Ford Motor Co. is exploring the possibility of shipping vehicles that are awaiting parts to dealers who are desperate for inventory amid ongoing supply-chain issues and high consumer demand.
That's according to a proposed agreement sent to Ford's dealer network and obtained by The Detroit News, as well as interviews with dealers. Ford declined to discuss the details of the proposal, but in a statement, spokesman Said Deep said: "We are exploring a number of different options as we work to get our customers and dealers their new vehicles as quickly as possible."
Ford has not yet determined whether it will implement the program but is gauging the interest level among dealers. The idea behind it is that it's a way to get vehicles — albeit unfinished ones — onto dealer lots faster, giving customers the chance to look at them, select what they want and then take delivery of the vehicle as soon as the necessary components have been installed.
That potentially cuts down on the time customers have to wait and could ease the inventory anxieties of dealers who are navigating strong demand for new vehicles against the backdrop of rapidly-dwindling inventories caused by production delays.
Dealers would have the choice of whether to opt into the program.
Some dealers who spoke to The News expressed excitement about the prospect, casting it as a creative solution in unusual circumstances. Still, some expressed wariness about assuming liability for unfinished vehicles they don't own.
"The thought process is, with the industry experiencing this chip situation ... that we need to think slightly outside the box," said Tim Hovik, chairman of the Ford National Dealer Council and owner of San Tan Ford in Arizona. His dealership will participate in the program if Ford implements it.
"The overriding thought that should guide us is, 'What's the best and fastest way that we can get inventory to the dealers and then in the end game to our customers?'" he said. "This comes out of that thought process."
Ford recently sent to its dealer network what's known as a bailment agreement, which details the proposed terms of the program.
The terms of the program are not yet a done deal, nor is it certain that Ford will move forward with it, but according to the proposal, Ford would retain ownership of the vehicles while they're being stored by the dealer and awaiting parts.
The dealer would agree to install the missing components once it receives the parts from Ford. Once that work is done, the dealer would be able to buy the vehicle from Ford and list it for sale.
It's an approach that some dealers say is right in their wheelhouse, given their experience responding to safety recalls and completing other repair work.
As the proposal is written now, the dealer would be "responsible for the maintenance and repair of the vehicles" as well as insuring them. Dealers who have been briefed on the proposal said their understanding is that it would require no extra cost on their end.
Jim Seavitt, owner of Village Ford in Dearborn, said his dealership is still reviewing the proposal and awaiting legal guidance on it. He hasn't decided whether he's in favor of it.
"The downside is the same downside they're facing, they being every manufacturer: that the vehicle sits around on your lot," he said. "I'm not sure how I feel about it, because it turns the liability over to us."
Other dealers are more enthusiastic about the idea, given how desperate the inventory situation has become.
Ford has been hit hard by the chip shortage. Earlier this month, it reported that its gross vehicle stock was down to 162,000 units, down from 475,000 at the same point last year.
And back in April, the automaker warned that the shortage could cost it 1.1 million vehicles it planned to produce this year, and result in a $2.5 billion hit to its annual adjusted earnings. And though the company said the second quarter would likely be the worst in terms of production impacts, the automaker recently announced downtime throughout July at several of its North American plants.
Hovik said his sense is that Ford's dealer network is largely supportive of such a move. The dealer council continues to work through some of the details with Ford, particularly around questions about insurance and who would be responsible for the vehicle at various stages of the process, he said.
Rhett Ricart, owner of Ricart Automotive Group outside Columbus, Ohio, dubbed the proposal an "excellent idea." His dealership's technicians already do this type of work, he said, and it prevents vehicles from sitting for extended periods of time on third-party lots, possibly incurring flat tires and rusting.
Matt Stanford, general manager of Varsity Ford in Ann Arbor, said the dealership will opt into the program if Ford moves forward with it.
"I have all the confidence in the world in my technicians," he said. "At least I'll have a vehicle that customers can come in and look at. ... I'd rather have them on my lot than sitting on a lot somewhere they could potentially be damaged."
While Varsity Ford normally has more than 1,000 vehicles in stock this time of year, Stanford said they're currently averaging between 50 and 75 vehicles that sell as fast as the dealership gets them in.
“I’m just looking forward to seeing some inventory hitting our lots and getting them in the hands of folks who are waiting for them," he said. "There’s a lot of pent-up customer demand. We need the supply to get to them.”
