Blue Oval's Latest: Cash Out, Health Options In

Cash bonuses will be out, higher invoice margins and a new health-care plan will be in when Ford Motor Co. changes its Blue Oval dealer certification program in 2005.

Until then, the program — which dealers first disdained, then embraced — remains unchanged. Ford Div. President Steve Lyons told dealers that in a satellite broadcast.

In 2005, Ford will stop 1.25% bonus payments on invoices for each vehicle sold. The auto maker has paid that since 2000 to dealers meeting Ford-mandated customer-service standards.

Certification requirements will stay the same when Blue Oval moves to a new system. Details are still being worked out, says Lyons.

“The new program will be supported by benefits other than a cash bonus, such as the current D-Plan vehicle discounts, Fidelity 401(k) plan administration, transportation assistance and health-care option,” says Lyons.

The health-care option is new. Certified dealers would be eligible for alternative medical, dental, life, disability, and accident and illness insurance.

Ford's Blue Oval Certified Advisory Board and Dealer Council have been developing the health-care initiative for two years.

Blue Oval was introduced in 2000, and revamped to ease dealers' fears of Ford dictating standards. The cash incentives have proven popular with dealers, but expensive for cash-strapped Ford.

Ford initially proposed reducing the cash incentives gradually to .5%. But dealers urged Ford to keep the program as is until 2005.

“It gives them time to bridge their own strategies,” says James O'Connor, Ford's group vice president-marketing sales and services.

Blue Oval grew faster than Ford anticipated. Today, 95% of all Ford dealers are certified. It costs Ford $700 million annually.

Many dealers contend Ford has paid for the program by cutting invoice margins 1% when Blue Oval was created. Lyons denies that, telling them to “look at the numbers.”

Ford plans to reverse the 1% margin cut by 2005, making the net loss on the cash bonuses .25%.

“We listened to what you told us,” Lyons told dealers. “…We were looking for some cost relief in 2003 and 2004, but that's our problem.”

Overall, dealers reacted positively to the announced changes, says O'Connor.

“You want to know what the ‘overnights’ are,” he says, referring to gauging audience reaction to the broadcast. “I'd say they're strong.”

Says Ford Dealer Council Chairman Michael Kennedy, “This is the only solution that covered all of the bases.”

Ford dealer Eric Jenkins in Leesville, LA, says, “Blue Oval was a ahead of its time. Ford went about it the wrong way at first, but it was good for the industry, our employees and customers.”