Ford Franchise Dealerships Trying To Price Gouge F-150 Lightning Customers Is One Of The Reasons We Don’t Really Need It Anymore – FutureCar.com
Author: Eric Walz
The 2022 F-150 Lightning is the first electric version of the popular truck.
Ford’s new F-150 Lightning electric pickup truck has generated a lot of interest as the electric version of America’s most popular pickup truck. Consumer demand is so strong for Ford’s first electric truck that some dealerships are trying to cash in by overcharging customers up to $10,000 off the list price.
Ford CEO Jim Farley recently called the new F-150 Lightning the automaker’s “iPhone moment,” comparing it to Apple’s 2007 launch of the iPhone, which transformed the entire industry into the app-based world we live in today.
But amid reports of overcharging customers in order to get their F-150 Lightning faster, Ford said any dealer selling the electric pickup for more than the list price will face “very strict consequences.” and that dealerships must abide by Ford’s rules.
This does not include side deals or selling “early delivery time slots” at a higher price. More importantly, Ford says there can’t be an additional dealership markup (ADM) that will favor one customer over another, just because they’re willing to pay significantly more to get their hands on the Lightning mic. before the others.
Ford offers four versions of the F-150 Lightning. The base Pro model starts at $39,974 and climbs to $90,874 for the top-end Platinum version.
The real question here is how price gouging affects Ford’s customer service and its franchise dealer network. By setting a precedent and allowing dealers to get away with these practices for years, the automaker’s dealer network is essentially doing its customers a disservice by overcharging them. But now that Ford is aware of the problem, the automaker is looking to fix it.
“It has come to our attention that a limited number of dealerships are interacting with customers in a way that negatively impacts customer satisfaction and damages the Ford Motor Company brand and the reputation of the dealership,” said writes Andrew Frick, Ford’s vice president of U.S. and Canadian Sales, in a letter to dealers.
“These actions are seen as a threat to customers by denying them the ability to convert reservations into orders,” the letter said. “This behavior is not acceptable,” Frick added.
Even though individual dealerships are responsible for pricing and making deals with customers, Ford, as a big business, needs to make sure its customers never experience price hikes, especially with the high stakes. related to the successful launch of the automaker’s first consumer electric vehicle. a truck.
Many people hate buying a new car from a dealership for this reason. Complementary services of high-pressure sales tactics are commonplace, not just with Ford, but with the industry in general.
But now that Tesla has turned the auto industry upside down with its electric cars and direct-to-consumer model, other automakers are following suit and offering customers more online shopping options. This includes the ability to buy a car online and have it delivered to your home or office, without ever having to deal with a high-pressure sales department.
Tesla, for example, clearly announces all of its electric vehicle prices on its website and that’s what customers pay, no more and no less. The business model is working for Tesla, and its tech-savvy customers seem to be taking it very well.
Tesla sold nearly a million cars last year without the help of a network of franchise dealerships and at the same time became the world’s most valuable automaker with a market capitalization exceeding $1 trillion, eclipsing Ford’s current valuation of $100 billion.
What’s more impressive is that Tesla as a company doesn’t even advertise its vehicles. All of its sales are by word of mouth, and Tesla has some of the most loyal customers in the automotive industry.
To be fair, Ford has its loyal customers too, especially with its F-150, which has been the best-selling truck in the United States for 44 straight years. So why are loyal Ford F-150 customers subject to price gouging? It doesn’t have to be that way.
Electric truck maker Rivian has also adopted a direct-to-consumer strategy similar to Tesla’s. Rivian’s new R1T electric pickup is also an attractive alternative to Ford’s F-150 Lightning and first deliveries began last month. Plus, General Motors’ electric Silverado goes on sale in 2023, so buyers looking for an electric truck will have other choices very soon.
This will of course give Ford more competition in the electric truck segment, so the company needs to ensure that its customers are treated fairly when purchasing a new vehicle, even if it is a very popular electric model like the F-150 Lightning.
Although Ford has been in business for over 100 years, the automotive industry has been transformed by technology, particularly in the past decade, as buyers can shop new or used vehicles online and compare prices dealerships in different states without ever visiting a dealership in anyone.
So why are dealerships even necessary to sell cars? It turns out that many state laws prohibit automakers from selling cars without the help of dealerships owned by third-party franchisees.
These laws have hampered sales of Tesla vehicles in some states. New Mexico, Alabama and Louisiana, for example, have banned Tesla from operating dealerships or repair shops because it does not have a network of franchised dealerships. The rules seem ridiculous in the modern age when so many products can be purchased online.
Local dealerships always serve a purpose other than just selling. Brick-and-mortar locations provide a direct link to customers for service needs, warranty issues, or to purchase vehicle accessories and have them installed. They also create jobs. But customers should also be able to make a vehicle purchase online and only go to the dealership to take delivery, not the sale portion.
This new model of selling vehicles online has been further bolstered by the pandemic of the past two years and it will likely stay for good as technology transforms the way companies do business both online and in person.
However, many car buyers may still want to visit a dealership to see the vehicles in person, test drive them, and see accessories and options such as wheels. That’s why Tesla and Rivian have a network of small, company-owned low-pressure outlets. However, Tesla and Rivian customers can still make their vehicle purchase entirely online in most states without dealer franchise laws.
Despite recent price gouging reports, reservations for Ford’s F-150 Lightning have been much higher than expected. In December, Ford briefly closed its reservation books after CEO Jim Farley said the company was “nearing 200,000” reservations for the electric pickup truck.
The company has since reopened them and announced that it was increasing its annual production from 80,000 to 160,000 vehicles for a third time to meet demand. Other electric vehicles from Ford are also in the works.
In May 2021, Ford said it plans to spend more than $30 billion by 2030 to electrify its model line, including the development of EV batteries. Ford’s previous commitment to electric vehicles was $22 billion. The automaker is aiming for 40% of its global volume to be fully electric by 2030.
Ford is implementing a two-step process to order the new F-150 Lightning. Customers must first put down a fully refundable deposit of $100 which entitles them to order the truck. Ford then sends an invitation to customers so they can officially place their orders.
The same sales model is offered for the Mustang Mach-E electric SUV and the Ford Maverick hybrid pickup and it’s quite simple and a new model for automakers who traditionally ship vehicles to dealers responsible for handling the sales part. .
With Ford’s new sales model likely to stick around, customers order the vehicle in their designed configuration, then the automaker builds it and ships it to a local dealership for the customer to pick up.
Although Ford sells reservations directly on its website, buyers who place an order online still have to appoint a local dealership to deliver the vehicle, which is fine as long as customers aren’t overcharged.
The first deliveries of the F-150 Lightning will begin in the spring.