Dealers Face Wrath Of An Unhappy Ford Boss Over Reported Lightning Markups

Now and again, a carmaker listens to criticism of its dealer body. To wit, there have been reports of dealers jacking the price of hot models like the Lightning and Maverick.

For instance, a couple of weeks ago, Torque News ran a piece about dealers who were jacking the price of car orders by $5,000. Indeed, some dealers were charging even more. For instance, one report said a dealer tacked massive up-fees of $10,000 for customers who "wanted to be one of the first" to have an F-150 Lightning delivered.

Ford Boss Isn’t Happy With Situation

Jim Farley, Ford CEO, isn't happy with this situation, said TheDrive.com yesterday. Nope, Farley isn't happy at all. And, he is watching Ford stores that are adding on big markups, markups that are over and above what can be called reasonable. The Ford chief made it clear during an earnings call that he won't "hesitate to levy consequences in the form of reduced vehicle allocations." The allocations would include the hotly sought-after F-150 Lightning.

Despite Farley's concerns, dealers say they are not slapping on large markup charges.

A Torque News dealers survey shows that most dealers are not marking up sought-after vehicles.

According to estimates, about 10 percent of dealers are jacking the Lightning price (Ford has used $100 reservations to encourage buyers to place orders for the hotly sought Lightning, and there have been reports of Maverick price hikes well. One of Maverick's big draws, aside from its compact size, has been its $20,000-vicinity cost.)

Observers like Fox Business Gary Gastelu and Barclays analyst Brian Johnson put the value of the markups at about $3.6 billion. That is reportedly about half the revenue per unit reported by Ford in 2021, according to Gastelu on The Drive.

During the earnings conference call, Farley noted that Ford knows who "they [the dealers] are." He noted that their future vehicle" allocations … will be directly impacted" by their actions.

Ford’s Efforts At Control Aren’t New

Ford's actions aren't new, as the automaker threatened to pull F-150 Lightning allocations from greedy dealers about a month ago. Even so, stores are trying to get all they can. Meantime, Dearborn has told them that the automaker doesn't favor customers having added deposits or payments.

As reported by The Drive last month, dealers who may have thought they could get away with gouging were caught in Farley's radar late last year. The automotive press also lit up with headlines about dealer shenanigans, offering opportunities to jump over other Lightning reservation holders for substantial sums. There were reports of dealerships offering reservation holders a chance to move up for fees of thousands more than MSRP. Farley was not a happy camper with that situation. Indeed, dealerships were reportedly offering markups of up to $10,000, so reservation holders could get early Lightning deliveries. Meanwhile, a report of an Illinois dealership tried to markup a Mustang Mach-E $10,000. Ford headquarters rolled up a proverbial newspaper and smacked it in the nose.

A Ford spokesperson told The Drive last month that "a limited number of dealerships are interacting with customers in a manner that is negatively impacting customer satisfaction." In an email, the automaker said that if "Ford determines that a dealership is engaging in such practices, we reserve the right to redirect that dealership's allocation of the F-150 Lightning[s]" for 2022.

The markup issue isn't solely a Ford problem. According to the Detroit Free Press, GM is also taking a dim view of markups and is cracking down on them.

Issue Has Several Causes

It is an industry-wide problem that has resulted from the semiconductor shortage, other supply chain issues, and other issues during the pandemic. As a result of these disruptions, automakers are watching customer reactions closely.

Waiting in the wings will be scrutiny of dealerships that seem a bit overzealous in their pursuit of markups. Of course, dealers will tell you that they can run their stores any way they want. However, those dealers do have to follow the rules set by the automaker. At this juncture, The Drive reports, the Ford boss seems to be focusing on the long-term prospects for the Blue Oval. Consumers should be reassured that they have a CEO in their corner.

Marc Stern has been an automotive writer since 1971 when an otherwise normal news editor said, "You're our new car editor," and dumped about 27 pounds of auto stuff on my desk. I was in heaven as I have been a gearhead from my early days. As a teen, I spent the usual number of misspent hours hanging out at gas stations Shell and Texaco (a big thing in my youth) and working on cars. From there on, it was a straight line to my first column for the paper, "You Auto Know," an enterprise that I handled faithfully for 32 years. Not many people know that I also handled computer documentation for a good part of my living while writing YAN. My best writing, though, was always in cars. My work has appeared in Popular Mechanics, Mechanix Illustrated, AutoWeek, SuperStock, Trailer Life, Old Cars Weekly, Special Interest Autos, etc. You can follow me on: Twitter or Facebook.