Ford Motor brass say the ailing auto maker has too many dealers. Many won't argue with that.
But what a lot of people don't know is how loyal those dealers are.
I'm not saying Ford's dealership ranks should go untrimmed. Auto analyst Stephen Girsky, who suggests a chain-saw approach to cutting excess dealership points, says “do the math” to calculate the extent of domestic-brand overdealering.
Here are some hard numbers: Toyota's 1,400 U.S. dealers (including Lexus and Scion) sell about 1,500 new vehicles per store. In contrast, Ford's 4,400 dealers average about 600 units per point.
Ford is streamlining itself by reducing the white-collar staff and blue-collar workforce. It is closing factories, and some of those jobs probably aren't coming back. The next logical step seems to be dealership network “down-sizing,” corporate-speak for closing stores.
But making that a tough thing to do is the fact that Ford dealers — even the ones on financial life support — are so faithful to the company.
Perhaps it stems from old Henry Ford inventing the dealer franchise system. Or perhaps there's a special connection because Ford, despite its global reach and publicly traded status, in many respects remains a family business.
Ford dealers I've talked with show a pride of dealership that belies some of the troubles they and Ford have seen lately from sluggish sales and lost market share.
“I thank God that he made me a Ford dealer,” says Irma Elder, head of the Elder Automotive Group in Michigan and Florida.
That's a heck of a testimonial.
She says that as an honoree during Ford's Salute to Dealers, an annual event recognizing extraordinary do-gooders. I was one of the program judges who narrowed 71 nominees to nine finalists. It always is awesome to see the extent of dealer generosity.
At the Salute to Dealers' reception at last month's National Automobile Dealers Assn. convention, I chatted with one of last year's recipients, Alton F. Owen Sr. of Owen Ford in Jarratt, VA.
He tells me of a loyal customer who has bought cars from him since 1948. Even after moving to Florida, she drives up to his dealership to do business.
You're doing something right when customers will do that. And an auto maker is lucky to have dealers like that as front-line representatives.
Doug Cheek owns Berea Ford and dealerships of other brands in Kentucky. But, he tells me, “The Ford store is my baby.”
He speaks highly of new Ford CEO Alan Mulally, hoping an executive from the aeronautics industry has the right stuff to turn around an old auto company.
“So much of it is having the right person at the top, and he seems right,” says Cheek. “So much of it is about business attitude and acumen. I think Ford will come out of it.”
When it comes to thinning dealer ranks, NADA insists the dealers themselves should decide who goes and stays.
“Individual dealers should decide when they are not making a fair return on their investment,” says 2006 NADA Chairman William Bradshaw. “This is not something that should be dictated by auto manufacturers.”
Nor does it seem like something auto makers want to get terribly involved in. Troy Clarke, president of General Motors' North American operations, says GM doesn't want to start hacking away at dealership ranks. “We don't see the upside of laying out mandates.”
Part of it is sense and sensibility, part dollars and cents. It is costly for auto makers to buy dealerships en masse, then close them. To the auto makers, a more palatable option is for one dealer to buy out another and consolidate the operations.
But it won't be easy either way, especially for Ford. Not with so many Ford dealers out there who feel so strongly about what they do and for whom they do it. To them, it is more than just business. It's personal.
Steve Finlay is editor of Ward's Dealer Business magazine. He is at [email protected].
