|Out of the frying pan, and into the electric truck race|
The years of “employee pricing for everyone” seem like about three lifetimes ago at this point.
The discounts were hugely popular, but they also reinforced the perception that the Detroit 3 only built cars and trucks that people bought because they were cheap. Time and again, executives promised to introduce models that didn’t need huge incentives, only to slap huge incentives on those same vehicles a few months later because they were piling up on the lots of the dealers. It was a damaging and predictable cycle that decimated corporate profits and contributed to the bankruptcies of General Motors and Chrysler once the economy collapsed.
It’s all changed. The shortage of microchips that has starved many dealers of new-vehicle inventory is a major reason, but all three companies had already overhauled their product lines and significantly reduced their reliance on rebates since being humiliated for the Great Recession.
Ford Motor Co. has recently launched one bestselling seller after another, and it has a crucial launch just around the corner: the F-150 Lightning. The electric pickup is in high demand – Ford has amassed nearly 200,000 reservations – and with retail versions ranging from around $55,000 to over $90,000, the clamor is certainly not because it’s a glaring affair.
Some dealers, knowing they have another hit on their hands and a limited allowance coming up, mark up the sticker price of the truck up to $30,000, according to owner forums. That hasn’t gone over well with Ford, which is warning of the potential profit consequences, as explained in a page 1 story in this week’s issue.
The Lightning isn’t just going up against Chevrolet and Ram, which have their own electric pickups due out within the next two years. Ford worries that negative experiences with its dealerships will drive customers to Tesla and Rivian, which don’t have franchise dealership networks. One dealership told reporter Michael Martinez that markups “kill the brand”, while another explained the carefully considered reasons why he asks customers to pay a premium.
Having too much demand is arguably a better problem to have than scrambling to unload piles of inventory at rock-bottom prices, and it shows just how far Ford has come since the early 2000s. a problem.
At least that’s not the kind of problem they’ll have to mortgage the company to solve.
— Nick Bunley