Many of you may be too young to remember, although a few of the “old timers” like me will. Back in 1955, Pete Seeger wrote “Where Have All the Flowers Gone,” recorded by the Kingston Trio in 1961 and made famous by Peter, Paul and Mary in 1962. The last lines of each stanza lament “. . . oh, when will they ever learn, oh, when will they ever learn . . .” Those lines have come down through the decades and, in a different context, apply to the car business today.
Recent industry news reminded me of this old tune as I read in the trade press FMC is once again elbowing its way into the retail business. Steve DaSilva reported in Jalopnick, a trade newsletter:
Ford CEO Wants To Abolish The Dealership Experience As We Know It
Steve DaSilva, June 2, 2022
“Ford wants to do things differently as it expands into the EV business. It’s spinning electric cars into their own sub-brand, untethered from the time-honored tradition of dealers asking, ‘What can I do to get you in this car today?’ Months after that news first came out, CEO Jim Farley is doubling down. In a speech today, the executive confirmed that under his new plan, dealerships would get rid of inventory entirely and become high-quality service centers for customers who purchased their vehicles online.
In a presentation at Bernstein’s 38th Annual Strategic Decisions Conference, an event that is apparently real and not an Arrested Development plot point, Farley confirmed that Ford intends to sell EVs entirely online, with no-haggle pricing. Dealer lots full of pre-ordered inventory would be gone, and today’s existing dealers would pivot to providing service for cars purchased online.
‘We’ve got to go to a non-negotiated price. We’ve got to go to 100% online,’ Farley said. ‘There’s no inventory (at dealerships); it goes directly to the customer. And 100% remote pickup and delivery.’”
Curious to know who Jim Farley is, I discovered, in addition to being a cousin of the comedian Chris Farley of SNL fame, he was born to a banker father in Buenos Aires, Argentina, where he spent his early years, before moving to Greenwich, Connecticut. He earned degrees in economics and computer science at Georgetown University and an MBA at UCLA in 1990. Reportedly, he’s a race car driver and has bought and sold a few race cars on the side. I could not find any evidence that he’s ever spent any meaningful time on the inside of a retail dealership operation.
He’s obviously a smart guy, and he knows how to work the levers in the executive suite. But he doesn’t appear to understand Ford company history in the retail end of the car business.
As I read the Jalopnick article, I recalled an earlier dive into the retail car business by FMC. It ended badly. I found the article again in Ward Automotive from just over 22 years ago:
Tim Keenan | Jun 26, 2001
“Like General Motors Corp. before, Ford Motor Co. is getting out of the automotive retail business. Ford is ending a three-year experiment in which it tried to run dealerships in mid-size urban markets. The automaker announced today that it will sell the auto ‘collections’ it runs in Tulsa, Oklahoma City, Salt Lake City and Rochester, NY. Started in 1998 as a reaction to dealership consolidators such as AutoNation, Inc. and the rising potential of the Internet, the collections have been a source of disagreement between Ford and its dealers since day one.
Ford’s once-ambitious plan called for as many as 30 ‘collections’ of Ford-run dealerships in certain cities. It didn’t work out.
Dealers, in general, reacted coolly to the idea, seeing it as a turf invasion. Yet in a few cities — notably Tulsa — enough dealers sold interests in their stores to Ford to get the plan going. It soon went awry. The Ford-owned stores started losing business, not only to the competition but also to independently owned Ford dealerships outside of town. Ford CEO Jac Nasser told Ward’s Dealer Business magazine that the idea was to better connect Ford to the marketplace. However, he added, “It got very complicated.” Ford Div. President James O’Connor tells Ward’s, ‘I think we have to acknowledge that we paid a heavy price for the auto collections in terms of trust with our dealers. Divesting ourselves of this hopefully puts us on a positive journey to improving and getting that partnership back to what we were used to.’ Ford will sell the seven Tulsa stores to United Auto Group and the local operator, Jim Evans. The 23 stores in Rochester, Salt Lake City and Oklahoma City will be purchased by individual dealers in those markets. ‘Ford realized that dealers do a great job on a day-to-day basis servicing their communities and moving cars down the road,’ says Ford Dealer Council Chairman Jerry Reynolds of Texas. ‘Would I had preferred (the collections) hadn’t happened? Sure. But since they did, we did learn a lot, and I’m ecstatic today.’” (emp. added).
Without a nod to 2001, Farley drew his line in the sand a year ago. Obviously, he has never asked a retail customer that time-honored question, “What can I do to get you in this car today?” His experience with the retail side of the car business must have come from case studies during his MBA program. Apparently, he’s not much of a history student either.
Dealers and the ATAE network, on behalf of the dealer body, have pushed back in their state legislatures and at the courthouse to preserve the franchised dealer model with a considerable degree of success to date.
It’s “very complicated,” all right, particularly when you don’t know nearly as much about the retail business, personal relationships, customer service or being a big part of your community as you think you do. CEO Jac Nasser and Ford Div. President James O’Connor are now long gone along with their recognition of the heavy price Ford paid in terms of trust with its dealers back in 2001, and so must be the collective wisdom and knowledge of the company history as FMC and the other OEMs are hell-bent on getting back in the retail car business, bound to repeat the errors of their predecessors.
“. . . Oh, when will they ever learn; Oh, when will they ever learn.”
