Ford CEO Farley cracking down hard on $3.6 billion dealer markups

Won't send dealers cars if they charge too much

Jim Farley isn't having it.

Ford CEO Jim Farley

Ford CEO Jim Farley doesn't want dealers overcharging for the company's electric vehicles. (Bill Pugliano/Getty Images)

During the automaker's earnings call Thursday night, the Ford CEO reiterated his commitment to eliminate the "unreasonable markups" some dealers have been charging amid the shortage of new vehicles.

Ford's head of sales, Andrew Frick, had previously sent a letter to dealers in January warning they could lose their F-150 Lighting allocations if they tried to get reservation holders to pay additional fees to place final orders for the upcoming electric pickup. 

But Farley said about 10% of the dealer network has been charging above MSRP on their existing models.

Ford F-150 Lightning

Deliveries of the electric Ford F-150 Lightning are set to begin this spring. (Ford)

"We have very good knowledge of who they are, and their future allocation of product will be directly impacted," Farley said.

Barclays analyst Brian Johnson estimated the value of the markups at $3.6 billion, or roughly half the increased revenue per unit Ford reported last year.

Ford also sells the e-Transit electric cargo van. (Ford)

Ford is particularly concerned about its electric vehicle sales, which compete with brands like Tesla and Rivian that don't used franchised dealers and are in direct control of their pricing.

"This is quite an important topic because the margins that we want to build to in BEV (Battery Electric Vehicle) are gonna be heavily dependent on a different go-to-market and customer experience," Farley said. 

"I won't go into any more than that, but this is a quite important lesson for us of the franchise system and the way we will manage going forward."


General Motors President Steve Carlisle also sent a letter to dealers last month informing them that they may lose their allocations of overbooked EVs and the upcoming Corvette Z06 if they are "tempted to profit" off the current shortage, The Detroit Free Press reported.