Can Ford’s build-to-order strategy work long term?

Diggs said built-to-order vehicles have accounted for at least half of Seelye Ford’s sales in the past few months.

He sees an advantage for small retailers that often lose business to larger auto groups with more inventory. Having fewer vehicles on the lot also would reduce dealers’ floorplan costs.

“If you tell me I can keep a third of the inventory and still sell as many if not more cars, as a dealer, I’m in,” he said.

The approach is designed to save Ford money as well.

During the company’s second-quarter earnings call with Wall Street analysts, Farley said having an order bank forces Ford to reduce complexity and “put pressure on our industrial system to deliver quickly.” He also suggested the automaker would need fewer discounts to push slow-selling vehicles off lots.

“I know we’re wasting money on incentives,” Farley said then. “I just don’t know where. With an order-based system, we will have much less risk of that.”

Don Jenkins, president of Jenkins & Wynne Ford, Honda & Lincoln in Clarksville, Tenn., says customers also can save money by ordering from the factory. Often when a dealership doesn’t have the exact configuration a buyer wants, it trades inventory with a nearby store, spending time and money to transport the vehicles and passing that cost along to buyers.

In October, Jenkins said he sold 165 vehicles at retail without ever having more than 40 in stock at a time, with a majority of buyers placing custom orders for F-Series pickups and Explorer crossovers.

“When you’re talking about the truck business, there are so many specific needs customers have and specific options,” he said. “Most of our customers have been comfortable with that because they’re getting exactly — not close to what they want — exactly what they want.”

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