Dealers cheer Ford facilities plan
The big draw: Offer to match store spending is all carrot, no stick
2011 NADA Chairman Stephen Wade: “Jim Farley is wonderful. He gets it” when it comes to facilities.
Photo credit: JOE WILSSENS
ORLANDO -- By offering to match dealers' spending on facility renovations dollar-for-dollar up to $750,000 per store, Ford has taken an already good program and made it even better, dealers say.
Ford's program won praise from its dealers and from a former chairman of the National Automobile Dealers Association whose term was marked by heated opposition to manufacturers' rigid facility-design programs.
"They've raised the bar for other manufacturers," said Jeff Carlson, owner of Glenwood Springs Ford in Glenwood Springs, Colo.
Franklin McLarty, CEO of RLJ McLarty Landers Automotive Holdings, a Little Rock, Ark., dealership group with 25 dealerships in eight states, including three Ford stores, said Ford's approach was more carrot than stick. "I think it's a better way to align the OEMs with their dealer body, by sharing in facility investment rather than setting up penalties" if they don't comply, he said.
Ed Jolliffe, owner of Gorno Ford in Woodhaven, Mich., said the assistance offer, made at the Ford-brand make meeting at the NADA convention here, improved an already good offer from Ford: interest-free loans announced by the company a year ago.
"This is completely voluntary. We needed it," he said.
Jolliffe had wanted to remodel his 40-year-old building since 2004, but delayed the work in part because of an uncertain economy. He estimates the cost of redoing his dealership at $2.5 million to $3 million, which would qualify him for the maximum $750,000 assistance from Ford. "We held off, and thank God we did. Plans are being finished right now, and hopefully we will break ground in April," he said.
Factory critic is impressed
Utah dealer Stephen Wade, who made facilities his signature issue as 2011 NADA chairman, praised the leeway Ford gives dealers in remodeling their dealerships. For example, Ford allows dealers to find local contractors to buy materials and services, as long as they get Ford's approval first.
Wade, who does not sell Fords, said that Jim Farley, Ford's executive vice president of marketing, sales, service and Lincoln, approached him at the 2011 Los Angeles Auto Show to say that Ford wanted to be NADA's "poster child" for doing facilities programs the right way. "Jim Farley is wonderful. He gets it" when it comes to facilities, Wade said.
A report commissioned by NADA during Wade's tenure found that carmakers have not demonstrated adequately to dealers the business case for renovating stores and that renovated facilities rank low on the list of reasons shoppers choose a vehicle or dealership.
Ford rolled out its Trustmark design guidelines for stores in 2006, "but we didn't push until we were comfortable dealer profitability would be in line with investment," said David Kelleher, director of U.S. market representation for Ford and Lincoln. "We think this is a good time to do it, with dealer profits being very good, interest rates being very low, and the industry growing."
Loan offer in 2012
At the 2012 make meeting, Ford offered dealers more limited assistance, including two years' worth of interest-free loans from Ford Motor Credit and allocation of one additional vehicle for each $10,000 dealers spent on renovation.
All 3,100 Ford dealerships are eligible for the voluntary matching-funds program.
"The dealer can choose to accept or not to accept our support," Kelleher said. The NADA study's conclusion that refurbished facilities don't increase sales is "probably true per se," he said. But "facilities are part of the customer experience," he said.
"The customer experience drives loyalty and loyalty drives sales," he added. "In that sense, having a nice, clean, well-branded facility matters to the customer and makes sense."
You can reach Bradford Wernle at email@example.com.