By Alysha Webb, Editor and Publisher
James Hackett, new CEO of Ford Motor Co.
Mark Fields is out as CEO of Ford Motor Co. and Jim Hackett is in. The change at the top won’t have much impact on the value of Ford dealerships in the near term, but it may accelerate a longer-term trend that will impact dealerships’ whole business model.
“Ford stores values will be just fine,” Mark Johnson, president of MD Johnson Inc. tells Automotive Buy Sell Report.
Buyers may use the management change as a reason to argue for discounts on Ford stores, he says.
“It will give buyers a lot of fuel to start demanding that dealership values are falling or going to fall,” says Johnson.
But, “in fact, they won’t and it won’t make any difference to the value of the store.”
Fields abruptly retired after only three years at the top. His tenure has been marked by the automaker moving cautiously into areas that have become a new focus in the auto industry – electric vehicles, car sharing and autonomous driving technology. At the same time, Ford’s stock price has fallen by 40 percent since 2014.
The Ford board replaced Fields with Hackett, whom Bill Ford haled as an agent of change. Hackett helped create Ford Motor’s Smart Mobility unit. Formed last year, it is tasked with moving Ford Motor into the new areas. Now, Hackett must figure out how to do that on a much larger stage.
Poor communication may also have played a role in Fields’ demise.
While Fields may have had a clear plan to deal with the near-term problems and the longer-term changes in the auto industry, that wasn’t clearly communicated, including to Ford dealers, says James Taylor, managing director at The Presidio Group, which advises dealerships on mergers and acquisitions.
Some of his clients who own Ford dealerships weren’t clear what Fields’ long-term plan for the company was, says Taylor.
Fields “wasn’t sharing the vision,” says Taylor. “The life of a CEO is a perpetual road show.”
The value of Ford franchises is very solid, he adds.
While that may be true for now, the appointment of someone who is charged with keeping the company up-to-date on the latest car-buying trends could accelerate changes in the retail experience that are already occurring.
Those changes will shrink the number of dealerships required by all automakers, including Ford, Sam Abuelsamid, senior research analyst at research firm Navigant tells Automotive Buy Sell Report.
In the mid- to long-term, Navigant sees a transition into a world of shared autonomous mobility. That will mean a decline in the total number of vehicles sold, he says.
“For dealers, a lot of their business is going to go away,” says Abuelsamid.
Navigant sees the manufacturers as operating the personal mobility networks themselves, which will leave a role for dealerships, but not as many.
“Some fraction of the current dealer network could transition into being the service network for these mobility businesses,” says Abuelsamid.
That may be true at some point, Blake Seabaugh, a tax manager at accounting firm Perkins & Co. in Portland, Ore., tells Automotive Buy Sell Report. For now, however, Ford dealerships values are safe.
“Hackett’s leadership could move the needle on dealership valuations down the road,” says Seabaugh. “But we don’t foresee any significant impact on transactional values by Fields’ exit in the near term.”
