Ford’s best kept secret to winning back dealers

Hey, everyone — In case you missed it — we announced last Friday that Sam D’Arc, COO at Zeigler Automotive Group will be hosting a brand new weekly segment on the Car Dealership Guy Podcast called the Industry Spotlight!

Learn all about it in our announcement video here. And stay tuned for the first official episode premiering on Nov. 17.

—CDG

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I’ve always loved a good comeback story. There’s something satisfying about watching a company course correct after making a few (or several) wrong turns. And lately, Ford appears to be getting back on track.

You might remember my newsletter about Ford’s problems with its dealer network (i.e., costly EV investments, quality control issues, reluctance to offer cash rebates — need I go on?)

Basically — dealers (rightly so) started to feel like they were footing the bill for a strategy that didn’t line up with reality. And while I can’t fault CEO Jim Farley for having ambition, his moves were grossly miscalculated and threw up red flags left and right.

But a lot can happen in a couple of quarters, and today, Ford is starting to look like a different company. In fact, according to my friends at Haig Partners, Ford stores are back in high(er) demand for mergers and acquisitions. Here’s why…

Hybrid models are taking priority over electric vehicles.

With EV losses averaging over a billion dollars a quarter, and competitors slashing prices on the electric cars left and right, Ford is smartly leaning into hybrids for high-demand segments (SUVs / trucks) where they know profits still flow. By scrapping the 3-row electric SUV and delaying the F-150 EV, they’re prioritizing models that work for today’s buyers — and the proof is in the data:

• Deliveries for the F-150 hybrid, which accounts for 25% of F-150 sales, increased 51% year-over-year in Oct.

• And the hybrid variant of the Maverick (Ford’s surprise hit since its launch) rose 47%.

Many Ford dealers are feeling encouraged by the pivot, but it doesn’t exactly undo the costs sunk (we’re talking millions in some cases) into the automaker’s formerly required EV certification program.

(Ford dealers — have you been offered any options to recoup those investments yet?? Let me know.)

While hybrids are turning out to be a serious profitability weapon — Ford has an even more lucrative trump card up its sleeve…

Ford Pro is addressing the needs of America’s aging commercial fleet.

Fleet sales and management, once seen as a low-margin "negative" for automakers, have become a profit powerhouse for Ford and its dealer network. 

For those of you unfamiliar — Ford Pro is a business unit within Ford dedicated to serving commercial customers with everything from vehicles to software, maintenance, and financing. 

And since its launch, Ford Pro has become a nearly $60 billion dollar business and growing…

In Q3, Ford Pro reported revenue of $15.7 billion, a 13% increase compared to last year, and the division achieved an EBIT (earnings before interest and taxes) of $1.8 billion with a margin of 11.6%.

How? 

1) Consumer demand may ebb and flow, but Ford Pro’s focus on commercial clients provides dealers with steady, reliable income. Fleet operators are often more loyal — after all, their businesses depend on it.

2) On top of that — paid subscriptions to the Ford Pro Intelligence fleet management software were up 30% in Q3 to nearly 630,000 — and repair orders completed by the company’s fleet of ~2,400 mobile service vehicles grew by 70%.

3) Ford also uses telematics (real-time vehicle data tracking) connections to notify commercial vehicle owners when parts need replacing. Also, boosting the rate of service subscriptions for Ford’s commercial vehicles by one percentage point can "add about $30 million of incremental EBIT to the business," Ford Pro Chief Financial Officer Navin Kumar said.

The big play for Ford? Locking in that recurring revenue and keeping commercial customers hooked for the long haul.

And the Ford dealers I’ve spoken to recently said that’s pretty much how it’s shaking out…

But the smartest dealers are taking their commercial business even further.

You see — Ford incentivizes dealers to join Ford Pro or add capacity to their stores. And a Ford Pro certification translates to faster access to parts, vehicle allocations, and support from Ford itself. 

George Smith, a dealer group COO I spoke to with four Ford stores in his portfolio, told me that the cash incentives to add service bays or build a new Ford Pro standalone facility are pretty lucrative.

So, that’s exactly what he did. For his larger stores, there is a totally separate commercial fleet division on the variable side and fixed-ops (service center) side as well. He even has a separate business development center focused solely on commercial clients (the BDC is a department within the dealership that manages inbound and outbound calls, appointment scheduling, etc.)

Why? Because commercial clients — like contractors, plumbers, and electricians — aren’t your average retail customer. When one of their work vehicles breaks down, it’s more than an inconvenience — it’s a potential hit to their bottom line if it’s not back on the road fast.

But there’s more…

I also spoke with Tim Michael, a prominent Ford dealer in the Southeast, and he seems to be taking it a step further. His facility stocks the lot with popular commercial vehicles already fitted with specialty bodies — utility beds, dump bodies, cargo setups — you name it. 

For busy clients running their own fleets, this means zero downtime waiting on custom modifications. Instead, they get what they need when they need it.

But the biggest takeaway for me?

Ford’s commercial strategy is a solid hedge for dealers.

By focusing on the higher-end market of large SUVs, upmarket models, and commercial vehicles — Ford is well-positioned to weather the disruptions that autonomous technology might (eventually) bring to entry-level markets.

And with Elon Musk teasing the Cybercab, a two-seater $30,000 robotaxi that could hit the market for consumers — automakers that focus primarily on low-cost, entry-level cars will likely be most at risk.

But Ford is steering clear of that volatility.

As Jim Farley put it — “If you’re looking for the future of the automotive industry, look at Ford Pro. It’s got half a million subscribers with 50% gross margin.”

And he’s right – Ford's commercial business has some serious tailwinds right now. More enterprises need work trucks and vans, and as Ford’s management starts to realign to market realities, a lot of dealers are being rewarded. Farley may not be Ford’s CEO for the long haul (and, candidly, many Ford dealers still disapprove of his leadership), but the brand’s focus on its commercial segment, premium vehicles, and dialing back the EV rhetoric are providing dealers with a steady — and much-needed — boost of confidence.

What do you think of Ford’s direction as a company? Hit reply and let me know (Yes, I really read all the emails)

Courtesy transportation is no longer a nice-to-have.

It’s a need-to-have.

That’s why 80% of dealership respondents agree that providing courtesy rides with Uber has helped retain customers, based on Uber’s survey of 79 organizations in 2023.

With Central, you can request an Uber ride on behalf of your customers, even if they don’t have the Uber app. Car dealerships love using Uber because it’s a simple way to offer white-glove customer service, supplement loaner cars or shuttles, and manage parts pickup and delivery.

Dealers can request one-way or round-trip rides, add multiple riders and locations, set spend caps, and even monitor trips in real time.

Plus, you'll get monthly reports to keep track of everything.

If you’re ready to reduce the costs associated with maintaining shuttles and limit the liability of loaner vehicles, it's time to partner with Uber for Business.

How 28 seconds is quietly transforming dealership profits

You can stream the full episode now on YouTube, Spotify, or Apple.

Taking a 100-year-old dealer group to new heights — risks, challenges, and future vision

You can stream the full episode now on YouTube, Spotify, or Apple.

We’ve got tons of great jobs hitting the CDG Job Board right now:

• Ron Marhofer Auto Family: Hyundai Sales Consultant in Ohio.

• Edmunds: Account Executive in Wisconsin.

• Sheehy Auto Stores: Sales Manager in Maryland.

Looking to hire? Add your roles today—it’s 100% free.

• Why American automakers can’t make cheap cars.

• Elon Musk’s Tesla is now worth more than bulk of the car industry combined.

• Rivian announces formal launch of $5.8 billion joint venture with Volkswagen Group.

• Car financing firm Vroom plans to file Chapter 11 to revamp debt.

• Trump says Musk and Ramaswamy will lead government efficiency group.

Thanks for reading. See you on the next edition…

—Car Dealership Guy

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