Ford gets dealers on board to build commercial service centers

As Ford Motor Co. asks many dealers to spend upwards of $1 million to sell future electric vehicles, it also wants retailers to invest in new commercial-focused facilities with larger service bays and expanded hours that it says will boost fixed operations profitability.

The automaker in the coming years expects its retail network to open 120 Elite Commercial Service Centers, each of which would feature at least 24 service bays, be open 72 or more hours a week and include a minimum of five mobile service vans. The first such facility opened in January in Minnesota, with two more expected to follow in the next two months.

Ford on Tuesday provided Automotive News with a first look at details and design renderings for the commercial service centers that it's releasing in conjunction with the Work Truck Show in Indianapolis.

"It's really going after significant unmet needs in the commercial service marketplace," Tim Baughman, general manager of Ford Pro North America, said in an interview.

Baughman said more than 120 dealers have signed letters of intent to invest in the facilities and that Ford is working to firm up those commitments. He said the company is using data and analytics to target dealers in markets with enough business to support such commercial service operations.

The cost for the facilities is expected to vary by dealer, Baughman said. Two retailers who spoke to Automotive News put their cost at around $9 million and $15 million, respectively.

Baughman declined to say how much financial help Ford would give dealers, although a memo sent to retailers last month and obtained by Automotive News said the company would provide up to $250,000 for a small subset of dealers who convert existing buildings to Elite facilities if it's completed by the end of this year, with additional financial assistance of up to $300,000 if a dealer adds more service bays.

Baughman said one dealer plans to have enough room for 100 bays, for example.

According to the memo, the small subset of dealers who convert existing buildings into Elite facilities must have service doors that are at least 14 feet tall and have four bays designated for medium-duty vehicles and four bays for express service, among other requirements. They must have two mobile service vans operating within 30 days of signing a letter of understanding and three additional vans upon facility certification.

Baughman said the mobile vans are important so dealers can reduce the amount of in-store work spent on lighter, simpler maintenance jobs and focus their bays on higher-margin work.

Ford dealers operate 900 mobile service vans today, and the company hopes to have 2,100 deployed by the end of this year.

Andy O'Donnell, operating partner at Valley Truck Centers and Valley Auto Group, which owns three Ford stores in Ohio, said he's planning to build two Elite Commercial Service Centers.

The first, in Cleveland, will be between 55,000 and 63,000 square feet and is scheduled to open by year end. It will have 30 service bays — up from 18 at the store today — as well as a technician training center and cost between $8 million and $9 million to build.

O'Donnell, who is part of Ford's dealer council, said his Cleveland store has about 350 open repair orders a day and he expects to double the store's throughput when the Elite center opens.

"Making the financial commitment in the facilities is somewhat of a no-brainer for us," he said. "It's a nominal investment as a dealer when we're looking at what the return is going to be."

Chris Gulbrandson, president of Apple Autos in Apple Valley, Minn., opened the first Elite center in January.

His store was planning to expand its service capacity even before Ford CEO Jim Farley created the Ford Pro business unit in 2021, and he worked with the automaker to meet the required standards during construction.

Gulbrandson said his commercial service shop, separate from the store's retail customer service operations, previously had eight repair bays which struggled to keep up with demand.

"We were just jammed up," he said. "You could barely drive through the parking lot because there was so much work there."

The new facility includes 26 service bays, a 22-bay collision center and a 13,000-square-foot parts department. He's now open on Saturdays and plans to add a second shift of workers for the expanded weekday hours.

Gulbrandson said he spent $12 million on the building, $3 million on equipment and an additional sum on land.

He's already seeing a return on his investment.

Two months into this year, he said the center is profitable, with commercial service gross profit up 13 percent over 2022.

"Service is critical," he said. "We're going into some headwinds this year with interest rates and pricing of new vehicles. … Commercial service is really the backbone of the store."

While Ford does not require dealers to build new collision centers as part of the Elite facility, Gulbrandson said he's also seen an uptick in the amount of repair work fleet owners are opting to do.

"Commercial, in general, is underserved," he said. "You can see that in our parking lot, in the fact that there's stacks of vehicles waiting to be serviced. For the most part, it's plumbers, HVAC people, construction people. They can't afford to have a truck down five days or two weeks while you wait to get to it. The quicker you can get to these cars, the more business they can do, which helps everyone."