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Ford seeks dealer reductions

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Ford seeks dealer reductions

By BRENT SNAVELY

FREE PRESS BUSINESS WRITER

Ford would like to reduce its total number of U.S. dealerships to 3,000, Jim Farley, Ford’s group vice president, global marketing, sales and service, said at an investor conference in San Francisco today.

At the end of 2009, Ford had 3,553 dealers in the U.S., but the company is discontinuing its Mercury brand, which will make it difficult for some of Ford’s 276 stand-alone Lincoln Mercury dealers to survive.

Farley said Ford is better able to encourage its dealers to consolidate now because its relationship with dealers has improved in recent years.

“The dealers are full partners in every decision the company makes,” Farley said at a Bank of America investor conference. “When you are trying to consolidate your network from 6,000 down to 3,000, the dealers are on your side, and they will help you participate in the consolidation.”

Farley also said nearly half of the company’s marketing budget is spent on experiential and social media. Farley said the success of Ford’s Fiesta Movement campaign has caused Ford to permanently transform its new vehicle marketing strategy.

With Fiesta Movement, Ford gave cars to 100 agents for six months and encouraged them to post pictures and comments online.

“Fiesta Movement has really changed our mind with how we go to market with vehicles,” Farley said. “It is so efficient compared to going out to the networks and buying huge media buys for two months.”

Read more: Ford seeks dealer reductions | freep.com | Detroit Free Press http://www.freep.com/article/20100914/BUSINESS0102/100914043/1331/BUSINESS01/Ford-seeks-dealer-reductions#ixzz0zYTH1kRF

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Ford wants to trim to 3,000 dealers

End of Mercury brand to make things tough on Lincoln stores

BY BRENT SNAVELY

FREE PRESS BUSINESS WRITER

Ford would like to reduce its total number of U.S. dealerships to 3,000, Jim Farley, Ford's group vice president, global marketing, sales and service, said Tuesday at a conference in San Francisco.

At the end of 2009, Ford had 3,553 dealers in the U.S., but the company is discontinuing its Mercury brand, which will make it difficult for some of Ford's 276 stand-alone Lincoln Mercury dealers to survive.

Farley said Ford is better able to encourage its dealers to consolidate now because its relationship with dealers has improved in recent years.

"The dealers are full partners in every decision the company makes," Farley said at the Bank of America Merrill Lynch conference. "When you are trying to consolidate your network from 6,000 down to 3,000, the dealers are on your side, and they will help you participate in the consolidation."

Ford has been working for years to trim its dealership network by encouraging dealers to sell their franchises to other nearby dealers, said Randy Berlin, global practice leader of Urban Science, a dealership consulting firm.

"It has been a very, very positive approach," Berlin said.

General Motors and Chrysler, in contrast, rapidly reduced their dealership networks in 2009 as part of their bankruptcy reorganization.

GM expects to have 4,500 dealerships by Nov. 1 after starting with about 6,049 before its bankruptcy. As part of that restructuring, the automaker offered to "wind down" hundreds of Saturn, Pontiac, Saab and Hummer dealers because those brands were terminated or sold.

Chrysler went through an even more rapid reduction of dealerships last year as it rejected 789 of its U.S. dealers and another 197 closed voluntarily, leaving the automaker with 2,311 at the end of June.

Berlin said many of Ford's stand-alone Lincoln Mercury dealers depend on Mercury for 40% to 60% of their sales.

"I think it is going to be difficult for the majority of those dealers to survive as Lincoln-only dealers," Berlin said.

Production of all Mercury models will end this month, said Lincoln spokesman Christian Bokich.

Ford is hosting a meeting for its dealers on Oct. 4 at its Dearborn headquarters where it might discuss consolidation.

Bob Tasca Jr., chairman of the Lincoln Mercury dealer council, said Ford has not shared the agenda for the meeting with dealers.

"I think we are going to hear about their future plans with Lincoln from product standpoint and a lot of things," Tasca said.

Read more: Ford wants to trim to 3,000 dealers | freep.com | Detroit Free Press http://www.freep.com/article/20100915/BUSINESS01/9150327/1331/Ford-wants-to-trim-to-3000-dealers#ixzz0zbiyVqCm

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FORD TARGETS 3,000 U.S. DEALERSHIPS AS MERCURY CLOSES

By Drew Johnson

Things may be going well for Ford, but the Blue Oval revealed this week that it would like to whittle down its United States dealership network to just 3,000 stores. The announcement was made by Jim Farley, Ford's group vice president, global marketing, sales and service.

According to Farley, Ford would like to see its total number of U.S. dealerships drop to 3,000 within the next few months. Ford ended 2009 with 3,553 U.S. dealers.

"The dealers are full partners in every decision the company makes," Farley said. "When you are trying to consolidate your network from 6,000 down to 3,000, the dealers are on your side, and they will help you participate in the consolidation."

Ford is hopeful that its 276 stand-alone Lincoln-Mercury will be willing to shut their doors. Ford will end production of its Mercury-branded products by the end of the month.

Ford estimates that its stand-alone Lincoln-Mercury dealers rely on Mercury for 40-60 percent of total sales volume. It’s doubtful that those dealers could survive on Lincoln sales alone, making the proposition to close those 276 stores a little easier.

Bankruptcy disadvantage

While about half of Ford’s targeted cuts should come relatively easily, it will still have a fight on its hands to get to 3,000. General Motors and Chrysler had a much easier time trimming that fat out of their dealer networks, thanks to their 2009 bankruptcy filings.

GM entered bankruptcy with over 6,000 U.S. dealers, but is expected to have that figure down to 4,500 by November. Chrysler was able to cut nearly 1,000 dealers, leaving the automaker with 2,311 outlets.

link:

http://www.leftlanenews.com/ford-targets-3000-u-s-dealerships-as-mercury-closes.html

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Report: Ford still hoping to cut 10% of its dealer network

by Zach Bowman (RSS feed) on Sep 16th 2010 at 6:32PM

Ford may have come through the automotive implosion relatively unscathed, but that doesn't mean the company isn't still trying to trim its costs. According to Automotive News, Ford wants to consolidate its dealer network by closing the doors on some 300 lots. The reason? While the automotive market is slowly improving, no one expects to see the kind of buying levels enjoyed before 2009 anytime soon. As a result, Ford wants to boost the profitability of its dealer network by reducing the number of outlets available to consumers.

While you'd expect dealers to be up in arms over such an announcement, Ford says that, by and large, its showrooms are behind the move. The company's relationship with its dealer network recently hit an all-time high, putting Ford in a good position to push the consolidation effort.

The move to trim outlets is also bolstered by the fact that there are 261 Lincoln-Mercury dealerships out there, and with Mercury on its way to the back lot in the sky, those dealers will likely be exploring other options. And with Ford currently operates a total of 3,338 dealerships in the States, a sacrifice of 10% seems more than reasonable.

link:

http://www.autoblog.com/2010/09/16/report-ford-still-hoping-to-cut-10-of-its-dealer-network/

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