Ford dealers will lobby for an acceptable replacement to the Blue Oval dealer certification program in 2004.
Leading that charge is Frank Rodriguez, chairman of the Ford Division National Dealer Council for 2004 and dealer principal at Greenway Ford in Orlando, Fla. Ford will end the current Blue Oval program after March 2005. Dealers want to make sure the profit increase it offered in recent years doesn't dissipate entirely.
New cars are coming to Ford dealers during 2004. Significant showroom arrivals include the 2005 Five Hundred sedan, the 2005 Freestyle sport wagon and the redesigned 2005 Mustang.
Rodriguez spoke with Staff Reporter Amy Wilson.
How was 2003 for Ford dealers?
It has been a turning year. The evidence of that is the latest NADA survey. We were at the bottom of the barrel as far as dealers' attitude toward the manufacturer, and we had a huge turnaround this past survey.
What are the prospects for 2004?
The gurus out of Detroit are saying it could be another 17 million unit year. I'd certainly like to see that. I think it's a pretty aggressive number. We've been on a wave of incentives now since 9/11. You wonder if those are eventually going to wind down and what it will do to the market when they do.
What product segments are most promising for Ford Division?
We're certainly getting back in the car business. We have two all-new cars, with also a crossover vehicle that is more carlike than trucklike. Then we've got the Mustang coming out in the fall. As far as cars go, we have some opportunity to regain some share.
What is the hot product?
The F-150 is certainly the one. I think they've had double-digit increases in sales every month since it's been released.
What is the weak link for Ford Division?
Cars are our weakest link. It looks like we've got some salvation coming with some of the new products to help us out in cars this year.
Will the Five Hundred be a delicate pricing situation with its premium content?
I don't know where the base price is going to be on the Five Hundred yet. But I know Ford is very, very in tune to making it a successful launch. So I think you're going to see some pretty aggressive price-pointing on the bottom end of the Five Hundred.
What should the entry point be?
It's going to need to be in the low 20s, the low to south side of $25,000.
What do you think about the mid-sized strategy Ford is deploying with the Five Hundred and Freestyle on the higher end and the Futura on the smaller end?
There's a void there. We've had a long run now selling SUVs. At some point, I've got to believe the public will go back to more of a true mid-sized vehicle. A lot is going to have to do with fuel prices and what comes out with legislation on gas economy on SUVs. The other thing that will help is Ford's commitment not to make these cars into the No. 1 rental car. The Taurus became such a fixture in the rental car market that it pretty much killed the value on the back end.
Do you need a car smaller than the Focus?
We'd love to see an entry-level Kia fighter or Hyundai fighter. There has been talk of bringing cars in from somewhere else, but I don't know what will shake out with that. It's all about the cost of doing it and whether you can even make any money at it. I guess someday we could be seeing one coming from China or somewhere. Who knows.
Where do you need help on the truck side?
If you look at our total truck lineup, (Ranger) is probably our weakest link. We have some opportunity there if we had a fresher product, but I don't see that in the future.
How is the minivan doing?
The Freestar is certainly a great product. The segment has slowed up some. But it's a market that will continue for quite some time.
The Freestar has been criticized for being too similar to the Windstar on looks and styling. Are you feeling that?
I certainly hear comments that it's a very similar exterior. The big difference is when you get in and sit in it and drive it and use all the functions of it. Yeah, personally, I would have liked to see a little more dramatic exterior styling, but bottom line is this: It's a minivan. And when you look across all the minivans, I have a hard time telling which one is which.
What is the dealer council's top priority in 2004?
The Blue Oval certified program or, let's put it, Blue Oval 2. My goal is to try to protect the profitability of the dealers. Blue Oval certified payments have become a substantial part of dealers' profitability over the last four years.
What is the best way of returning the 1 percent reduction in the dealer discount that was taken when Blue Oval was launched?
(Ford Division President) Steve Lyons has committed we will get our margin returned to the pre-Blue Oval levels. I'm not sure how that is going to be implemented, whether MSRP is going to be adjusted or whether invoice is going to be adjusted.
Some dealers are lobbying for it to go into holdback?
That probably isn't going to happen. But I think Ford is at least objectively thinking of ways to work with the dealers to find a way to secure some of that money to the dealer body.
Do you personally like the idea of adding it to the holdback?
I'd love to have the money come back off-invoice if there's a way to do that. And holdback would be one of the ways it could happen. My goal is to somehow get some of this money, if not all of this money, back to the dealers.
What are other ways to do it off-invoice?
It could be floor plan allowance. It could be through the (Ford dealer advertising fund). There's several different vehicles that they could use.
Will this be communicated by the time of the NADA convention?
I don't think so. I would hope prior to the summer we've got something.
What will happen to the Blue Oval customer surveys?
The goal of the council was to simplify the survey. We thought it was too long. If I open up a survey and it's more than two pages long, I'm done.
What is the dealers' position on the involvement of J.D. Power and Associates?
Dealers in general have voiced some strong comments. Some of the statements that were made by Mr. Power (J.D. Power III, in an October Wall Street Journal commentary critical of the current vehicle-distribution system) were ludicrous.
Generally the dealer body is not happy when someone comes in and threatens their franchise. We have certainly voiced an opinion that we don't want to be associated with someone who is not in favor of the current franchise system.
Has the issue blown over?
It's not on everybody's lips like it was a month ago. But I don't think they've felt the end of the fallout for themselves.
What are other top concerns?
Continued emphasis on quality. The new F-series launch was evidence of the results of some of the quality policies that Jim Padilla's people have put in place. Hopefully, with the two or three new product launches coming this year, we see the same results.
Another one has been the complexity of contests and incentives. That's high, high on our list. Although we welcome the money and the incentives, there just seems to be so much complexity that it's hard for the dealer to manage it on two ends.
One is not being able to easily talk to (customers) about what incentive they qualify for. And, secondly, putting someone on the wrong incentive and having a future chargeback.
How frequent are those chargebacks?
In any kind of store, you're going to have chargebacks over time because you're going to miss or misrepresent a contest or incentive. I don't have a dollar amount for what it is. It's always going to be there, as long as the complexity is there. I don't think there's a dealer out there that would say turn off the faucet. But a big percentage of the dealers say it is counterproductive to have the complexity that's there.
The quality gains bring up another issue, albeit a good problem to have. Warranty claims have gone down.
It certainly is a problem because of the loss of revenues. But, on the other hand, it's an opportunity to take capacity in the shop and turn it over into customer-paid labor sales, which we've been working on in my dealership for many years.
Is the situation over reductions in warranty labor times getting better?
I really feel wonderful about Cisco Codina (heading up the customer service division). He's already shown some fortitude on stepping up to the pump on some things that other people have never even thought about. Putting together this technician panel, I think, was a breath of fresh air for the technician body out there. Will we ever get back to the levels we had on labor times? No, I don't think so. The adjustments have been made, and we've just got to figure out a way to make a profit on what we sell now.
Are you satisfied with dealer profitability?
It's certainly not what it was last year, but it's still going to be one of the top profit years ever. It's going to be a top five year. We've really had some of the most profitable dealer body years ever through this recession. A lot of it has to do with Blue Oval. It's a big part of the dealer profitability.
Are dealers worried about the union drive going on among the techs?
I haven't felt it too much here in this marketplace, but generally everyone is concerned about it, I think, including Ford.