Ford has issued an ultimatum to its dealers against indulging in malpractices and unfair means for its much anticipated electric truck. What essentially is an EV version of the Ford F-150, America’s best-selling truck, the Ford F-150 Lightning is all set to hit the streets very soon. And as you’d expect there’s a lot of hype around and people want to get their hands on it as soon as they can.
But dealers you know, as notorious as they always are, are smacking their lips as they know that buyers are crazy about the truck and see a great opportunity of making money by marking the prices up and charging deposits. However, Ford is aware of these practices and hence has issued a warning to its dealers to protect buyers from dealers charging them heavy pre-sale deposits. Dealers have been warned by the automaker from refraining from such practices and have been asked to give customers a fair deal. Moreover, Ford has also added a new no-sale clause that disallows buyers from selling the truck immediately after purchase and making money. Ford anticipates a huge rush for the truck and hence has taken some stern steps to protect the truck from black marketing.
A Ford forum F150Gen14.com had posted a screenshot of the warning letter sent by Ford to its dealers but it was soon taken down. Ford had observed malpractices from dealers before the launch of the Bronco where they charged buyers heavy deposits and as a result, there were a lot of negative reviews all over about the company’s dealerships. To protect the F-150 Lightning from negative news, Ford has issued this memo against all its franchise dealers.
Ford in its warning letter states, “It has come to our attention that a limited number of dealerships are interacting with customers in a manner that is negatively impacting customer satisfaction and damaging to the Ford Motor Company brand and Dealer Body reputation. Examples of these negative interactions include demanding that customers who are already on the reservation list for the 22MY F-150 Lightning make additional deposits or payments. These actions are perceived as threatening customers by withholding their opportunity to convert reservations to orders.”
Franchise dealers typically tend to charge buyers deposits to reserve their vehicle and Ford noticed dealers demanding more money before they could sell the customers the vehicle. The franchise dealership agreement of Ford clearly states “ The Dealer shall conduct dealership operations in a manner that will reflect favorably at all times the reputation of the dealer, other company (Ford) authorized dealers, the company, company products, and trademarks and trade names used or claimed by the company or any of its subsidiaries.” The warning issued by Ford further states that dealers shall not indulge in any misleading, deceptive or illegal advertising and sales practices. Ford has strictly warned that any dealer indulging in malpractices will have their allocations of F-150 Lightning canceled and will only get the next model year’s truck after it is rolled out.
The warning memo also talks about scalper issues where people initially buy vehicles with high demands and later immediately sell them at a higher price and book profits. Ford has added a ‘No-Sale Provision’ clause that does not allow 2022 F-150 Lightning owners to sell it immediately after rolling it out of the dealership. Ford has asked its dealers to add this clause in the closing documents of the purchase and have the buyers agree on it. Ford had taken a similar measure when it rolled out the GT supercar.
The ‘No-Sale Provision’ document states, “Purchaser hereby agrees that it will not sell, offer to sell, or otherwise transfer any ownership interest in the vehicle before the first anniversary of the date hereof. Purchaser further agrees that Seller may seek injunctive relief to prevent the transfer of title of the vehicle or demand payment from the purchaser of all value received as consideration for the sale or transfer.” Long-story-short, once you buy the F-150 Lightning, you are supposed to live with the truck at least for a year no matter what. You cannot sell it or transfer the title to anybody else. Ford thinks that this will help the truck from scalpers and prevent potential buyers from paying excess to third parties.
And while the no-sale provision might look fair, the thing is you will be stuck with the truck even if it doesn’t meet your performance expectations. With the no-sale provision agreement, Ford wants you to stay with the truck for a year, whether you like it or not. Now that somehow doesn’t seem right, does it?
Interestingly, the warning memo doesn’t talk much about markups. Markups are necessary when there is high demand for the vehicle and they just help dealers and automakers manage supply and demand. However, many times we have seen dealerships charging buyers markups of almost half to double of the MSRP and that’s not what one would consider a fair deal. While Ford does not want its buyers to sell their trucks immediately, Ford should also try and bring in some cap on the markups charged by dealers. Dealers exploit buyers by charging heavy markups but Ford doesn’t seem in a mood to curb this issue. So if you’re planning to buy the F-150 Lighting, you may not be asked for a deposit but be ready to pay heavy markups or wait for a couple of years until the demand subsides.
So, even if the Ford warning letter looks like a step towards protecting consumer interests, it doesn’t entirely work in the buyer’s favor. Not allowing an owner to sell their vehicle for a year simply doesn’t make sense given the fact that the F-150 Lightning is a mass-produced vehicle. It did make sense when Ford had implemented the no-sale agreement on the GT supercar because it was a limited run vehicle but what’s the point of having it on a truck like this one? And Ford hasn’t commented about markups and there are good chances that you wait all year long for your truck to arrive and when it finally does, your dealer demands a few thousand dollars more. Ford needs to crack down on this as well if it truly wants to protect consumer interests.
