COLOGNE - Germany is at the heart of Ford of Europe President Nick Scheele's strategy to revive the flagging fortunes of his company - and making the dealer network more efficient is part of that strategy.
Ford dealers in Germany on average retain less than one percent of the vehicle's price. Ford would like to change that, and so would its dealers.
Ford now ranks third among major manufacturers in Germany, behind market leaders Volkswagen and Opel, and DaimlerChrysler is gaining fast.
Although Ford is classified as a domestic brand, it does not have the strong German identity of Volkswagen, Opel, Mercedes-Benz, Audi or BMW.
German Ford dealers are in the middle of a two-year reorganization process designed to put ownership of the Ford network in fewer hands, but maintain the same number of customer contact points.
The program began before Scheele's predecessor Jim Donaldson became president of Ford of Europe, but Donaldson was a driving force. The program is similar to those being undertaken in other European markets.
Germany remains a country of small towns, and Ford's dealer network reflects that. There are about 2,400 Ford dealership outlets in Germany. Of those, about 980 are main dealers. The rest are branches and service outlets. Research shows customers do not want to drive more than 15 minutes to a service point in a city, or 25 minutes in a rural area.
'The objective is to keep our 2,400 customer contact points and to maintain customer satisfaction,' said Hans Frenger, director of sales for Ford Werke AG.
But Ford wants to consolidate ownership and is organizing the German network into about 130 customer marketing areas (CMAs). Those areas could be controlled by a single company, similar to the Auto Collection centers Ford has launched in the USA. Another option would be for the dealerships to remain independent. As of April, eight dealers had sold their dealerships to others as part of the consolidation, Frenger said.
Ford is not interested in owning dealerships in Germany, Frenger added.
Dealers are currently holding meetings in each customer marketing area. Ford wants each group to submit a letter of intent by the end of 1999 outlining how they plan to reorganize. The plans would then be put in place next year.
Ford hopes to gain efficiencies that would help improve the slender profit margins. Ford also wants its dealers to stop competing with each other for sales. It wants them to devote attention to competing with other manufacturers instead.
To help improve margins, Ford wants to reduce the number of back-shop functions in each area to one, consolidating dealer computer systems in the process. Ford also wants to consolidate other functions, such as paint shops and body shops.
A customer marketing area coordinator would handle such things as ordering vehicles and parts. Ford is working to establish an order-to-delivery program that would reduce the number of vehicles dealers held in inventory.
'The customer marketing area coordinator would be responsible for ordering cars, supplying demonstrators, ordering parts, coordinating training, and coordinating advertising,' said Frenger.
In exchange for his work, the coordinator would make an extra profit, said Frenger.
Frenger is optimistic savings will come from the reorganization.
'We need a transition period while we're establishing the CMAs,' he said. 'The synergies will not be achieved from day one. But they will come.'