End of the road for Ford Falcon and Holden Commodore

[TWRv12]

Companies and advisers involved in the car industry have begun talking openly about Ford, the No. 3 car maker, quitting local production in 2016.

Ford’s demise is seen as inevitable and suppliers are starting to factor it into business plans that are increasingly focused on product and geographical diversification.

http://afr.com/p/national/car_indust...LmpuveABX3eyOI

[GTRMagic]

There have been a few big name Ford dealerships change hands in recent times for prices that seem undercooked..

Former Britek & Formula Ford championship winning (with Mr Larkham & Mr Ingall) sponsor Coffey Ford recently changed hands for $2m Here, which perhaps reflects the state of volumes in the blue oval dealerships

Ford hasnt tried to tickle business along with fancy financing packages to stimulate demand. Nissan, VW, Toyota, Renault, Subaru, Mercedes, Volvo and friends have all participated in low interest rate financing most recently, and from the look of the sales numbers, this has been helping shift a lot of product.

Whether there is money to be made out of financing is the challenge... being able to flex the interest rates on a customer's borrowings is where many dealerships have made their money.

What will happen going forward with fixed price servicing, as against full price servicing which is another post-sale source of strong margins and indeed ongoing cashflows, will be interesting..

[TWRv12]

Hope they are all wrong, sad to hear of anyone thinking of closing a factory

[Downoz]

http://www.news.com.au/national/ford...-1226517474664



It does not matter which company, Ford, GM or any other it is workers in our Country that are on the scrap heap.

[GTRMagic]

The thing I still havent worked out is why there is still a healthy trade in selling Ford dealerships. The likes of AHG & AP Eagers have more than a few in the portfolio, and have kicked tyres and/or consummated deals to eat up a number of family dealerships

Just like Mitsubishi and Nissan before them, if/when Ford pulls out, surely the market value of some of these dealers simply evaporates?

[Chris - Melb]

Ford sells the world's most popular car (the Focus) unlike Nissan or Mitsubishi. Not to mention the other world Ford models which are doing well here in Australia.

Or are you saying that unless you sell locally produced cars your dealership is worthless? On that basis Mazda dealerships must be dirt cheap to buy.

[GTRMagic]

Originally Posted by Chris - Melb

Ford sells the world's most popular car (the Focus) unlike Nissan or Mitsubishi. Not to mention the other world Ford models which are doing well here in Australia.

Or are you saying that unless you sell locally produced cars your dealership is worthless? On that basis Mazda dealerships must be dirt cheap to buy.

What I am suggesting is that the Ford dealer network is arguably still set up as if they sold 3 times as many cars as they do now, meaning each dealer is likely to be struggling as a standalone with 1/3 the cars leaving the showroom floor

Which would have an impact on profit and dealer valuations..

[Chris - Melb]

That's true. It will also start to apply to Holden dealerships sometime soon.

Holden Cruz sales are going down and will have to compete against the cheap imported Thailand Focus. Not to mention the other competition in a class and the biggest competition of all, the high Australia dollar.

Commodore sales are now crashing too, so there won't be the need for so many Holden dealers.

This is a race that neither Holden or Ford are going to do too well in.

I guess what I was trying to say in my post was that Ford sales are not going to crash dramatically if local production ends, so there will still be value in owning a Ford dealership in the long-term.

[GROUPA]

Ford marketing is just hopeless….the Ford Ecoboost is a decent car but there has hardly been any marketing of the car. Also might help if they brought out a diesel for the Falcon and a few other models to boot. You would be bonkers to purchase a Falcon now if you were a private buyer (let alone fleet), Mondeo makes more sense

[GTRMagic]

Just wait til Toyota brings its new finance model into the retail market

There is a strategy apparently to mimic the US concept of a fully maintained operating lease, charging a set price per month, and all you have to do is keep the mileage within agreed numbers (reflected in the price), the car serviced at genuine Toyota dealers, and put fuel in it, and there should be no other costs

Supposedly this is scheduled for a 2013 Q1 launch

It should be an absolute gamechanger in the industry!

Imagine driving a brand new Corolla for say $400 a month.. No more to pay. Then get a new one for the same money in 3 years time..

[bluesport]

Originally Posted by GROUPA

Ford marketing is just hopeless….the Ford Ecoboost is a decent car but there has hardly been any marketing of the car. Also might help if they brought out a diesel for the Falcon and a few other models to boot. You would be bonkers to purchase a Falcon now if you were a private buyer (let alone fleet), Mondeo makes more sense

The 2 litre ecoboost 4 cylinder has been getting rave reviews and is arguably the best petrol engine in the Ford range with 74kg less weight, more power and comparable torque to the old venerable SOHC 4 litre six cylinder.

[GROUPA]

Originally Posted by bluesport

The 2 litre ecoboost 4 cylinder has been getting rave reviews and is arguably the best petrol engine in the Ford range with 74kg less weight, more power and comparable torque to the old venerable SOHC 4 litre six cylinder.

Yes I know but rave reviews have not translated to rave sales and hence the market has spoken.

Ford missed the boat years ago first dropping the V8 after the XE they lost a generation of potential buyers for kids having an interest in Australian cars followed HDT/HSV....later they lost it again with no replacement for the Laser and relying on the Falcon....sure a few years there the XR6 Turbo was the ducks guts but the market moved again and Ford was reading from another book

As for the finance package luxury brands like Mercedes have been doing this for sometime...now trickling down to mainstream cars will put a further nail in the coffin of big Aussie 6.

[Chris - Melb]

Originally Posted by GROUPA

Yes I know but rave reviews have not translated to rave sales and hence the market has spoken.

How could the market have spoken if the market doesn't know that the car exists?

[Tourer]

Originally Posted by GTRMagic

It should be an absolute gamechanger in the industry!

Sorry, can't agree - those types of finances packages have been around literally for decades from the luxury brands plus have also been available from finance companies for quite some years.

Could be new to Toyota or for that matter to a volume manufacturer finance arm but game changer? Not even close.

[bluesport]

Ford should put the ecoboost 4 cylinder in an AWD Fiesta.......I'd like to see that, it would be a pocket rocket.

[mountainstar]

Originally Posted by GTRMagic

Just wait til Toyota brings its new finance model into the retail market

There is a strategy apparently to mimic the US concept of a fully maintained operating lease, charging a set price per month, and all you have to do is keep the mileage within agreed numbers (reflected in the price), the car serviced at genuine Toyota dealers, and put fuel in it, and there should be no other costs

Supposedly this is scheduled for a 2013 Q1 launch

It should be an absolute gamechanger in the industry!

Imagine driving a brand new Corolla for say $400 a month.. No more to pay. Then get a new one for the same money in 3 years time..

Oh you guys don't have that?

We've had that for over 20 years.

Usually there is several thousand $ up front for various fees they hit you up for when you sign. As an example:

http://www.toyotafinancial.com/consu...ilsPage_unsctf

Leases usually sucker in "payment buyers" or business owners or those that like new cars and like to trade in all the time. They are not always financially advantageous.

[GTRMagic]

Originally Posted by Tourer

Sorry, can't agree - those types of finances packages have been around literally for decades from the luxury brands plus have also been available from finance companies for quite some years.

Could be new to Toyota or for that matter to a volume manufacturer finance arm but game changer? Not even close.

I think you might be surprised.. the likes of Lexus, Mercedes Benz and BMW have been playing the guaranteed buyback game for a number of years...

... but the likes of Toyota with mainstream cars.. it will be something new..

A couple of importers have offered near-zero interest rates through their dealer networks, and enjoyed a significant volume upswing in models that previously couldnt been brought to life with any other means...

Metal is moving... and the finance solution is one of the reasons for the activity..

Whether this pulls forward demand, or adds to the overall aggregate is a numbers game that nobody seems to understand just yet.. but the accretive activities in the servicing and parts divisions from the increase in the carpark is something that will pay back the dealer for the next 5 years.

In the Toyota example, they are said to also be decentralising some of their fleet activities, allowing local dealers the ability to sell/deliver/administer fleet sales activities in their PMA.

Someone is thinking outside the box... and with borrowings in Japan possible at less than 1% p.a. coupon rate, and an economy locally that is supposedly the best thing since sliced bread... lets see what the world delivers us

[Umai Naa]

How does this affect the dealerships, besides an obvious increase in stock flow?

Will it affect the profit margins on the cars themselves?

[GTRMagic]

Originally Posted by Umai Naa

How does this affect the dealerships, besides an obvious increase in stock flow?

Will it affect the profit margins on the cars themselves?

The basis of the finance opportunity swings around the $ per week/month for the consumer.

Presumably at that point, there will be a 'points based' pricing matrix, working on the cost of the base car, and the variant options... with a suggested retail margin. Like what happens now. What might be interesting to understand is if the retail margin actually increases for the dealer in this scenario.. or if it is fixed via recommended guidelines for pricing... all ACCC compliant of course

What has happened in other brands is that a factory-approved financing deal such as this style, sees a commission go to the dealership for initiating the deal, which is some form of compensation for the dealership losing the capacity to sell finance, insurance, warranty & aftermarket products to that customer.

Conceptually there if there will be more cars sold.. there will be an increase in the requirement for finance and insurance sales people, an increase in the number of cars that within the first year of ownership require servicing...

Or not... depends if they have their sums right..

What is also an unknown is what the competitor response might look like. The likes of Toyota Financial Services has the backing of the manufacturer.. as does Nissan's Nissan Motor Finance...

... but what of Holden or Ford or Mazda, who dont have their own local finance houses available to help weave such magic...

[Umai Naa]

Food for thought.

Since you mentioned service, which is where I belong, I wonder what the inner workings are in the capped-price deals. Surely some dealerships are hurting if they're not being reimbursed the difference?

[GTRMagic]

Originally Posted by Umai Naa

Food for thought.

Since you mentioned service, which is where I belong, I wonder what the inner workings are in the capped-price deals. Surely some dealerships are hurting if they're not being reimbursed the difference?

Capped price service deals do one of two things, it arguably feeds a dealer with new customers wanting 'factory' servicing who may have previously used their own mechanic/Ultra Tune/Midas/self... and allows the service centre to offer opportunities to repair other parts of their car... by way of upselling of items outside the 'capped price' option

Capped price servicing doesnt seem to get a lot of direct manufacturer financial support at the minute. It doesnt always seem to be a manufacturer-induced thing, although it is said that Hyundai is likely to bring in a variation of this sooner rather than later, which may in fact convert to free 'standard' servicing for the warranty period of the car.

Indeed there is a multi site Ford/Mitsubishi/Toyota dealership group here in Sydney that has been doing this for some years.. and they are notorious for spruiking injector cleans, air pollen filter replacements, windscreen wiper blade replacements, power steering fluid changes, wheel balancing & alignments etc etc... I reckon they are Wynns #1 customer for injector cleaning products!

There are some upsell maximisation technologies now like EVHC software, where the service advisor takes an iPod/iPad with him/her to review the car upon delivery from the customer, with a 50 point checklist on various consumable parts of the car, their condition, and likely future life.

The customer is informed of the condition report, of any work required that might be immediately apparent. The customer can say yay or nay.

This is then denoted on the service invoice to the customer, into the service record of the car inside the dealership Reynolds system, in their CRM system to use as an introduction to potential future work from the customer and approximate timings for when these parts might need replacement and provide a source of potential ongoing work.

Investment in such technology has come about to some extent by the need to crank up margins when they are squeezed by fixed price, fixed time service.

There is only so much that a service team can do to use lower cost apprentices to do the more basic of service work, or where a technician specifically skilled can do a job that is recorded in the service manual as requiring an hour in say 45 minutes... the efficiency & productivity of the team will only get you so far.. as the underlying assumption is that the service hours available each day are pretty much fully sold..

[Marcos WTF]

Originally Posted by GTRMagic

Just wait til Toyota brings its new finance model into the retail market

There is a strategy apparently to mimic the US concept of a fully maintained operating lease, charging a set price per month, and all you have to do is keep the mileage within agreed numbers (reflected in the price), the car serviced at genuine Toyota dealers, and put fuel in it, and there should be no other costs

Supposedly this is scheduled for a 2013 Q1 launch

It should be an absolute gamechanger in the industry!

Imagine driving a brand new Corolla for say $400 a month.. No more to pay. Then get a new one for the same money in 3 years time..

Please, please, don't wish that upon me. I can't concieve of anything worse than being stuck with whitegoods trying to pass its self off as a car. Well I can, but that involves hair removal with paint stripper.

Back on topic. As long time Holden/GM owner, fan, mechanic, I'm always pleased to see henry getting screwed.

BUT I am concerned with the loss of jobs & capability in this country.
We used to make so, so much in Australia. Now we're a nation of raw materials exporters. And that saddens me.

[Marcos WTF]

Originally Posted by GROUPA

Ford marketing is just hopeless….the Ford Ecoboost is a decent car but there has hardly been any marketing of the car. Also might help if they brought out a diesel for the Falcon and a few other models to boot. You would be bonkers to purchase a Falcon now if you were a private buyer (let alone fleet), Mondeo makes more sense

Agreed. frod marketing seems more focused ( no pun) on 'conectivity' so one can plug in ya MP3/smartphone/ whatever gadget is flavour of the month).

WTF happened to extolling the things that actually matter in a car?
You know. Minor stuff like performance, safety, enconomy, looks, price etc.
frod are just xxxxing on their heritage. Such as it was

[Umai Naa]

Originally Posted by GTRMagic

Capped price service deals do one of two things, it arguably feeds a dealer with new customers wanting 'factory' servicing who may have previously used their own mechanic/Ultra Tune/Midas/self... and allows the service centre to offer opportunities to repair other parts of their car... by way of upselling of items outside the 'capped price' option

Capped price servicing doesnt seem to get a lot of direct manufacturer financial support at the minute. It doesnt always seem to be a manufacturer-induced thing, although it is said that Hyundai is likely to bring in a variation of this sooner rather than later, which may in fact convert to free 'standard' servicing for the warranty period of the car.

Indeed there is a multi site Ford/Mitsubishi/Toyota dealership group here in Sydney that has been doing this for some years.. and they are notorious for spruiking injector cleans, air pollen filter replacements, windscreen wiper blade replacements, power steering fluid changes, wheel balancing & alignments etc etc... I reckon they are Wynns #1 customer for injector cleaning products!

There are some upsell maximisation technologies now like EVHC software, where the service advisor takes an iPod/iPad with him/her to review the car upon delivery from the customer, with a 50 point checklist on various consumable parts of the car, their condition, and likely future life.

The customer is informed of the condition report, of any work required that might be immediately apparent. The customer can say yay or nay.

This is then denoted on the service invoice to the customer, into the service record of the car inside the dealership Reynolds system, in their CRM system to use as an introduction to potential future work from the customer and approximate timings for when these parts might need replacement and provide a source of potential ongoing work.

Investment in such technology has come about to some extent by the need to crank up margins when they are squeezed by fixed price, fixed time service.

There is only so much that a service team can do to use lower cost apprentices to do the more basic of service work, or where a technician specifically skilled can do a job that is recorded in the service manual as requiring an hour in say 45 minutes... the efficiency & productivity of the team will only get you so far.. as the underlying assumption is that the service hours available each day are pretty much fully sold..

Honestly, I had a fairly good understanding of how it all worked, but trying to coerce a employer (at the time) to provide clear-cut information on it was difficult. There also seemed to be no defined strategy in place that would ensure maximum benefit to the dealership. In its execution, or lack thereof, it appeared to be nothing more than a foot-shooting exercise, that saw plummeting customer satisfaction, and surveys that were probably spat on.

However, there were representitives of the franchises involved, claiming that these particular concepts were very successful, providing the playbook was adhered to absolutely.

[Tourer]

Originally Posted by GTRMagic

I think you might be surprised.. the likes of Lexus, Mercedes Benz and BMW have been playing the guaranteed buyback game for a number of years...

... but the likes of Toyota with mainstream cars.. it will be something new..

A couple of importers have offered near-zero interest rates through their dealer networks, and enjoyed a significant volume upswing in models that previously couldnt been brought to life with any other means...

Metal is moving... and the finance solution is one of the reasons for the activity..

Whether this pulls forward demand, or adds to the overall aggregate is a numbers game that nobody seems to understand just yet.. but the accretive activities in the servicing and parts divisions from the increase in the carpark is something that will pay back the dealer for the next 5 years.

In the Toyota example, they are said to also be decentralising some of their fleet activities, allowing local dealers the ability to sell/deliver/administer fleet sales activities in their PMA.

Someone is thinking outside the box... and with borrowings in Japan possible at less than 1% p.a. coupon rate, and an economy locally that is supposedly the best thing since sliced bread... lets see what the world delivers us

Yep, let's see but fully maintained finance packages (which are what you referred to in your initial post) have been around for years from the prestige finance arms - also at volume dealers although offered through the finance companies rather than manufacturer finance arms. Mountainstar is right, not just for the USA - this type of finance has been around a long time.

Strange that Toyota are only decentralising fleet activity now - others have again been doing it for a very long time.