Blue Oval or Blue Anal?
Publisher and editor Mike Roscoe conducted this clandestine interview with a prominent Ford Dealer on complete and total anonymity. To respond or to recommend a future "Dealer Undercover" segment, write to mroscoe@dealeronline.com.
What's on your mind, Mr. Dealer?
This Ford Blue Oval program is a sham. First of all, there is a ton of criteria we must meet, we have to keep logs on service concerns and on sales concerns, which we never had to do before so there is a lot of extra, unnecessary recordkeeping. Our buildings have to be totally free of cracks, stains and smudges, and toilets have to be clean and the driveway can't have any cracks or weeds. I've only got about seven acres here. I am not the biggest dealer in the country. But I've got some major, major repairs to do here and all I say is don't punish me. I don't want to get punished.
Punished?
Don't punish me by taking 1% of my money. Reward me for my doing it. Ford claims that there is no profit in this deal for them. O'Connor is even saying that this is not a cash cow for Ford. I heartily disbelieve that. I do not believe that for a moment. I said, "Take the .25% more that you have now budgeted, if you are not making any money, take the .25% that you are going to pay back to those dealers who are certified and reward all the guys that make it. Forget the 1% holdback. Just take the .25% and give that back to the dealers in the form of a reward for getting this done. Because we have to meet every single criteria. It's not a 75% deal or a 50% deal like the Canadian dealers have. If they make less than 100%, it's a stairstep deal. We don't have that. We must make every single, solitary criteria. Every single one. So, if the guy comes through and I have all my logs in place and my customer rating is high, I qualified...
But if he finds one weed in the corner of the lot...
One weed, I'm dead. And the problem is, Ford says they are going to be flexible. However, Ford ain't the arbiter, Mike.
Who is?
J.D. Power is the judge. [laughter]
Mr. Dealer, you're a medium-sized to large operator. How is Ford's Blue Oval program going to affect the small dealers?
They're gone. It's going to kill the small guys. First of all, they are not going to be able to afford the sign. Second of all, the customer viewpoint that measures customer satisfaction-it was called "QCP"-the new one is called customer viewpoint, you have to get to a certain number. A certain absolute number, which is a rating of four different questions on that report. The problem is, Ford already admits that they don't send out that customer viewpoint to every single retail customer like they used to do with QCP.
So if you're a dealer selling 20, 30 cars a month or less, you get one bad report...
You are screwed.
He doesn't have a chance. He can't even apply. He can have the most beautiful facility in the world, every crack filled and every weed pulled, the toilets clean and the toilet paper a full roll. But he loses his 1.25%. And he is going to fail because he can't even apply because he doesn't have the voice of the customer. They call it the VOC. It's terrible.
Why do you think Ford is doing this this way? What do you think their real motive is?
The top executives had to get such and such consumer rating to get their bonuses. J.D. Power rating or something. They didn't make it. About 50% of their bonus they lost because they didn't make it.
Because they didn't make a J.D. Power number?
Or it might have been a NADA number, I don't know. Not sure where that number came from. Nasser walked off with $13 million, so I really don't feel we should take up a collection for the guy.
Do you feel that this is part of any bigger plan?
In my judgment, although O'Connor denies it, he calls it miss number one, but Blue Oval is an attempt to eliminate small dealers. O'Connor says all dealers, irrespective of size or sales, have an equal ability to achieve certification. That's not true. "The certification criteria are fair and will be applied in a consistent manner to all dealers." That's not true. He is forgetting the effect it's going to have. He is not forgetting, he is just ignoring the effect it is going to have on the small guys. First of all, they don't get enough customer viewpoints. A chance of one customer killing a small dealer on a customer viewpoint is much greater than it is with me.
Do you think that it's a case of they don't care about the little guys or they are trying to get rid of some of them?
There is no question it costs Ford a lot of money to service those dealers, despite the fact they have inventories full of parts and service tools and all the other crap they have to buy. I think down the road, Ford is looking toward this whole idea of Internet selling and the dealers becoming warranty centers. A warranty repair center and a delivery boy.
It seems like it wasn't that long ago that General Motors had a monopoly on extreme dealer control and it seemed like Ford was succeeding because of the autonomy they gave their dealers. What do you think has changed at Ford?
It's hard to say. Maybe it's the current regime. You know, Nasser is a tough guy. He may just lay down the law, lay down the gauntlet and say, "Look, we are going to tell these dealers what to do and we are not going to take any BS from them." It changed overnight. O'Connor made a big thing about a letter going out to the dealers. I got a letter from the president. Well, that's nice. My rep asks, "Don't you feel good about that letter? Don't you feel good?" I said, "We got a damn franchise that my father got in 1952." Why do I need a letter from Nasser telling me that? That I already have. I guess there must be some reason he had to send it out and repeat it.
Okay, Mr. Dealer, I would say, quite frankly, I have been surprised a lot of times going to what I considered a successful, nice-looking dealership and the bathroom is a mess. It stinks, there is toilet paper on the floor, a mess. How do you suggest a better way for Ford to make sure that all their dealers are at least are up to a certain level? A chain is only as strong as its weakest link.
Let me give you an example. A friend of mine, a good friend of mine, is a Porsche-Audi dealer in northern New Jersey. They had a kind of a contest and he would be rewarded for high CSI. If he got such and such a CSI rating, they would pay him X amount, $90,000. But he had to put that money back into his building. You know what he told me? He said, "I love it. They are going to pay me $90,000 for getting good customer satisfaction, which is what I am here for anyway. Plus I get $90 large to put into my store." One of my initial points, Mike, was reward. Don't punish, reward. Reward the dealers. Take that .25% that they claim they budgeted and give that as a reward. Forget the 1% holdback. Make it a stairstep. If this guy makes 75% of it, then he gets so much, and then if the guy makes 100% then he gets the big kahuna. That's the way to do it. Get a carrot. Dealers love incentive. Ask any dealer. Everybody I have ever spoken to says, "I am going to make the max and that's what I am betting on, and I want to make every deal based on the fact that I am going to make the maximum stairstep dealer cash." And guess what? They make it. They give some of it away at the beginning but they get it all back at the end. Reward the dealers. Chevrolet is not doing this. Chrysler is not doing this. Chrysler's got a Five-Star deal, but it doesn't cost the dealers anything. I mean, they are not surcharged on the invoice. It costs them some money to get there. And that's okay. Clean up your bathrooms, clean up your building, get the weeds taken down, do some paint work that you haven't done in 30 years and we'll pay you back.
Ford has got to take out the 1% so the small guy stays competitive. Because if he is down the road from a big hitter, we know that there are guys who are going to say, "We are going to make the one and a quarter so we are going to use some of that to make deals." We know what is going to happen. I think Ford knows what is going to happen. I don't think that they are that stupid. They are just chasing the price of the car down again. But the little guy who can't make it is going to be further disadvantaged. He is going to be forced into a further uncompetitive positiona serious price disadvantage against a guy up the street betting on the if come that he's going to get the money back from Ford. He already knows that he has got the money coming back. A brand new store, place just opened, Ford designed it, you don't think this guy is going to qualify? They are going to qualify, period. Especially if he is doing big volume, he's going to qualify. We know that there is that flexibility built into it. If the guy is doing a big volume, he is going to get help. And the little guy is going to be standing alone saying "help me." It's grossly unfair. O'Connor has admitted they are going to keep raising the bar. They are going to raise the bar again next year. You have to get re-certified every year on your anniversary. It is going to get tougher, it's going to be tougher and tougher to get there. How far do they want to go? First of all, I firmly believe that it is a profit center. No matter how much they deny it, it's going to be a profit center for Ford. It's got to be. You don't have to be rocket scientist or an accountant to figure it out. It's there. And they are just going to keep moving it and moving it until they grind another 1% from everybody. I'm deathly afraid of this moving the bar up, moving the goalposts.
So you are not necessarily taking sympathy on the small guys, you think that this is just the first step of an ongoing process that will continue to squeeze, and if you don't fight them now...
Oh yeah. It's just going to come. There's no question about it. We are still selling cars. We are still getting the job done. Can we get it done better? Yeah. Reward us and see how much better we do. But, don't punish us. We don't need to get punished. And we don't need to start battling between dealers and guys using this money for a holdback against deals. Our competition isn't doing it. Chevy's not doing it, Chrysler's not doing it. Chrysler has a program, but it's more of a reward program than it is a punishment. A dealer friend of mine, a Five-Star Chrysler dealer, said, "It cost me more than I got back. But you know what? I probably should have done it anyway. I didn't get all the money back that I spent and maybe Chrysler figured that was going to happen anyway." The guys would spend more than they got back. But,at least they did it. They moved to the next level and got the Five Star. But people don't come in and say, "I am here because you are a Five Star dealer." They don't even know what the hell it is. Everybody is a Five Star. We have a dry cleaner down the street, he's a Five Star dry cleaner. [laughter]
