DETROIT - When Ford Division revises its Blue Oval certification program next April, bonuses to dealerships will be cut nearly in half, dealers and company sources say.
The current bonuses, which go only to certified dealers, will be replaced by new bonuses tied to sales performance. All dealers can receive bonuses, regardless of certification.
Under the current Blue Oval, designed to motivate dealers, Ford pays certified dealers who meet certain customer service and other standards. Certified Blue Oval dealers receive bonuses of 1.25 percent of base sticker prices.
In 2000 Ford raised invoice prices 1 percent for all dealers to pay for the 1.25 percent bonuses.
In designing the new program, Ford wanted to avoid the legal hang-ups it encountered with the current program, say sources. Some dealers accused Ford of two-tier pricing, claiming Blue Oval provided different prices to different dealers. Dealers in Texas and North Carolina sued Ford under state franchise laws.
But Ford also wants to pay dealers who fear the loss of the bonus payments. Many certified dealers, especially those who upgraded stores, say they have come to rely on bonuses.
The new payments, though just 53 percent of current bonuses, will help alleviate such concerns, one dealer source says.
"The dealers have had a pretty rough year in a lot of markets," the source says. "Their profitability is down, and taking away Blue Oval (payments makes it) worse. We were pleased with what we got."
Under the existing plan, Blue Oval payments average about $330 a vehicle, sources say. Payments, based on sales targets, will average an estimated $175 a vehicle under the revised program.
Ford told dealers in December 2002 that it would end Blue Oval payments after March 2005 because it no longer could afford them.
Ford officials wouldn't comment on the specifics of the new program. But spokesman Jon Harmon says it will maintain and build on the improvements realized in customer sales and service satisfaction.
"The new program is also aimed at ensuring that our dealers remain strong and profitable," Harmon says.
Ford still will certify dealers under the revised Blue Oval program, but the main payments no longer will be tied to certification.
Ford Division President Steve Lyons plans to brief the Ford national dealer council on Wednesday, Aug. 18. Ford will brief all dealers on Friday, Aug. 20.
Lincoln Mercury dealers also will be briefed Friday. The Mercury program mirrors the Ford program. The new Lincoln program, called Lincoln Elite, includes all elements of the new Blue Oval, plus additional payments. A Lincoln source called the extra cash "operational assistance" in line with what other luxury brands pay.
Monthly sales targets
Under the new Blue Oval, Ford will: