Ford to launch new digital platform to sell used vehicles
Ford Motor Co. is launching a new digital platform for used-vehicle sales, a move aimed at increasing the Dearborn automaker's market share as new online startups compete for the favor of consumers and investors alike.
The platform, branded Ford Blue Advantage, will allow Ford's 3,100-member dealership network to list and sell their used-vehicle inventory in a single digital marketplace. Ford executives announced the new offering during a three-day annual dealers' meeting conducted virtually earlier this week.
"Dealers recognize the growing competition in the used car space and that a combined effort with Ford and its dealers would provide a competitive edge," Ford spokesman Said Deep told The Detroit News.
The idea for the platform was developed in partnership with Ford's national dealer council, according to Tim Hovik, who serves on the council and owns the San Tan Ford dealership in Gilbert, Arizona.
One out of every three of the 3 million used Ford vehicles that change hands every year are sold by Ford dealers, according to the Dearborn automaker. Now the Blue Oval, under new CEO Jim Farley, sees an opportunity to grab a bigger slice of the market by offering the digital experience that many of today's consumers have come to expect. The decision comes as online used-car retailers such as Carvana and Vroom have promised consumers completely-online transactions, and as those companies have found favor on Wall Street.
"Carvana and Vroom have been extremely successful, particularly in attracting younger buyers," said Michelle Krebs, executive analyst for Autotrader.
Carvana has yet to turn a profit, but the Tempe, Arizona-based company known for its car vending machines delivered stronger-than-expected financial results in the third quarter. Its revenue of more than $1.5 billion was up 41% over last year; it reported sales of nearly 65,000 vehicles, up from just over 46,000 in the same quarter of 2019.
And the company with a market capitalization of more than $40 billion has seen its stock more than double from just under $91 per share at the start of the year to $228 at market's open Friday.
In recent interview during an automotive summit hosted by Reuters, Farley cited Carvana as an example of the opportunities created by digital retail platforms.
"All we have to do is look at the used car business. ... It's perfectly suited for the digital retailing world," he said. "You can see Carvana, you can see dealers, you can see the large public companies experimenting both in the (United Kingdom) and the U.S. with new used-car models."
The "common themes" he sees in those models, he said, is that they put much of the car-buying experience online, and make it doable for the process to be completed remotely.
Ford and its dealership network were able to improve on both of those things after COVID-19 restrictions forced many dealers to shutter their showrooms, he said. Now they're looking to expand on that: "We're really busy investing in mobile. We think that that's a big opportunity for us."
Dealers like Hovik are excited by the prospect of having a platform on which to market their entire pre-owned inventories, and by a promised expansion of Ford's program for certifying used vehicles.
"I think it's important that we acknowledge that we have more competition now in that space than we've ever had, and we need to be more forward-thinking in our approach to compete," said Hovik. "The thought is, if we can leverage the Ford dealers and make this as one and create a marketplace and a platform where consumers would be able to go and look at our inventory, we should be able to pick up share and hopefully pick up a piece of that pie."
Krebs deemed the new program a "smart move:" "There's a lot of money to be made in the used-car business."
It should also provide a more seamless shopping experience for consumers, and draw in more entry-level buyers: "It's a way to attract younger, more budget-oriented buyers to the brand," said Krebs.
The automaker says it will share more detail on the program in the first quarter of 2021. Ford also hinted this week about the addition to its portfolio of a new, "not-yet-named vehicle that will fill a whitespace in the market."
Hovik, the Arizona dealer, hinted that this move is aimed at offering a more affordable option for budget-minded buyers, which Farley has identified as a key component of his plan to grow the business.
"I can't comment too much, but I can say that those dealers that have had an opportunity to look at that plan and look into the future — the future's pretty bright," said Hovik. "We always talk about affordability, and I think the plan moving forward in our pipeline is going to address that situation."
The unannounced 2021 product would join several other new vehicles in one of the most significant portfolio changeovers in Ford's history. With its transition away from sedans nearly complete, the Blue Oval will begin delivering its first fully-electric vehicle, the Mustang Mach-E next month; is now shipping the redesigned 2021 F-150; is beginning to deliver the Bronco Sport; and next year will launch the two- and four-door Bronco SUV.
The company says it expects the Mach-E, Bronco, Bronco Sport, and the unannounced vehicle will outsell its "entire previous sedan portfolio" by this time next year.
The automaker announced in 2018 that it would cut sedans from its North American lineup, to the consternation of some dealers.
"There was a lot of concern when Ford made the announcement ... that we were going to move forward and move out of the sedan space, and move more to the SUV and truck space," said Hovik. "We kind of had to go through that transition the last couple years, where our sedans are one-by-one falling away but we didn't yet have their replacements."
Now, the Blue Oval is eyeing 2021 as a key period for executing on the strategy it has detailed, and for growing the business while hitting profit goals. In a statement, Mark LaNeve, Ford's vice president of U.S. marketing, sales and service, called 2021 "the year we have been building toward."
Dealers are ready for it, said Hovik: "The exciting thing about 2021 ... is finally our day in the sun is here. The products we've lost, now their replacements are arriving."