Ford is backing away from a proposal to drastically cut payments made to United States dealers under a customer satisfaction programme in the face of a flood of complaints, the Detroit News reported.
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The Detroit News said that Ford Division president Steve Lyons last month told dealers that the car maker could no longer afford to spend $US700 million a year in bonuses for dealers who meet standards in the 2 1/2-year-old Blue Oval Certified programme.
Qualified dealers receive a refund equal to 1.25% of the price paid by the dealer for each car and truck sold, averaging $250 per vehicle, but Lyons proposed cutting the payments by 60% over three years, the Detroit News said.
After hearing from hundreds of annoyed dealers, the newspaper said, Lyons last week proposed keeping the programme as it is until March 2005 and then ending it altogether, a proposal that allows Ford to fulfill its original commitment to keep Blue Oval in place for five years.
Ford is likely to make a final decision on the incentive programme by the end of the year, the Detroit News said.
The Detroit News said the majority of US Ford dealers opposed Blue Oval when it was introduced in 2000 but many have now come to rely on the cash bonuses. About 94% of the Ford’s 3,700 dealers qualify for the bonuses which can reach $1 million or more a year, the newspaper added.
The Detroit News said Ford hiked the price dealers pay for cars by 1% when the Blue Oval programme was launched in April 2000 but would likely rescind the price increase in 2005 after the programme is ended.
According to the Detroit News, Ford claims customer satisfaction with dealer sales practices has increased 26% and satisfaction with dealer service has increased 23% since the Blue Oval programme was introduced.
