COLOGNE, Germany - Germany is at the heart of President Nick Scheele's strategy to revive Ford of Europe's flagging fortunes. Making the dealer network more efficient, possibly with ideas borrowed from the United States, is part of that plan.
In the brutally competitive German market, Ford dealers on average earn less than 1 percent of retained margin. Ford would like to change that, and so would its dealers.
Ford ranks third in sales in Germany, behind market leader Volkswagen and Opel. DaimlerChrysler is gaining fast. Although Ford is classified as a domestic brand, it does not have the strong German identity of Volkswagen, Opel, Mercedes-Benz, Audi or BMW.
German Ford dealers are in the middle of a two-year reorganization designed to put ownership of the Ford network in fewer hands but keep the same number of customer contact points. The program is similar to those being undertaken in other European markets.
Germany remains a country of small towns, and Ford's dealer network reflects that. Germany has about 2,400 Ford dealership outlets. Of those, about 980 are main dealers. The rest are branches and service outlets. Research shows customers do not want to drive more than 15 minutes to a service point in a city or 25 minutes in a rural area.
Hans Frenger, director of sales for Ford Werke Aktiengesellschaft, said: 'The objective is to keep our 2,400 customer contact points and to keep customer satisfaction.'
But Ford wants to consolidate ownership and is organizing the German network into about 130 customer marketing areas. Those areas could be controlled by a single company, similar to the Auto Collection centers Ford has launched in the United States. Another option would be for the dealerships to remain independent. As of April, eight dealers had sold their dealerships to others as part of the consolidation, Frenger said.
Ford is not interested in owning dealerships in Germany, said Frenger.
Dealers are holding meetings in each customer marketing area. Ford wants each group to submit a letter of intent by the end of 1999 telling how the group plans to organize. The plans would then be put in place next year.
Ford hopes to gain efficiencies that would help improve the slender profit margins. Ford also wants its dealers to stop competing with other for sales so they can devote attention to competing with other manufacturers.
To help improve margins, Ford wants to reduce the number of back shop functions in each area to one, consolidating dealer computer systems in the process. Ford also wants to consolidate other functions, such as paint shops and body shops.