Ford CEO Jim Farley said yesterday his company must move to a direct online sales model where their electric vehicles (EVs) are only sold online and have no dealer markups so that customers won’t have to negotiate the best price.
Farley says this is necessary to stay competitive against the likes of Tesla as they are currently spending thousands of dollars more per vehicle to get it into the hands of a customer.
“We’ve got to go to non-negotiated price. We’ve got to go to 100 percent online. There’s no inventory (at dealerships), it goes directly to the customer. And 100 percent remote pickup and delivery,” Farley said while speaking at the Bernstein Strategic Decisions Conference on Wednesday. (via Detroit Free Press)
The comments have likely made Ford’s network of dealers very unhappy, but to fend off some of the expected backlash Farley said their dealership network will still have a role to play in this new model and, without providing specifics, said it will be used to “outperform” competitors.
However, based on the reaction from when Volkswagen just hinted that the Scout brand might not be sold at their dealers, Farley is going to have his work cut out for him.
Last month VW unexpectedly announced it was bringing back the Scout brand as an off-road EV. VW wasn’t clear in their communications, but it sounded like they were going to market and sell the Scout EV under its own brand, leaving existing VW dealers out in the cold.
This led to a storm of backlash. National Automobile Dealers Association (NADA) CEO Mike Stanton issued a letter (included below) to VW Group North America CEO Scott Keogh asking him to “quickly and clearly communicate Scout’s distribution plan to your dealers who have made significant investments to support VW’s business model and transformation to electrification.”
North Carolina Automobile Dealers Association (NCADA) President Robert Glaser also penned a letter (included below) suggesting VW is intentionally doing this “to reduce [their] dealer count.”
All of this happened when there was some uncertainty around who is going to sell the Scout EV, let alone when the CEO comes out says the company is moving to a 100% direct online sales model for their EVs.
Given this reaction, it would not be surprising to see similar letters being published in the days to come from some very unhappy Ford dealers and their associations.