Ford entices dealers to give up franchises with cash, vehicle-allocation promises

Ford Motor Co. isn’t relying on cash alone to achieve dealership consolidations.

It’s no secret Ford wants to reduce its Ford and Lincoln dealership count in metro markets. The consolidations, though voluntary, often involve large sums of money from Ford or neighboring dealers to coax other dealers to surrender their franchises.

It’s a challenge because many dealers don’t want to leave the team when their side is winning. And Ford is winning. It generated a profit of $6.56 billion last year. Ford, Lincoln and Mercury sales through March are up 16 percent.

Yet buyouts are getting done.

Ford has eliminated dozens of dealerships in the Los Angeles area over the past few years, for example. It is making headway in reducing its Lincoln dealership count in the Midwest and other regional metro markets, too.

One dealer recently agreed to surrender his Lincoln franchise to Ford. He told me that Ford’s cash offer was very fair. But what sealed the deal for him was Ford’s agreement to allocate more vehicles to his Ford store, if he dropped Lincoln. Now he can grow his Ford franchise.

Ford wouldn’t comment. But most Ford and Lincoln dealers are clamoring for more inventory, especially the redesigned Ford Explorer. They say they just can’t get any more vehicles from Ford.

Well, now there appears to be a way.

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