26.02.2020

Ford to close almost half its 400 UK dealerships by 2025

Ford will close almost half of its 400 UK franchised car retail sites as part of a ‘Ford 2025 dealer plan’ revealed to its investor partners at a conference today (February 26).

A total of between 160 to 180 dealerships will be closed under the plan, which the brand said had been formed “in a spirit of partnership” with dealers and their investors to build a “stronger and more sustainably profitable Ford sales and servicing network for the future in the UK”.

In a statement issued to AM, Ford said that implementation of the plan would work “for the mutual benefit of our businesses and for our commercial and passenger vehicle customers”, with Ford of Britain chairman and managing director, Andy Barratt insisting an interview with AM that there would be no Vauxhall-style mass termination of dealer contracts.

It is the largest cull of UK car retail sites to date and comes after AM exclusively revealed Vauxhall’s decision to axe one-in-three of its sites in March, 2018, and Honda’s plan to reduce its network by up to 55 of its 155 sites from March last year.

Speaking to AM after today’s meeting with the brand’s UK franchise partners – the second of two, on consecutive days, at the OEM’s training academy in Daventry – Barratt said that the ‘Ford 2025 dealer plan’ had resulted in a map of the UK that would see dealerships accessible to 90% of customers within a 30 minute drive time.

However, he said that a “local and personalised aftersales service” would hopefully be retained, with the majority or all of the franchisees departing the network as new car sales locations remaining as aftersales providers, with an option to sell used vehicles.

Barratt said: “I would be happy if we retained all those partners.

“There will be no terminating of contracts as part of this plan and I fully appreciate and value the relationships that we have with our retailers.

“Many have invested family savings and generations of work into their businesses. I really do hope that we will continue to work together moving forward.”

Ford said in its official statement on the new plan that its dealer network and Ford of Britain national sales company had undergone restructuring over the past two decades but added that “dealer network profitability is still not sustainable”.

Barratt told AM that the 2025 plan would aim to bring the network’s franchisees up from a 2019 return on sales (RoS) figure of 1% to 1.5%, with its top quartile earning 2% with the help of greater commercial vehicle (CV) sales.

According to data published by the Society of Motor Manufacturers and Traders (SMMT), Ford sold 236,137 vehicles in 2019, 7% down on 2018’s 254,082.

Barratt said: “We are a large volume player and those are the sorts of targets that our partners should be aiming to achieve.”

Ford said that it would now become a more targeted business with a strong focus on growing its CV business and providing passenger vehicle customers with a more defined portfolio, shifting towards new automotive trends, including: electrification, connectivity, car-sharing and online sales.

Its statement said: “We are working together in a spirit of partnership with our dealers and their investors to build a stronger and more sustainably profitable Ford sales and servicing network for the future in the UK, which works for the mutual benefit of our businesses and for our commercial and passenger vehicle customers.

“We currently have around 400 vehicle selling points in the UK Our goal is to create a network of around 210 to 230 sales sites over the next five years.

“Customers will not be unduly inconvenienced when buying a new vehicle; there will continue to be a Ford selling site within easy reach for the majority of our customers, with around 90% of the population within a 30-minute drive of a Ford sales point. Many of the existing smaller sales sites will be converted into vehicle servicing centres to further improve our customer service capability.”

In its official statement issued to AM today, Ford said that The UK was an important part of Ford’s European transformation and continued to be a critical market.

The UK remains Ford’s largest European sales market for commercial and passenger vehicles.

Ford of Britain said that 2019’s investment in the Dunton Campus, in Essex, to create a home for the European CV design and engineering business plus powertrain engineering, co-located with the new Ford of Britain and Ford Financial HQs, underlined the brand’s commitment to the UK.

Dagenham and Halewood remain key manufacturing operations, meanwhile, along with the OEM’s parts centre at Daventry.

 

[source: Automotive Management online]