P&A Providers & Administrators
MenuMENU
SearchSEARCH

Lincoln Dealers Reluctant to Upgrade Their Stores

October 25, 2010
5 min to read



Lincoln dealers say they are reluctant to invest in pricey upgrades to their stores until Ford Motor Co. reveals more details about Lincoln's future lineup.


Ford is asking some dealerships to spend more than $1 million to remodel buildings and make other improvements to meet new standards that have yet to be spelled out, several dealer sources say.

Ad Loading...


"I say show me the money," said Larry Taylor, owner of Beau Townsend Ford-Lincoln Mercury in Vandalia, Ohio.


"They told us there would be no new products for about 24 months. I don't know how the stand-alone Lincoln dealers are going to make it, especially those dealers who have to spend $2 million on their upgrades."


Taylor is also a member of the Ford Lincoln Mercury National Dealer Council.


Ford plans to cut at least 200 of 1,200 U.S. Lincoln franchises, mostly in the top 130 metro markets, reported Automotive News. It wants to rehabilitate the sagging luxury brand with fewer, more profitable dealerships.


Ford has begun offering some Lincoln dealers cash - in one case about $1.5 million and in another just over $300,000 - to give up the franchise if they're not in a "preferred location" or won't make the recommended improvements.

Ad Loading...


"My facility is in excellent shape," one dealer said. "I plan on doing nothing here but selling Lincolns - unless Ford comes up with a lot more money."


Some dealers see tough negotiations ahead with the factory. Some are rejecting buyout offers as too low. And others wonder about the commitment to product. Ford has said it will spend $2 billion to upgrade Lincoln's lineup.

No to status quo

Lincoln spokesman Christian Bokich said the "status quo is not an option" when it comes to the changes Lincoln wants to see in stores. If the dealers decline to meet new standards for facilities and customer service, they can negotiate a price to give up the Lincoln franchise.


If the two sides can't agree on a price, the legal options become murky. But Ford's real leverage could come from getting tough with incentive money if dealers refuse to comply.


At an October meeting with Lincoln dealers, Ford said Lincoln stores not in compliance with upgrade requirements by fall 2011 would face limitations on incentive money.

Ad Loading...


The negotiations come at a time when Ford is paying down $27.3 billion in debt, and the company intends to play hardball in forcing dealers to make a decision. But some dealers insist that Ford can't make them invest or exit -- especially if the settlement offers are unreasonable.


Ford has started meeting individually with Lincoln dealers to outline expectations for facility improvements and to offer cash compensation to some who choose to leave. Some stores would require more extensive investment than others.


The dealers who have met with Ford say the automaker wants a decision before Dec. 31.

2 cases in point

In one major metro market, a dealer said Ford offered him about $1.5 million to relinquish his Lincoln franchise.


The dealer asked for anonymity because he plans to keep selling Lincolns. But the dealer says Ford's offer for Lincoln is "very low." He owns a large Lincoln-Mercury dealership and sells nearly 1,000 new vehicles a year. The dealer earns nearly $2 million in annual profits. Ford's offer, the dealer says, should be closer to $5 million.

Ad Loading...


"So they're just offering me one year of earnings," the dealer said. "For some stores that's fair because they're losing money, but for us, it's not."


The dealer rejected Ford's offer and says he will not comply with Ford's requested $2 million in facility changes.


A second dealer in the same market estimates Ford's desired remodeling would cost at least $1.5 million. Ford offered that dealer just more than $300,000 to give up the franchise.


"'Insulted' isn't a harmful enough word to describe it," the dealer said. "It's asinine. I'm getting my numbers together and going back. I'm not going to accept this."


A Lincoln spokesman says there is no formula for compensation offers because offers are made on an individual and market-by-market basis.

Ad Loading...


Ford does have a Mercury formula, though. It's based on the average number of new vehicles sold at a dealership from 2007 through 2009, times a per-unit amount that ranges from $1,500 to $2,500 depending on the dealer's average percentage of Mercury sales as compared with the store's total sales.


Some dealers are refusing Ford's exit offers and are hesitant to upgrade stores because Ford has yet to reveal its future Lincoln products. Dealers say they can't make a business decision without the facts.


At the October meeting, Ford told dealers it will take about two years to rebuild the Lincoln lineup and at least four years for many buyers to add Lincoln to their consideration lists.


Lincoln now sells three cars, two crossovers and a full-sized SUV. Supplier and company sources say Lincoln will add a vehicle based on Ford's global compact car platform.


As Ford continues to meet with Lincoln dealers, it will slowly roll out specifics on the dealership requirements, dealers say.

Ad Loading...


"They showed us pictures and renderings, but nothing specific," said Bob Tasca Jr., a Rhode Island dealer and head of Lincoln Mercury's dealer council. "A lot of these details will be rolled out over the next year. There will be a plan and some type of time line."

Specifics wanted

At the meeting, Ford told dealers that maintenance for four years or 50,000 miles, such as oil changes, will be included in the price for all Lincoln vehicles. Also, beginning Jan. 1, a new slate of owner privileges, such as providing the same Lincoln model loaner vehicle for Lincoln warranty work, better roadside service and a dedicated team of Lincoln customer service people will kick in.


Dealers also must agree to wash and detail every Lincoln vehicle at every service visit.


Ford is telling dealers that it would like a distinct look for Lincoln showrooms, but Ford and Lincoln franchises can share a rooftop.


Lincoln spokesman Bokich said: "The key to success is consistency."

Ad Loading...


But an East Coast Lincoln-Mercury dealer said: "They cannot force us to upgrade. So you'll get a stalemate that results in two classes of dealers -- the fools who upgrade and the ones who are at acceptable levels but haven't upgraded."


More Industry

Photo of gray SUV plugged into public electric-vehicle charger in parking lot
Industryby Hannah MitchellJuly 21, 2026

World EV Adoption Set to Grow

A new report says the segment, despite recent setbacks in some regions, is poised for acceleration as many countries look to reduce pollution.

Read More →
Bar chart of truck and SUV segments' weekly value change
Industryby StaffJuly 21, 2026

Black Book: Weekly Market Update

Wholesale automotive auction business stayed steady last week as bidders encountered lower prices, analysts observed.

Read More →
laptop with blue car on screen on a shopping website, Clear Costs Convert
Industryby Lauren LawrenceJuly 21, 2026

Pricing Transparency Drives Purchase Consideration

An annual study by JD Power found that clear pricing matters to consumers on automaker websites, so much so that it increases their purchase consideration.

Read More →
Ad Loading...
Bar graphic of used-car segment weekly change
Industryby StaffJuly 14, 2026

Black Book: Weekly Market Update

Used-vehicle market depreciation was the prevailing story in the wholesale market last week.

Read More →
Light-blue Fiat car parked on a sunny Chicago street
Industryby Hannah MitchellJuly 14, 2026

Smaller Is Looking Better

A growing number of Americans in the market for a new vehicle are opting for more affordable options, not waiting for market stability to bite the bullet.

Read More →
man sitting at desk using calculator with charts in front of him, to-go coffee cup on desk, rising and falling data chart in front
Industryby Lauren LawrenceJuly 14, 2026

U.S. EV Market Slowly Stabilizes

U.S. electric-vehicle interest is slowly stabilizing since a major dip in sales after last year's end of the federal EV tax credit, and hybrids remain the leading electrified power train.

Read More →
Ad Loading...
blue background, map of the world with connecting lights and an electric vehicle emblem in the middle
Industryby Lauren LawrenceJuly 8, 2026

Global EV Market Entering New Phase

Automakers are making investments to lower battery costs and optimize production to meet changing consumer needs.

Read More →
Bar chart showing week-over-week wholesale automotive price change
Industryby StaffJuly 7, 2026

Black Book Weekly Market Update

The holiday weekend, not surprisingly, put a drag on wholesale automotive activity last week, analysts observed.

Read More →
Photo of Honda CR-V SUV on two-lane road next to roadside trees
Industryby Hannah MitchellJuly 1, 2026

Auto Affordability in Context

Cox Automotive points out the complex circumstances that have led to eye-popping vehicle prices.

Read More →
Ad Loading...
Line chart of used-vehicle days to turn over past week
Industryby StaffJune 30, 2026

Black Book: Weekly Market Update

Automotive auction inventory increased last week, giving choosy bidders even more leeway.

Read More →