In his July 21 column on shrinking dealer margins ("Margins shrink; small dealers hurt"), Keith Crain restricted his observations to the vehicle sales issues.
If you ask me, he told only half of the story. Not only are the manufacturers moving the sales price down to the invoice price, they are attacking other profit points (parts and service) as well.
Ford, in my opinion, continues to attack its dealers' profit structure with programs that are designed to eliminate the very small rural dealers by taking away all available discounts on parts and putting upward pressures on their cost of labor in the repair shop by their unfair demands in technician training and certifications.
At the same time, Ford is putting cash-flow pressures on the dealers with overly aggressive warranty denials and chargebacks. At worst that is a deliberate attack on Ford's own franchise system, and at best it is simple neglect of the rural dealers and their customers.
The Blue Oval Certification program, until its long-overdue demise in March 2005, is a perfect example of a manufacturer interfering with the retail side of the business in hopes of selling more vehicles to its dealers at wholesale and ignoring the necessity of a fair profit structure for its dealers.
After all, the manufacturers do not make one penny when a dealer sells a vehicle; they make their profits only when they sell a vehicle to a dealer. If the manufacturers can eliminate a majority of their dealers and concentrate on sales to the larger dealers, they see that as win-win.
Ford sees 20 percent of its dealers doing 80 percent of its sales, so why bother with the smaller dealers that do only 20 percent of the sales volume? In Ford's mind, the consumer will just move down the road to purchase from the nearest large dealer (survivor).