Ford To Dealers: Break The Rules And Lose F-150 Lightning Allotment
Ford's basically saying "operate ethically or we won't send you any Lightning in 2022".
I have an F-150 Lightning reservation and spoke to a number of local Ford dealers, and I could only find one that promised me (although they wouldn't put it in writing) that they would sell me my vehicle at MSRP, and that's the dealership I'm going with.
However, it seems as though the price-gouging isn't limited to ADMs at some dealerships. There have been reports that a small amount of Ford dealers are telling customers that they need to pony up additional money if they want to be one of the first customers to be able to order an F-150 Lightning. That's not sitting well with Ford.
"It has come to our attention that a limited number of dealerships are interacting with customers in a manner that is negatively impacting customer satisfaction and damaging to the Ford Motor Company brand and Dealer Body reputation." -Andrew Frick, Ford vice president of U.S. and Canada sales.
To be clear, this isn't about ADMs. There are very clear laws that prevent auto manufacturers from interfering with the dealer/customer relationship, and OEMs have very limited control over what pricing the dealers set. This issue is different because it appears as though some dealers are "selling" early delivery slots to those that are willing to pay the exorbitant additional fee.
The document was first posted on the F150 GEN14 Forum
Ford views that as violating the Sales and Service agreement that every dealership has with Ford, as it is "negatively impacting customer satisfaction and damaging to the Ford Motor Company brand and Dealer Body reputation".
As a punishment, the letter states that "if it is determined that your dealership is engaging in such practices, Ford Motor Company reserves the right to redirect that dealership's allocation of the F-150 Lightning for the entirety of MY 2022".
"The Dealer shall avoid in every way any 'bait,' deceptive, misleading, confusing or illegal advertising or business practices"
Additionally, the letter advises dealers to add a No-Sale Provision to all F-150 Lightning contracts. The intent of that clause is to prevent customers from taking delivery of an F-150 Lightning and instantly flipping it for more than what they paid.
Ford provided the language which requires the buyer to agree not to sell, offer to sell, or transfer any ownership interest in the Lightning within one year of purchase. If the buyer violates the agreement they can face legal action including blocking the title transfer to the purchaser.
This clause is just a recommendation. Ford isn't telling their dealers they have to do it, which I don't think they legally have the power to enforce in any event. Those pesky dealer franchise laws would most likely prevent Ford from requiring it.
I'm curious to see how many dealers agree to add the no-sale provision to their contracts, as they really don't have anything to gain from it. Once the sale is made, most dealers really don't care what you do with your vehicle - you can keep it or sell it, it makes no difference to them. If anything, it will create animosity between the dealership and the customer.
I can see customers saying they won't agree to it, and for good reason. What if the Lightning doesn't suit their needs and they need to sell it and get another vehicle? What if the customer's financial condition changes shortly after making the purchase and they cannot afford it anymore? How about if they just don't like it? Having a clause that forces the buyer to keep it for at least a year or face legal action won't go over well with many people.
What about ADMs?
I had the opportunity to talk to Darren Palmer, Ford's Global Manager of Battery Electric Vehicles about ADMs while I was at the Mustang Mach-E GT media drive in October. Palmer is very aware that this has been a problem with the Mach-E at some dealerships and will be an even bigger problem for the F-150 Lightning.
He promised that Ford would be monitoring this closely and use whatever leverage over their dealers they can to discourage them from drastically marking up over MSRP. However, it's really not a simple thing to control. Dealership franchise laws are very clear and prevent the manufacturer from interfering with the dealership/customer relationship, especially when it comes to price. Palmer said Ford will do everything within its power to prevent excessive ADMs, including using product allocation as a carrot/stick when necessary.
We'll continue to monitor these issues, including dealer markups as we move closer to customer deliveries. I'll also be documenting my ordering process once I'm invited to configure my F-150 Lightning, and if all goes well, make a video of my delivery and dealership experience. I reserved my F-150 Lightning shortly after the reservations opened on May 19th, 2021, so I should be one of the earlier deliveries.