many years. This despite a $14.7 billion loss last year, and a $1.43 billion loss in Q1 of 2009. The good news? Ford has restructured its debt, reached a deal with the UAW’s VEBA fund, raised $1.6 billion in its recent stock offering, and its retail market share has “stabilized.” But there’s still plenty of work to be done.

The Freep reports that Ford is still concerned about the size of its dealer network. Not enough to spur the deep cuts that GM and Chrysler are undertaking but enough to motivate executives to call for the “consolidation” of some of its urban dealers. “The only issue we have is we have a few extra dealers in the large metropolitan areas,” Ford’s Alan Mulally told shareholders. “And so that’s where we are consolidating.”

But Ford’s 3,723-strong army of dealers apparently strikes at least one stockholder as somewhat excessive. The unnamed investor questioned Ford’s “case-by-case” consolidation strategy, noting that Toyota has fewer than 1,500 dealers in the United States. Luckily, the Rev. Jesse Jackson was on hand to provide the politically correct justification for not slimming down: Ford has been a leader with minority dealer programs. “Now, in the crunch, there is an attempt to retreat from inclusion,” said Jackson. “There must not be a retreat.”

Not that Jackson stayed completely on-message as a Ford attack dog. “The Ford Fusion, made in Mexico, can be made in America,” he told the meeting. “The automotive industry is the heart of our manufacturing. It’s the backbone of our financial markets.”

And Jackson wasn’t the only one grousing. “At last year’s meeting, talk was of profitability in 2009. Now, there is talk of profitability in 2011,” says stockholder William Thrower. Thrower introduced a measure to limit executive compensation and bonuses, arguing that “as stockholders, we must insist that all available capital be used for . . . restructuring.”

Join the conversation
2 of 23 comments
  • CPTG CPTG on May 17, 2009

    MikieDee: Your question is precisely why I haven't purchased a new car from ANYBODY. All car companies share common vendors---CRYCO, GM, FORD, BMW, TOYOTA and HONDA use the same Windshield/glass suppliers, the same tyre manufactures, the same Battery Manufactures, the same computer chip and electrical manufactures. If I were Al Queda, I wouldn't fight the Americans in Afghanistan---I would take out full page ads attacking CRYCO's build quality, CRYCO's not honouring California Lemon Laws, CRYCO's depreaciation value (etc. etc) and simply erode consumer confidence in buying CRYCO products. CRYCO would go under and 'trainwreck' the American Economy as vendor after vendor goes under. Correct me if I am wrong, but all cars built in America use the same Fuse breaker vendors (there are three?) so if Cryco stiff's the vendors on payment and they goes under---EVERYTHING SHUTS DOWN!!!

  • MPad1 MPad1 on Jun 01, 2009

    I actually think that Ford has a great opportunity to expand its dealer network by bringing in the best of the discontinued Chrysler and GM dealers. I laid out my reasoning in a blog post I added to Ford, Star Trek, and Domus. The potentially added downward price pressure caused by increasing the number of dealers would be greatly offset by the stated benefits.

  • SPPPP The little boosters work way better than you would expect. I am a little nervous about carrying one more lithium battery around in the car (because of fire risk). But I have used the booster more than once on trips, and it has done the job. Also, it seems to hold charge for a very long time - months at least - when you don't use it. (I guess I could start packing it for trips, but leaving it out of the car on normal days, to minimize the fire risk.)
  • Bader Hi I want the driver side lights including the bazl and signal
  • Theflyersfan One positive: doesn't appear to have a sunroof. So you won't need to keep paper towels in the car.But there's a serious question to ask this seller - he has less than 40,000 miles on some major engine work, and the transmission and clutch work and mods are less than 2 months old...why are you selling? That's some serious money in upgrades and repairs, knowing that the odds of getting it back at the time of sale is going to be close to nil. This applies to most cars and it needs to be broadcasted - these kinds of upgrades and mods are really just for the current owner. At the time of sale, a lot of buyers will hit pause or just won't pay for the work you've done. Something just doesn't sit well with me and this car. It could be a snowbelt beast and help save the manuals and all that, but a six year old VW with over 100,000 miles normally equals gremlins and electrical issues too numerous to list. Plus rust in New England. I like it, but I'd have to look for a crack pipe somewhere if the seller thinks he's selling at that price.
  • 2ACL I can't help feeling that baby is a gross misnomer for a vehicle which the owner's use necessitated a (manual!) transmission rebuild at 80,000 miles. An expensive lesson in diminishing returns I wouldn't recommend to anyone I know.
  • El scotto Rumbling through my pantry and looking for the box of sheets of aluminum foil. More alt right comments than actual comments on international trade policy. Also a great deal of ignorance about the global oil industry. I'm a geophysicist and I pay attention such things. Best of all we got to watch Tassos go FULL BOT on us.