Ford retailers whose new car sales businesses have been put at risk by the manufacturer’s plan to close almost half of its 400 UK dealerships by 2025 are demanding changes to their aftersales contracts.
After being told that the “160 to 180 sites” earmarked for closure could retain an approved aftersales or used car agreement after the ‘Ford 2025 dealer plan’ deadline for changes shared with franchisees yesterday (27), retailers have issued an ultimatum to the blue oval, AM understands.
In a raise of hands after yesterday’s briefing from the brand at its Daventry training academy around 50% of the franchisees in attendance indicated that they would consider retaining an aftersales contract following the loss of their new car sales business.
However, one long-standing Ford retailer told AM: “After that initial vote we were asked would we be willing to retain the aftersales function on the terms of our current contracts. Nobody raised their hands.”
Disgruntled retailers are understood to be wrestling with the idea of how they will retain profitability on the brand’s current warranty rate and income from parts, with many suggesting that their Ford business would not be viable without the flow of new car sales from the historically volume-driven brand.
“Yesterday’s news was painful after all the years we have spent with the brand. Painful and disappointing,” said AM’s source.
“As it currently stands I would retain the Ford franchise for aftersales after 2025, if the contracts change. If they don’t – like many people in the room with me yesterday – we will be forced to look for other options.”
Speaking to AM after yesterday’s meeting with franchisees and investors, Ford of Britain chairman and managing director, Andy Barratt, said that he hoped to retain a "local and personalised aftersales service" with the majority or all of the franchisees departing the network as new car sales locations remaining as aftersales providers, with an option to sell used vehicles.
Barratt said: “I would be happy if we retained all those partners.”
But while Barratt told AM that there would be no Vauxhall-style termination of contracts in his brand’s plan to consolidate its UK retail network, he also told AM that there would be “no changes to contracts” either.
Franchised dealers set to become aftersales-only Ford operations will be hoping that this is something that is reconsidered.
While UK retailers were considering their future with the Ford brand, the OEM’s incoming chief operating officer, Jim Farley told a Wolfe Research automotive conference in New York yesterday that "The only way to change the sense of urgency is to change the way you work.
“More agile, all-in, together."
Among the four areas that Farley listed where the brand needs to drive improvement were: warranty costs, which he said hit $5 billion last year; launch performance; material, logistics and labour costs; and sales and marketing.