Keeping entry-level Ford customers key in 2020

Dealers can never have enough new product, although Ford Motor Co.'s Ford brand will try to challenge that notion in 2020.

The automaker has vowed to offer the freshest lineup in the industry by the end of this year. That includes overhauling more than three-quarters of its lineup with new or redesigned nameplates. Among them: a redesigned F-150, the revival of the Bronco SUV, a smaller off-road crossover and a new Mustang Mach-E battery electric.

John Crane, chairman of the Ford National Dealer Council, said that while the brand's retailers will have plenty of new product to push, they face a challenge in keeping entry-level customers who may defect to rivals as Ford cuts its lower-priced sedans.

Crane, 54, CEO of Hawk Auto Group — which operates Hawk Ford of Oak Lawn and Hawk Ford of St. Charles, both in Illinois — spoke with Staff Reporter Michael Martinez. Here are edited excerpts.

Q: How was 2019 for Ford dealers?

A: It was generally positive, but not without its challenges. As we move from a lesser dependence on sedans to more dependence on SUVs and pickups, we're leaving behind a portion of the consumers that are sometimes the ones that are least profitable — both from Ford and the dealership standpoint. But nevertheless they eventually become buyers of our more-expensive vehicles. So that's one of the challenges. But at the same time, demand for Ford vehicles on the high end is still very strong, including great successes like Expedition. F-150 could be a franchise in itself. Super Duty, we do very well with. Commercial has been doing really great. So even though, you know, there were some changes, there's still a ton of opportunity within our line.

How was 2019 from a profitability standpoint?

Ford, together with dealer council, worked on and came up with a good solution for helping dealers curb the rising costs of floorplan interest with a new standard for floorplan interest reimbursement that really did help all dealers across the board. Whenever we can get help on the cost side, that helps us move the needle from a profitability standpoint.

Every single brand that I own faces the same kind of challenges. It's really a matter of which direction they attack that same thing, which is there's not a lot of profitability in vehicles that sell for under $20,000 MSRP, on both sides, whether it's the manufacturer or the dealer. Some manufacturers are shifting production into more profitable lines. Some are still trying to find a way to capture more market share and hopefully crack that equation.

I'm a Chicago dealer. Four or five years ago it was 50-50 car-to-truck ratio in our market. And you know what? Most Chicago dealers would be making the argument that you can't really peel back from development of sedans because it's 50 percent of our market. Well, here we are five years later and sedans are just barely over 30 percent of the market. So the sedan segment's in free fall. It's a matter of how manufacturers react to that.

Should Ford reconsider ending the Fusion?

I think that the decision has already been made. So, my personal opinion almost doesn't matter.

When they develop a vehicle, it is not something that they can turn a switch on and a year later or even half a year, decide to keep Fusion up and rolling, at least from my understanding.

I don't spend a lot of time thinking about the decision that was already made about Fusion. I just kind of focus on what are we going to have in the future. How am I going to plan out 2020 with Fusion being sunset, or discontinued? I look at what the other opportunity is within the line. We have to count our chickens in the sense of, we have the No. 1 selling vehicle in F-150. And there's just still a ton of opportunity with that vehicle.

One thing we do at dealer council is get together with the factory and focus on what many people would just say is low-hanging fruit. Mostly the dealers are asking for a well-contented, decent price-point vehicle to combat the rise in pricing that is generally happening.

How significant will the Mustang Mach-E be for Ford and its dealers?

It's really a game changer for Ford.

Many of these electric vehicles are about complying with regulations that the government is enforcing for whatever reason to drive up fuel economy and drive down emissions. And you can look at vehicles that have been brought out from other manufacturers as well as Ford that are strictly there to comply with a regulation. And the consumer's just not connecting with those compliance vehicles.

When you look at the Mustang Mach-E, you see the perfect synthesis from a Ford standpoint of taking something that everyone values — which is the sportiness of the Mustang and the mystique that that vehicle has — and pairing it with a vehicle that moves the ball forward from an environmental standpoint and a technology standpoint. You end up with what we as dealers, not just Ford Motor Co., as dealers, we believe that's the winning solution for electrics.

People have to be willing to pay what it might sell for, and they are. It has to be good-looking and sporty enough for people to want to adopt that new style of vehicle. And it is. And it's got to be exciting and fun to drive. And, of course, electric vehicles, one thing they have far above internal-combustion-engine vehicles is that they have a ton of power. When you step on the gas, it's like driving a drag racer. There's plenty of power, plenty of range. It really checks all the boxes from the fun sense. And then it also complies with a lot of things that people really believe we ought to be doing.

Are Ford dealers prepared to begin selling EVs in large numbers? And are they prepared for how to offset some of the service business they might lose?

There's a little bit of a tendency in media to talk about the death of the internal-combustion engine as something that is imminent and is going to be dramatic and quick.

The thing as dealers that we remember is that despite all of the hype that some of the electric vehicles get in the media — I mean, if Elon Musk sneezes, that makes news. And he's running a failing company that many people believe is somehow going to take over the entire industry. I'm not sure that he couldn't sell his stock in Tesla and buy the entire industry right now.

But the reality is, under 3 percent of vehicles sold right now are hybrid and electric. I'm not saying that there's not a change coming to the industry. I'm saying that change is certainly more gradual than it is being presented in the media. I think everyone thinks that another shoe is going to drop and suddenly everyone's going to be driving electric cars in five years. While that number is going to go up significantly, you know, dealers are very resilient.

It's not like we're unaware of the changes that are happening, and we make changes. A few years ago, we weren't very well-versed in programing cellphones. For a few years, if your salesman didn't help the customer do it, it didn't get done. Today, the customer plugs in and the cellphone is paired. So, you know, we adapt to the changes and dealers are very resilient. And we will we will adapt to the changing market, especially in service.

What would you most like to see from this next-generation F-150?

I look at F-150 and I'm always amazed that they come up with great product. Think of Raptor. Here is a vehicle that is a specialized vehicle where the factory went ahead and provided an unbelievable upgrade to a very capable truck from the very get-go and virtually created their own brand out of taking an awesome truck and making it a little bit better.

So when you say what to expect with the F-150, I can't even imagine it. It does everything. I can't imagine what they're going to do next with the F-150.

Just taking the dealer's perspective, what we would like is the entry level to get just as much attention as the top end. Because while the fastest-turning vehicles on my lots are the high-end F-150s — the Platinums, Limiteds, the Raptors. Those turn very quickly. There's a market out there of people who really respond to those trucks.

But I can still remember going camping 30 years ago and every single campsite had an F-100. Those people all graduated and moved up the ladder. But who are we bringing in at the bottom end to bring up the ladder 10 years from now? That's really important, too.

Modernizing an icon can be tough. You don't want to anger the purists and you want to stay true to its heritage. What are your thoughts so far on the Bronco? And what do you think the reception to the Bronco will be from customers?

From having seen the vehicles, because Bronco is more than just one vehicle, I know that it's going to be a runaway success. I'm not a vintage Bronco owner, but values on vintage Broncos are much higher than I would have suspected. There are people who will build you one from scratch now and it's over $100,000 to do so. People do it. So it's a brand with, again, that emotional tug.

If you went back, people don't remember how spartan those vehicles were because we certainly have higher expectations for them. So when you modernize something, a lot of good things happen, too.

But I've seen the vehicles. It's the kind of design and look that a person can get excited about and feel good about and identify with. And (there are) those brands that are able to do that, like we do with Mustang and we do with Raptor and our special-edition vehicles and in F-150 in general. This is the kind of vehicle that people will drive around and be proud to drive. And it'll make them feel special. It's like a reflection of their personality. So I really do expect the Bronco to be a runaway success.

Where are the opportunities for dealers now that Ford is entering this off-road space? Will it be in accessories and parts?

This is where dealer council and Ford have been working together, trying to get our accessories to the level that we know consumers will want them. I'm also a Jeep dealer. I see how much money gets spent on accessories. This was also true way back in the day when Hummer was in existence. Some people would spend $10,000 to $20,000 on accessories within the first six months of owning a vehicle. So it's different.

We spend some money on accessories with pickup trucks, don't get me wrong. I'm from the commercial side where we do a lot of upfitting, but this is different. These are retail consumers who are going to buy a vehicle and have in mind when they buy it, spending another few thousand dollars, customizing it, making it their own. So we have to be ready for that. We've got to have the right accessories. And we're already working on that. I have a list of over 100 different items that will be available for the Broncos coming forward, instead of just a handful at the beginning.

Together with Ford, the dealers are communicating and trying to find out what are the right accessories to have ready at launch. I see the company addressing that issue. But I also believe that no matter how much we address it, we're going to be surprised by the consumer demand. We probably won't be able to keep up with demand for accessories initially.

What's the reception been to FordPass Rewards? Do you think you need to make any tweaks to it? What are you hearing from customers?

FordPass is an app, and it needs to be updated and tweaked at all times. It's going to need to be constantly updated to address changing needs and changing expectations of the consumer.

This was something we worked on in council. We got together and essentially said, "We've got to discover what the right thing to do for consumers is." We really broke down a bunch of walls in order to provide a more meaningful and more valuable ownership experience. We know we have very loyal owners. How do we reward the ones who have been very loyal to us? It can be done through FordPass.

FordPass is a connectivity app for you and your vehicle, but it's also a way of housing our rewards program that allows people who are spending money in a Ford dealership to then turn around and use their loyalty points to pay for service at any dealership in the nation.

So this is where the dealers really sort of gave up their sovereignty, you might say. Money that was earned at their dealership can be spent at any one because that's the right thing to do for the consumer. The consumer can pick up and pay for maintenance or repairs at any Ford dealership with their points. That's fantastic. It's a big step forward with no complications. It needs to be easy for the consumer.

What are the biggest challenges for Ford dealers in 2020? If you could ask Ford for one thing, what would it be?

Ford and Ford's upper management has been great to work with. I've been in council for the past four years. And we have moved from — I wouldn't say adversarial but sometimes confrontational to a much more collaborative work process. We really have the opportunity to make some serious inroads and leverage our ability to work together as manufacturers to do the right thing for consumers.

What's the one thing that we as dealers want? Great product. If we focus on great product, which I believe we're bringing with Bronco, and we keep it priced at a point where it's sustainable in the market — we do not want to bring up vehicles that are overpriced and then you have to adjust — we will get to a point where great product really fixes anything that goes wrong in the industry. And we've proven we can bring it out.

Our challenge in 2020 is preparing for Bronco and in making it until the new product comes in. But then, as we've proven, we can bring out really groundbreaking products and we just believe that that's what Bronco is going to be. So we've just got to make it until Bronco comes out. And it's not that bad to do so when you have some of the bestselling vehicles on the planet. So we figure out how to make it and then we're going to have another great story to talk about.