Farley: Ford dealers had 'most profitable year ever' in 2011
Photo credit: JOE WILSSENS
LAS VEGAS -- Ford Motor Co. dealers racked up record profits in 2011, said Jim Farley, Ford's vice president of global marketing, sales and service.
Ford and Lincoln dealers "had the most profitable year ever last year, in a 13 million industry," Farley told journalists during the National Automobile Dealers convention here on Sunday.
Ford dealers' profits came in two major areas, he said.
1. Dealers had "lower inventory holding costs," not just because they're holding lower stocks of cars, but also because of low interest rates, he said.
Said Farley: "It's not uncommon for a big metro dealer to say to me, 'What am I going to do with all this pavement, Jim?'"
2. Strong used-car prices, especially for Ford-brand vehicles, boosted profits. "Our residual values have improved more than any other brand's," Farley said.
At the Ford dealers' make meeting, Farley said a letter will go out to dealers within the next week or so with details about Ford's latest, and voluntary, facilities-improvement program.
Farley declined to give a specific percentage of dealers that are profitable, except to say it was in line with industry averages of 85 to 90 percent.
With warranty work declining, Ford and Lincoln dealers are making up for it in other areas. For example, dealers sold 3 million tires in 2011, he said.
Farley also discussed the increasing sophistication of dealers in using social media and digital advertising.
"In our south Florida dealer ad group, 30 percent of their budget is only digital," he said. "They're not doing banner ads. They're doing the coolest social media marketing."
Farley also said carmakers and their dealers must monitor rapidly changing trends in other retail sectors.
"Look at Amazon's impact on Best Buy and Apple's control of their distribution network," he said. "We're seeing a completely new retail world outside the automotive sector. And the reason is because creative entrepreneurs have been able to commoditize the transaction.
"We're starting to see the same thing in automotive. If we think those trends are not going to affect us, that's just not accurate."
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