Ford CEO Jim Farley (left) and 2020 NADA Chairman Rhett Ricart (right)
The future of the automotive industry was explored on February 10 during a conversation between Ford CEO Jim Farley and the soon-to-be former Chairman of the National Automobile Dealers Association (NADA), Rhett Ricart.
The discussion was part of the second main stage presentation on day two of the NADA Show, covering topics from electric vehicles to emissions standards, connectivity and data, and how the industry will change in the coming months.
“First of all, we’re going to be really tight on supply, and the semiconductor shortage is going to make its way through the whole industry,” said Farley, in reference to the semiconductor shortage that has plagued the global auto industry and impacted a number of OEMs. “We don’t know exactly the impact and (it) may be slightly different by manufacturer, but we’re already going into this with low days supply, especially at Ford,” said Farley.
Farley said many dealers have rationalized their costs amid the pandemic, and have become more serious about their online business. He sees a much healthier retail network with new products coming up, but that OEMs (and specifically Ford) will be focusing on quality, manufacturing, and thoughtful allocations.
On the topic of mobility, vehicle subscriptions, autonomy and electric vehicles, Farley said it will take time for society to move to e-mobility and that it will not be done one-hundred per cent.
“We have a lot of rural customers that have a long distance to travel. It’s just, e-mobility won’t work for them,” said Farley. “But in December, in Europe, one out of every 10 retail vehicles sold was a pure electric — not a plugin or a hybrid, but a pure electric.”
He said he expects the United States to put their foot on the scale and really commit to CO2 reduction, particularly as some EVs have reached the 300-mile range, and many products are well-designed and usable for families. Furthermore, the number of available EV models is expected to grow significantly over the years, which means the number of models dealers will be able to sell will grow as customers are provided with greater choice from the EV market.
“There is a lot of pressure because the batteries cost a lot of money, $10,000-$15,000 — that’s extra costs. And we have a lot of work to do to get that cost down,” said Farley. “Emissions for ICE (internal combustion engine) products are getting more expensive too. So at some point they’re going to cross, and it’s just more choice.”
Farley believes the pressures of the auto retail business are changing more than for the OEMs, with online retailing and remote service as two examples, and that it is all happening at the same time. He also said that dealers will figure it out, as they always have during times of change and crisis.
“Just like everyone said, there was no future for brick and mortar retailers when Amazon came out,” said Farley. “Well, Target figured it out. Home Depot figured it out.”
As for vehicle standards, he said Ford does not want to go back to the days when vehicles had to meet different emission standards based on the state or country they were being sold in. Not only is it complicated for dealer trades, it is also a nightmare from a logistics point of view in that it becomes an extra cost — which he said no one really pays for.
“We need one national standard at Ford,” said Farley. “We committed to the California standard last year. It wasn’t so popular with a lot of the politicians at the time, but that’s our values at Ford. And we know we want to be a leader in this change to mobility. We also want the dealers to be part of that journey.”
Farley also talked about Ford Direct: a joint venture between the Ford Motor Company and its franchise dealers to create a comprehensive Web presence for dealers, and to provide digital marketing services that help them sell more vehicles. Strathcom Media was named the official FordDirect Certified Website provider for all Ford and Lincoln dealers in Canada in 2019.
Farley said solutions like these have to work for all dealers as they have different (or multiple) selling systems. Manufacturers, he said, must have a set of tools or a couple of solutions that work for most customers but still provide flexibility for the dealer, due in large part to the way retailers collect, manage and use their data.
NADA Chairman Rhett Ricart said dealers have always been the one to shake the hand of the customer and look them in the eye and thank them for their business while collecting their data.
“So dealers feel very sensitive to our customers and this information they give us, as well as the newer data that the manufacturer is collecting through connectivity, which is here now — it’s not coming next week — and how to put those two together to be able to maximize our customer’s positive experience with that product. And also to be able to maximize our ability to stay in touch with them,” said Ricart.
Farley said that for him, that connectivity is the biggest game changer, “because it really rewards all of us to work on loyalty, not this conquest model that a lot of us have worked on.” A lot of dealers, he said, have always figured that loyalty model out, but not every manufacturer understood it.
The virtual 2021 NADA Show runs from Feb. 9-11, 2021. Stay tuned for more coverage of the event, which will appear on our Canadian auto dealer website and in our March issue.
