Tuesday, May 19, 2009

Ford "resists cutting dealer network" is a bit of a fib

Now don't get me wrong FoMoCo is doing a fine job trying to restructure during these tough times. But all the news stories about Ford not cutting dealers, like the one linked in the title, are a bit of a fib. It's true that FoMoCo isn't slashing and burning dealers like Chrysler has and isn't giving a doomsday clock to dealers like GM is doing. But, it's also not true that they haven't shed dealers. In reality FoMoCo started in 2005, as part of the Way Forward, shutting unproductive dealers and trimming some dealers in oversaturated areas. FoMoCo just did it slower and more carefully. 770 Ford dealerships have shut down since 05, just about 1 in 6 to be honest.
And I think it was obviously a good thing. I know of several Ford dealers within a reasonable drive from me that shut. One of those was a huge dealer that had just changed owners and was in the middle of major renovations. I wasn't a fan of this particular dealer, they had shady practices.
I see these news stories as a double edged sword. On the one hand it makes it look like Ford is doing better than GM & Chrysler, which they are. But on the other side, it makes it look like Ford isn't doing enough to cut costs and return to profitabilty, which of course is untrue.
In my opinion it would be to Ford's advantage to point out the facts, that they did cut dealers, but slowly over time and with less of an impact to the economy than the paniced moves of Chrysler and to a lesser degree GM. I can see that any positive press is good. But will people feel that Ford hasn't done their share? I know they have and that they've done it in a far gentler way. Sure, the closed Ford dealers had employees that lost jobs, but because it was gradual over 4 years, they had opportunities to find jobs. What Chrysler did is dump a huge pool of workers all at once. And next October when GM dealers run the clock on their franchise agreements, there'll be more.
Give Ford credit where it's due, but also point out that the Way Forward has been a process not a panic.

1 comment:

MarcoP said...

I actually think that Ford has a great opportunity to expand its dealer network by bringing in the best of the discontinued Chrysler and GM dealers. I laid out my reasoning in a blog post I added to Ford, Star Trek, and Domus. The potentially added downward price pressure caused by increasing the number of dealers would be greatly offset by the stated benefits.