Everyone has heard the saying “Don’t judge a book by its cover.” However, Ford Motor Company seems to be doing just that.
At a meeting held in Detroit last week, Ford CEO Alan Mulally told the Lincoln dealers present that they had two years to complete $1 million worth of renovations on their showrooms. If dealers have joint Ford and Lincoln dealerships, then it’s worth it to dish out $1.9 million on restorations.
And although some Lincoln dealers might welcome this ultimatum, those in disagreement really have no other choice. Ford plans on reclaiming franchises that refuse to invest in refurbishments, taking over the dealerships and providing compensation for the out of work dealers. It really is a “take it or leave it” arrangement.
The reason for all this hubbub is Ford’s wish to revamp its only remaining luxury brand, Lincoln. Ford projects its U.S. Lincoln sales will balloon from the 86,000 units sold in 2010 to 162,000 by 2015. The showroom overhaul is the first step in making Lincoln a more appealing luxury brand.
But Ford is interested in more than just improving its dealerships; it wants to make them exclusive as well. Indeed, the ultimatum only applies to urban dealers at this time. Dealerships who can’t afford the pricey makeover are simply given the boot.
Ford is using this tactic to decrease the number of Lincoln dealers specifically in the top 130 U.S. markets, where 55 percent of its business is derived from. At the close of February, 434 Lincoln dealers were in the top 130 markets. By the end of this year, Ford wants that number to dwindle to 325.
Thus that Lincoln dealer you see when you drive to work or pass on your way home may soon be victim to a grim fate. Or maybe it will be one of the lucky ones, given a new coat of paint and freshly laid carpet. In the eyes of Ford, it seems that either way is fine.
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