GM’s decision to abandon a similar venture hasn’t changed Ford’s mind: US consumers can now buy Ford cars and trucks directly from dealers over the Internet. However, the structure of the operation could be improved. Ford UK cuts out the middleman and supplies its online customers direct, making more money and gathering useful customer data.
Ford has launched an online car retail joint venture across the US.
Despite a year of poor performance and cost-cutting measures, the world’s number two carmaker has now unveiled FordDirect, an online joint venture with its franchised dealers. The news of FordDirect comes a day after archrival General Motors cancelled its plans to launch AutoCentric, a joint venture with its dealers, because the business model was not viable.
On a public relations level, this represents something of a coup for Ford, which can now claim that FordDirect is ‘unique in the industry’. But why is it viable for one, and not the other, given the similarities between the two companies? In part, it could be a matter of scale: Ford will have 2,500 dealers participating, while GM had planned to include 7,800. Perhaps less is more in this case.
More interesting is the venture’s strict conformity to the current distribution arrangements for new cars in the US, where all vehicles are still supplied through the franchised dealer network. In the UK, both Ford and General Motors (operating as Vauxhall) supply vehicles direct to the consumer online, despite having a similar distribution structure in place. The manufacturer takes the vehicle order and assigns the nearest dealer for delivery and future aftersales. The dealer receives a bonus per vehicle.
Particularly considering Ford’s acquisition of some its UK dealers, it is effectively supplying direct, removing the middleman. This gives the company direct access to its customers, enabling it to gather essential data from which CRM programs can be launched. Ford US should take note.