While speaking at the 2022 Alliance Bernstein Strategic Decisions Conference, Ford CEO Jim Farley made bold comments about operational restructuring that could have serious implications on the franchised dealer network. So much so that Brian Pasch penned an open letter to Farley asking him to address some tough but important questions. Today on Inside Automotive, we’re pleased to welcome Brian, to discuss the letter and what he has (or hasn’t) heard from Ford leadership. Brian is the Founder of PCG Companies, BPE | Brian Pasch Enterprises, and host of the CBT series, Auto Marketing Now.
Brian’s letter has over 14,000 views from the automotive community and hundreds of readers have reached out to Brian to discuss this contentious topic. His intention behind the letter was the be a voice for dealers and fill in the gaps missing from Farley’s introduction of what future retailing looks like at Ford.
Brian explains that he’s not trying to protect or defend outdated ways of selling. There is a need to provide consumers with more ways to make faster and easier purchases. Behind the scenes, the real question becomes, does the push to change the EV model stem from other EV makers that have circumvented franchise law and extracted exceptions from states? Brian thinks that Farley’s claims are outrageous and not supported by consumer buying habits today.
However, Brian adds that Farley is the most honest OEM leader and deserves credit to a certain extent. He ripped off the band-aid. Ford is envious of Tesla’s margins and the simplicity of its distribution channel. Tesla’s success has a lot to do with being “the only real game in town” according to Brian. Tesla captured the early adopters. , but in 3, 5, or 10 years, there will still be less than 50% of US consumers driving EVs.
Furthermore, when every manufacturer has a few EVs available, there will no longer be 100% sell-through. Dealers will have to sell, convince, and assist consumers into their electric cars, says Brian.
It will take a long time for this to occur, but Farley’s comments leave dealers confused and uncertain of what to expect. Farley mentioned how brutal the process could be for car dealers during this transition, but there is a lot that is still unknown. Will dealers service these cars? Will they be able to take trade-ins?
Ford is an iconic American brand and Brian understands that the company has to stay competitive and answer to Wall Street. Still, in the future, the auto industry should highlight more initiatives from OEMs that appear collaborative with dealers.
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