Ford
Motor Co. is improving the quality of its cars and trucks but, in an ironic
twist, the gains come at a price for dealers who have come to depend on
regular warranty work to keep their stores in the black.
Dealers know that having better vehicles will help them in
the long run, but they are looking to the automaker for help developing other
parts of their business to offset the loss in warranty business. This week,
Ford delivered with several new programs.
"We are working on giving them the tools to improve
their retail parts and service business," Ford Americas President Mark
Fields told the News.
"It's something I hear about from dealers," said
Curt Yun, director of global warranty analysis at Ford, who said the
automaker's warranty costs dropped $1 billion last year worldwide.
"That's more money for us to invest back into the business, back into new
products."
Dave Knittel knows the problem all too well. Things are quiet
these days in the service bays at Charlotte County Lincoln
Mercury in Florida, where he is the general manager. A little too quiet.
"Ford's cars don't
break down anymore," Knittel sighs. "You don't see the amount of
warranty work we used to."
In 2001, Knittel's store did $400,000 in warranty work. By
2006, that figure had dropped to $93,000. And last year looks to have been
even lower. Knittel remembers a time when he did as much as $100,000 in
warranty work in a month.
Ford and Lincoln Mercury dealers across the country are
reporting declines that, if not as steep as Knittel's, nonetheless represent a
substantial blow to their bottom lines.
Michael Kennedy, who owns four Ford stores in the greater
Philadelphia area, knows that Ford's improving quality is good news for his
business in the long run.
But he still has to
deal with a 40 percent decline in warranty business over the past two years.
"It's a double-edged sword," he said.
"Financially, it hurts a little bit. And it could push some of the
smaller dealers over the edge. But it also means we're going to do more repeat
business."
Kennedy also owns a
Chevrolet franchise. Warranty work is down there, too, he said, but not to the
same degree it is at his Ford stores.
You can reach Bryce Hoffman at (313) 222-2443 or bhoffman@detnews.com.