Ford is serious about changing its business model, and one of the ways the company plans to apply new strategies involves how it will sell you an electric vehicle in the future.
The American auto giant wants transactions to take place online, prices to be fixed (meaning no negotiations) and direct deliveries to customers instead of via dealers.
Ford's top boss Jim Farley confirmed that alongside a host of other announcements made by the company, including a $3.7 billion investment (in electric vehicles, but also in regular models, including the next-generation Mustang).
“We need to move to a non-negotiated price. We need to go to 100-percent online sales. There would be no more dealer inventory; vehicles would be delivered directly to the customer.”
- Jim Farley, Ford CEO
It's unclear if gasoline-engine models will be included in the new sales process, but considering those are on borrowed time, and that changes to that process won’t happen overnight, it’s as likely as not that only EVs will be sold via the new system.
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The fixed-price sales model has been tried by others in the past, including used car dealerships and the occasional new-car manufacturer like Saturn. A little over 20 years ago, Toyota also announced a one-time fixed-price policy. There was no talk of online sales in the late 1990s, however.
It took Tesla to pioneer the process of offering fixed prices combined with online sales.
Behind the move, for Ford, it's all about costs and profitability. According to USA Today, Ford spends $2,000 more than Tesla to sell and distribute each vehicle. Farley says that for his company to be competitive, it needs to rethink how it does things.
Ford also plans to cut back on advertising for its electric models, citing that it's yet another way the company needs to adapt. “If you ever see Ford Motor Co. doing a Super Bowl ad on our electric vehicles, sell the stock,” Farley added. A 30-second spot during the last edition of that mega-event cost $6.5 million USD.
The change proposed by Ford is a major one, and it’s one thing to say you want the change, it’s another to implement it. Will Ford push through and successfully change its business model with online and fixed price sales? How will consumers respond? Initial reactions to Ford’s plans are very mixed; some love the idea, others say it will incite them to shop elsewhere.
Stay tuned.