bzcat Posted August 2, 2017 Share Posted August 2, 2017 Why would a dealer pay the residual value for a trade-in if you can go to the auction and buy the same vehicle for a few thousand less? The dealer residual is usually different (lower) than consumer residual. If you allow dealer to buy the car from Ford Credit, it won't flood the auction circuit which depresses the actual realized value. The problem according to Deanh is that Ford didn't want dealers to keep off-lease Fusions on the lot least a buyer may be tempted to buy the used one instead of a new one. So they forced the Fusions into the auction channel. Although I will say that maybe Ford Credit was trying to arbitrage the difference between dealer residual and regional auction prices... and lost. Quote Link to comment Share on other sites More sharing options...
bzcat Posted August 2, 2017 Share Posted August 2, 2017 @Kirby...sounds simple doesn't it?.....and heres where I think Ford has shot themselves in the foot...they were , and I say were, asking ridiculous prices...dealers weren't paying them knowing they could go to the auction and POTENTIALLY pay less...( especially on trucks ) and I think what happened is they got burdened with too much inventory, and then were forced to take losses, rather large ones...so now they are victims of the very process they created....they basically got too greedy...heck, they have even instituted a dismissal fee of $395 charged to the customer if they turn their lease in and don't get another Ford...wonder how THAT is going to go down, whats next...a GAP fee?.... Lease disposition fee is pretty standard across the industry. You can avoid that by leasing another one from the same brand... which is kind of the whole point why they charge that fee. Quote Link to comment Share on other sites More sharing options...
fuzzymoomoo Posted August 2, 2017 Share Posted August 2, 2017 @Kirby...sounds simple doesn't it?.....and heres where I think Ford has shot themselves in the foot...they were , and I say were, asking ridiculous prices...dealers weren't paying them knowing they could go to the auction and POTENTIALLY pay less...( especially on trucks ) and I think what happened is they got burdened with too much inventory, and then were forced to take losses, rather large ones...so now they are victims of the very process they created....they basically got too greedy...heck, they have even instituted a dismissal fee of $395 charged to the customer if they turn their lease in and don't get another Ford...wonder how THAT is going to go down, whats next...a GAP fee?.... geez, what's the penalty for turning a lease in early then?!?! Quote Link to comment Share on other sites More sharing options...
akirby Posted August 2, 2017 Share Posted August 2, 2017 The dealer residual is usually different (lower) than consumer residual. If you allow dealer to buy the car from Ford Credit, it won't flood the auction circuit which depresses the actual realized value. I understand not flooding the auctions but you still end up with X amount of used fusions on the market and that affects auction prices anyway. The problem according to Deanh is that Ford didn't want dealers to keep off-lease Fusions on the lot least a buyer may be tempted to buy the used one instead of a new one. So they forced the Fusions into the auction channel. That's not how I read it. The dealer will always have used Fusions on the lot - purchased from auction if necessary. I understand Ford's dilemma - there are too many to negotiate case by case. And they don't want dealers pulling shenanigans and getting undeserved discounts. They also don't want to give up $$$ in cases where the market is higher than the residual. Forcing them to go to auction is the simplest answer even though it may not be the most cost effective in some cases. And you'd have to do it across the board, even on models with higher than average market values. I could see them allowing the customer to buy out the lease for the residual and if they refuse allowing the dealer to buy it for a fixed price based on the residual - say residual - 3%. But I don't think it's feasible to negotiate case by case or even model by model. That would probably cost more than they're losing on the residuals. Quote Link to comment Share on other sites More sharing options...
akirby Posted August 2, 2017 Share Posted August 2, 2017 geez, what's the penalty for turning a lease in early then?!?! You pay the remaining lease payments. Unless you lease another Ford. Quote Link to comment Share on other sites More sharing options...
fuzzymoomoo Posted August 2, 2017 Share Posted August 2, 2017 (edited) You pay the remaining lease payments. Unless you lease another Ford. even if it still has a year left? Asking for a friend Said friend needs a new Fusion maybe since the 2017 fire sale is starting Edited August 2, 2017 by fuzzymoomoo 1 Quote Link to comment Share on other sites More sharing options...
akirby Posted August 2, 2017 Share Posted August 2, 2017 Not sure how far they'll pull up the remaining lease payments. 1 year might be too much. You'd have to check with the dealer. Quote Link to comment Share on other sites More sharing options...
Deanh Posted August 2, 2017 Share Posted August 2, 2017 (edited) Fuzzy, Ford has early bird programs, but usually only for the last three months ( and if you have 6 months those 3 are deducted so if hes more than three out he is still obligated to the last payments, they don't just go away even if you lease a new one ). Back to turn ins, funny, Ford USED to give dealers the option of buying cars at lease end for the residuals, but found out the dealers were making money they thought they could keep for themselves, so that was nixed...kinda back fired on them as we now witness.......Also there never was any negotiation at lease end value....there was through BOA, Omni and outside banks that we al see are no longer in the lease business...again a victim of inflated residuals. As for customers buying their car at the end, they are welcome, its usually residual plus $500. Edited August 2, 2017 by Deanh Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 2, 2017 Share Posted August 2, 2017 (edited) Re Fusion buybacks, I guess this is the old problem of minimising lease payments by inflating residual prices. Eventually, all those popular cars come off lease and the automaker is faced with the dilemma ot either taking a big hit and buying them back or letting them go to auction and allowing residuals to sag even further... It's clear now that Ford was so single minded on Fusion sales and getting to No.3 behind Accord and Camry that they did this to themselves and made things hard for their dealerships...Was Ford really that one dimensional in its view of the market? Edited August 2, 2017 by jpd80 Quote Link to comment Share on other sites More sharing options...
Deanh Posted August 2, 2017 Share Posted August 2, 2017 little more to it than just residual,... rebates, rate, and discount packages add in, I don't rightfully know the answer, but bottom line is payments sell the vehicle, if you are out of line in comparison with your immediate competition you stand to lose sales. In Fords defense they may have tweeked the program ( Fusions ) due to backlogged inventory and now they are paying the piper. BUT....its not just the Fusion...the lease programs on the F-150 are a tad crazy right now, as are Escape and Edges...maybe its a kneejerk reaction to what they are experiencing with the Fusion situation....all that boasting about higher ATPs means absolutely nout if sales slump... 1 Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 2, 2017 Share Posted August 2, 2017 (edited) Exactly, lots of tin sitting in inventory is useless if it doesn't get sold, gotta get customers interested and if the payment is too high, they go elsewhere or just don't do the deal. Youve been warning about this for a while now - I wonder if that was the first signs of what we're now seeing with those slowing sales - it's not entirely the vehicles but more the deal as a whole and what dealers / sales staff are given to work with...as well as what competitors are prepared to do with deals (RAV4?) Edited August 2, 2017 by jpd80 Quote Link to comment Share on other sites More sharing options...
ice-capades Posted August 2, 2017 Share Posted August 2, 2017 Do you include Toyota and Honda stores as 'direct competitors' or just GM stores? I'm only comparing our sales to those of our direct Ford competitors. Quote Link to comment Share on other sites More sharing options...
630land Posted August 2, 2017 Share Posted August 2, 2017 Most of the posts here are constructive, instead of the whining about dead products. The stories from actual dealers shows where Ford needs to fix things. Not by bringing back Crown Vic or Mercury, which fan boys demand. 3 Quote Link to comment Share on other sites More sharing options...
630land Posted August 2, 2017 Share Posted August 2, 2017 (edited) Oops, double posted,, Edited August 2, 2017 by 630land Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 2, 2017 Share Posted August 2, 2017 (edited) I had a friend in sales with a Ford dealership, their DP loved to buy lots of run out stock and sell them down with good discounts - they always seem to get the deals done while other dealerships were wary of getting caught with old stock. I guess it depends what kind of focus on the business you have, there's still a lot of money to be made on run outs and on good low mileage used cars. I know that Ford is not as interested in that side of the business but it should be because everything eventually connects....or comes back to bite you... It's like Ford has not been defending its products with attractive leasing terms, have they been caught ball watching by patting themselves on the back with savings via transaction price and richer product mix? that seems to shine through on a lot of the sales calls and financials - probably sounds good to all the Merrill Lynchs and Goldman Sachs of the world but doesn't necessarily get the inventory sold... GM and Ford could have handled this much better but IMO, both of them concentrated on selling at inflated prices two years ago and traded on higher residuals and financing terms that dealers just can't seem to get today - no wonder Camry, Accord and Rav4 sold off into the sunset last mont...Ford and GM think they're safe with monster months of Truck and large utility sales... we'll see.. Edited August 2, 2017 by jpd80 1 Quote Link to comment Share on other sites More sharing options...
RichardK Posted August 2, 2017 Share Posted August 2, 2017 Always good to hear from you Deanh and appreciate your perspective from the California market! Agree completely with your comment about ATP's having no effect on sales as no one other than Ford cares about it. The market seems to gone past the initial demand for the Transit's and retail sales have been dropping. As for Transit Connects, our store didn't buy a single 2017MY Transit Connect and still has five or six 2016's that we're trying to get rid of. We do okay with C-MAX Energi models as they lease well, have done better with the Focus when we can get the 1.0L EcoBoost/Automatic SE's, the Fusion continues to drop each month (not helped by the very poor MCE), Escape commodity issues hurt getting the inventory we want compared to what Ford wants to build, F-150's and Super Duty's especially difficult to schedule due to commodity issues. What is MCE? Quote Link to comment Share on other sites More sharing options...
2b2 Posted August 2, 2017 Share Posted August 2, 2017 What is MCE? MidCycle Enhancement = refresh/facelift/etc Quote Link to comment Share on other sites More sharing options...
snooter Posted August 2, 2017 Share Posted August 2, 2017 Most of the posts here are constructive, instead of the whining about dead products. The stories from actual dealers shows where Ford needs to fix things. Not by bringing back Crown Vic or Mercury, which fan boys demand. Funny stuff..it all went south for ford when the dropped the maverick 2 Quote Link to comment Share on other sites More sharing options...
akirby Posted August 3, 2017 Share Posted August 3, 2017 (edited) Funny stuff..it all went south for ford when the dropped the maverickMy mom inherited her dad's 1974 4 door baby poop brown maverick with tan vinyl seats. The sad part is it was better than the orange amc hornet station wagon with the plaid seats. Let's just say I knew girls weren't dating me for my car...... Edited August 3, 2017 by akirby 2 Quote Link to comment Share on other sites More sharing options...
tbone Posted August 3, 2017 Share Posted August 3, 2017 Why would a dealer pay the residual value for a trade-in if you can go to the auction and buy the same vehicle for a few thousand less? I know you and I harp a lot on the lame MCEs, but it really has an impact. The Fusion was/is a good car, but they completely stalled its momentum with such little change. There are still a ton of midsized sales to be had, and fresh looking products sell. Why buy a new Fusion for the very reason you mentioned above. It's so disappointing. Quote Link to comment Share on other sites More sharing options...
630land Posted August 3, 2017 Share Posted August 3, 2017 Mid size cars are declining, period, with gas so cheap, and "high seating position" in fashion. Fusion is losing to Utes, when the family decider, usually the mom, says what she wants. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 3, 2017 Share Posted August 3, 2017 (edited) I know you and I harp a lot on the lame MCEs, but it really has an impact. The Fusion was/is a good car, but they completely stalled its momentum with such little change. There are still a ton of midsized sales to be had, and fresh looking products sell. Why buy a new Fusion for the very reason you mentioned above. It's so disappointing. Worse than that, why would returning Fusion buyers agree to higher repayments and worse residual than the car they currently have. Mid size cars are declining, period, with gas so cheap, and "high seating position" in fashion. Fusion is losing to Utes, when the family decider, usually the mom, says what she wants. While Ford and GM's mid sized car sales are in the toilet, Camry and Accord still sold over 30K each last month. There's clearly other issues hastening the pace of change at Ford and GM and of course, acts in their favor...... Edited August 3, 2017 by jpd80 Quote Link to comment Share on other sites More sharing options...
tbone Posted August 3, 2017 Share Posted August 3, 2017 Mid size cars are declining, period, with gas so cheap, and "high seating position" in fashion. Fusion is losing to Utes, when the family decider, usually the mom, says what she wants. They may be declining, but they will not go away completely, and Ford should not concede them. 2 Quote Link to comment Share on other sites More sharing options...
snooter Posted August 3, 2017 Share Posted August 3, 2017 Camry and accord have brand loyalty...suffice to say fusion cannot play in that rarefied air...very rarely will fusion steal a sale from camry or accord...old habits and old perceptions die hard..if accord had a square steering wheel it would still out sell fusion...my kid has a 15 fusion..damn nice ride for a mid size...too bad ford just let that car to rot 1 Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 3, 2017 Share Posted August 3, 2017 As explained previously by our two resident Ford salesmen, Ford is simply not backing up its productswith competitive financing deals.- that makes a huge difference to getting so many of those deals done. Who's going to trade in an older Fusion to get similar but with higher payments? Quote Link to comment Share on other sites More sharing options...
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