Beau Smith was a basketball star at Colorado Mesa State University and continues to be an avid fan of the game.
Smith, owner of Sill-TerHar Motors in the Denver suburb of Broomfield, Colo., says Ford dealers had a great year in 2013 but believes an even better year is within range in 2014 if the company and dealers continue to work together.
Smith started his automotive career while he was in high school, working at Sill-TerHar cutting weeds, cleaning the lot and doing jobs nobody else wanted to do.
After graduating from college and doing a marketing internship, Smith spent four years as an assistant coach at his alma mater. He returned to Sill-TerHar in 1999 and eventually became a partner with his uncle by marriage, Jack TerHar.
Smith is beginning the second year of his two-year term as chairman of the Ford National Dealer Council. He spoke with Staff Reporter Bradford Wernle.
Q. How was 2013 for Ford dealers?
A. I think we'll see record profits again in 2013. I think it was a great year for Ford and Ford dealers both. All things considered, it's a good time to be a Ford dealer.
What is Ford doing right?
I think that the plan is really transparent. It makes execution easier. That is led by product. F series is obviously doing fantastic. EcoBoost is helping all the product line. When they redid the Explorer, they got it right. Ditto the Escape and Fusion. The plan is transparent. The processes are really good. Without the products, none of that would matter.
In what areas would you like to see improvement?
We have to continue to be inspiring with our brand and our advertising. This is not the time to be too careful. We need to continue to inspire not only our current customers, but conquest customers who never bought a Ford before. We have to send an inspirational message to customers who have never bought a Ford before to inspire them to switch and consider the Ford brand, particularly in the Super Segment -- and I know that's a Ford term: Escape and Fusion and Focus.
There's still a lot of runway for us to gain market share and loyalty because we haven't had either of those. We've never had a lot of loyalty in those segments. They were adequate products before and now we have more inspirational designs and we need our marketing to line up with that inspirational design. If you could describe our advertising, it's educational but maybe lacks in inspiration.
Does it take inspiration to win conquest sales?
I think having a quality product is the price of entry. People in a Honda, Toyota or Subaru are happy with their cars. We're going to have to spark their interest with our messaging from the marketing side.
As dealer council chairman, what are your goals for 2014?
We need to continue to have alignment with the company and the dealers on the key areas of the business. We need to assure we have good quality for our customers. We have to try to become the best manufacturer-dealer team when it comes to communications. That's a challenge given everything that's going on. In the information age, there's just so much out there. Your inbox could fill in an afternoon.
How do we work together to make sure the dealers get the right messages, the general managers, sales managers and service directors get the messages they need and operate the business? It's a challenge.
The other thing we need to work on on the council side is driving loyalty. That starts on the sales side but goes through the back end of the business on the service side. We've made all these gains on the sales side. But the loyalty is earned on the back end. How are we taking care of those customers? That will be a real focus of the council.
What are the top issues facing dealer council in 2014?
Quality. We just need to make sure as we work together through some of the quality issues Ford has had, that we work to have a white-glove relationship with customers. The loyalty is how we take care of customers who maybe didn't have a great quality experience as we were launching new products.
Are the quality issues primarily having to do with MyFord Touch or do they go beyond that?
The lion's share of that is based on infotainment, but it doesn't just stop there. It's got to be full circle on quality. That's why I think Joe [Hinrichs, Ford president of the Americas] is the right guy at the right time.
Logistics and quality, that is within his making range. I know the teams are going to get back to some disciplines that helped us with initial quality when we led in quality with the last Fusions.
There were disciplines in the system that caused us to get quality gains, and we need to get back to those disciplines.
Are Ford dealers profitable? Could they be more profitable?
It's record profits. The idea is we could always grow profits, and we should. Especially with Fusion, we could sell more cars next year. We are more profitable. I think everyone is pleased with it, but we could be better. We have a great car and it's in a very competitive segment.
There was story about Ford dealers stockpiling pickups to prepare for the changeover to the next generation F-150. Does truck supply concern you?
I have a lot of confidence in [Ford truck marketing manager] Doug Scott and the truck team. Ford dealers have always done a good job of stocking up and selling down. Trucks are a major part of the record profits.
Ford announced a record launch year. Is Ford ready to handle all the new launches, including the next generation F-150 and Mustang?
We can do both at once. It's exciting to have a chance to do Mustang again. It's a little long in the tooth. Mustang is such an iconic brand it brings the cool factor back, and that will be a lot of fun.
Ford has spent a lot of money to convince people that it is not just a truck and Mustang company. How concerned are you that the new Mustang and F-150 will overshadow the Super Segment vehicles Ford has been so successful at promoting?
I'm not concerned, but I am cognizant that we have grown share of mind in the Super Segment. We have to be careful to continue to talk to those customers in a way that's relevant to them. It will be a dialogue. We have to be sure we don't walk away from those people.
The 2015 Mustang is going global. Ford changed it in a number of ways. The design is less retro and it has independent rear suspension. Will these changes hurt sales in the home market, or did they hit the nail on the head?
I think it has retained a lot of the heritage of Mustang and at the same time added the technology with powertrains and suspension that's needed to be a leader in the sports car segment. I think it's important to have those new technologies. With styling it's important to keep the heritage and the volumes we have in North America.
Ford offered dealers a technology allowance and then told them it will go away. What's the latest on that situation?
I think that we need to continue to examine and work together on predelivery, delivery and the ownership experience and we have to have the customers' best interests at the front of how we sell those products. The technology delivery allowance is one piece of that. I think it still needs to be worked through on how best to do that. The financing is still an open topic.
Do you have any suggestions?
It's in the early stages. We don't have a concrete solution recommended yet. But the Technology Delivery Allowance goes through the 2014 model year. We hope to have something in place by the 2015 model year.
Ford seems to have dialed back the MyFord Touch system by adding knobs on new vehicles, such as the Mustang. Did dealers offer feedback on these designs?
The company has been really collaborative in those changes. They've listened not only to dealers but customers to really get into the vehicles what customers want in that cockpit and what's easy to use.
Ford has added Fusion capacity at Flat Rock. Was that capacity needed? Will dealers be able to sell enough of them?
We need the capacity because the styling and the technology is so good. We have to execute at retail together. Are we messaging correctly and are we priced correctly? Those things will be critical to us gaining share.
Are some of the prices getting a little high?
I think in that segment [mid-sized sedan], transaction payment is probably is more sensitive than in any other segment. For Fusion, Escape and Focus, the transaction payment is hypersensitive. There are more options in those segments than anywhere else. Customers know that, and they're going to look at a lot of different options. Lease payment is critical to our success there.
Ford introduced the Mustang nearly a year before it arrives in dealerships. Will that hurt sales of the current model?
I don't think so. Customers knew it was coming anyway. I think the customer that wants a current Mustang will buy one. The customer that was on the sideline already waiting, that customer reads all the buff magazines. They know there's a new product coming. I think the volumes are low enough I'm not that concerned about it.
Are there any vehicles you would like added to the lineup?
The cadence of the current product cycle is more important to the dealers than additional vehicles to the lineup. How quickly do we get the new Focus, Explorer, Edge? We need to turn the showroom over quicker than the competition. Ford dealers always want a Bronco and a Ranger, but that's less important than whether current models are refreshed.
How successful has Ford been at holding the line on incentives?
I think they've done a good job. They've made actions where they've needed to. Especially in the Super Segment, I think they're trying to be competitive, but they are careful.
In contrast to some competitors, Ford has not tried to pressure dealers to make facility improvements. But Ford made money available to dealers in 2013, and the company says the program exceeded targets. How do dealers feel about the facility program and the way Ford has handled it?
The dealer body is appreciative and pleased with the Ford facility program. It is less restrictive. The company made an investment in it that was fair and has really helped improve some facilities around the country. To the council and the body it has been a success.
The industry had a record year in certified used-vehicle sales. How do Ford dealers like the certified program? What improvements would you like to see?
It's an OK program. It has pretty good results. But they'll need to continue to improve the program so it's competitive. I don't think it's a great program. I don't think it's a bad one. It's an adequate certified pre-owned program.
Would you like more leasing?
We're going to have to if we're going to compete in Fusion-Focus-Escape. If we're going to compete, we'll have to lease a higher percentage. They're continuing to drive more and more leasing, and they're supportive of that. Ford Credit getting to investment grade was a huge piece of that. If there's a customer desire to lease, then we'll be there.
Ford has been aggressive about having dealers sell more tires. Is that program continuing?
It's going to be a focus for us forever now. Tires are the No. 1 defection point for customers. When they start buying tires elsewhere, they'll buy brakes and other stuff elsewhere.
Are you happy with the leadership and succession plan for when CEO Alan Mulally leaves?
The process with Alan and Mark [Fields, Ford COO] and Jim [Farley, Ford global marketing, sales and service chief] -- the business plan process works. When Alan decides to go a different direction, those processes are in place and have been adopted by the company globally.