Ford's European Future: Far Fewer Dealers, More Online Sales
Ford’s plan to rein in costs and grow profit (well, create it, to be more accurate) in the European market will see the automaker shed dealers en masse.
Figuring those who really want to test drive a vehicle will be willing to go the distance to do it, Ford’s dealer cull coincides with the release of an online sales platform. That platform rolls out alongside the first model offered through it: the electric Mustang Mach-E.
The automaker’s planned dealer ditching is said to be most severe in the UK, a particularly troubled market for the Blue Oval. One industry newsletter estimated some 180 of the country’s 400 dealers could fall by the wayside. Ford of Europe President Stuart Rowley didn’t cite specifics when speaking with Automotive News Europe.
“It will be appropriate for the market,” he said of the cuts, adding that shedding costs in the area of distribution is key to returning to profitability.
“There is obviously a lot of cost wrapped up in the distribution network and that ends up in the price of the vehicle or coming out of profit,” Rowley said. “We want to make the network more efficient.”
Last year, Ford reported a pre-tax loss of $44 million in the region — a significant improvement over the previous year, despite sales and revenues coming in lower. The automaker said the decline “in Europe’s top line metrics is an outcome of our redesign and portfolio shift as we exit low-margin businesses and refocus our portfolio on
higher-growth and higher-return opportunities.”
In Ford’s mind, fewer dealers does not equal fewer models sold. The online sales system arriving later this year will fill the gap in service left by departing dealers, though the company estimates 90 percent of Britain’s population will still reside within 30 minutes of a Ford dealer.
“Customers want to be able to order their vehicle online. They want to pay for it online. They want a single interface,” Rowley said. They also want convenient servicing, which is why Ford plans to convert some dealers into service-only centers. Others will focus entirely on selling the Transit family of commercial and passenger vans — a fresh product lineup with much growth potential in the region.
Bd2 on Mar 13, 2020
Honda in Australia is also looking to cut dealer count. But aside from Tesla (and possibly for upcoming EV brands), the online sales/distribution model hasn't yet gained traction for traditional auto-makers. as buyers still like to be able to see and pick and choose among numerous options (color, trims, etc.).
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