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A mystery solved

5K views 42 replies 22 participants last post by  FTEfan 
#1 ·
I'd been puzzling over the apparent discrepancy between the FPV build numbers and the sales figures bandied about by a couple of recent articles.

A bit of a delve into the detail of the VFACTs numbers shed a little bit of light on the situation and showed that total sales to the end of August amounted to some 600 odd units while total builds were somewhere around the 1100 mark.

The intervening circa 500 units are sitting in dealer holding yards, which means that they pass the Ford definition of sold (invoiced to a dealer) but not VFACTs definition (registered).

To put those numbers in persepctive, the range has been seliing around 100 units per month (average) over the 6 months since builds commenced in earnest. Thaqt means that the present stock levels equate to about 5 months of sales assuming that the same level of activity can be maintained, which is probably unlikely given that there was some early pent up residual demand that had to be met.

Recent numbers suggest that the sales level might be closer to 70-80 units per month which then turns that stock level into a 7 month proposition.

Now for those who think (probably correctly) that the silly old fool is dribbling again , let me put this into the light of harsh reality with a little lesson on how the system works.

Ford sell the vehicle to your local dealer at an invoice price somewhat less than the RRP and the difference between the two represents their profit. Obvious.
The dealer finances the vehicles held in stock through a thing called a floor plan, which basically means that they incur interest charges on the value of the cars in the holding yard.

Eventually, the costs associated with holding a vehicle (interest, damage, etc.) reaches the point where the margin is reduced to zero and the dealer starts to actually be in a negative position - that is the car owes them more than they are going to get for it.

Sometimes, on slow moving models (like Cougar or T-Series) the manufacturer will choose to offer the dealers additional sales incentives or floor plan subsidies to minimise those potential losses but on other occasions they will just leave the dealer network holding the (dead) cat.

So what's my point?

Simply this. When dealer stock levels are high and subsidies or incentives seem unlikely, our friends in the dealer network usually opt to off load those vehicles at a price closer to invoice price than RRP. In extreme circumstances they are willing to cut their losses to move the offending items rather than continue to incur floor plan costs and then we see the discounting behaviour that was a bit of a trademark in the middle and latter portion of the AU. As a matter of business survival, once one starts, the rest tend to follow.

This situation is potentially exacerbated with the FPV range for two reasons.

Firstly, the dealer margin on the vehicle is below the level that is generally considered viable and secondly the model build mix appears to be not quite matched with the actual buying patterns especially with the ute.

Let me draw a hypothetical - the numbers aren't the real ones but they will do to show the point.

The dealer is invoiced for the Widget GTR-x (which has an RRP of $60,000) at $57,000 thus leaving a margin of $3,000 (ignoring the GST implications at this point). The dealer has a recommended delivery charge of $1,200 for a total potential margin of $4,200 which is reduced by the commission paid to Sammy Salesman (say $100) to $4,100.
The dealers floor plan is financed at the very kind rate of 6.5% and thus the interest charge on the Widget GTR-x amounts to $308.75 per month. In the real world there are other costs that are applied to the vehicle whilst held such as showroom running cost, minor damage, salesperson retainers etc. but we will ignore these for this simplified exercise.
Now for the simple maths.
At $308.75 per month, the floor plan will eat up the entire margin in a little over 9 months - in the real world that is likely to be far less - but before that happens the DP, sales manager, bean counter or the cleaning lady will make the decision to discount the thing to get rid of the liability.

So here is my crystal ball gaze into the not too distant future, assuming that nothing is done to remedy the situation.

1. GT and GT-p's will be on the market at between 5-7 % off RRP. Pursuits a bit more.
2. Demand will further slow as new product in the rest of the Ford range cannibalises some sales.
3. Resale values of GT/GT-p will suffer accordingly. 2nd hand Pursuit buyers will have to choose between a Pursuit and a Big Mac with their loose change.

Of course, I'll be happy to be proven wrong but I have history on my side. All we can do is prepare ourselves for the inevitable shock at trade in time and enjoy the great vehicles we have in the mean time.

Cheers
Russ
 
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#2 ·
Well, I agree on the Pursuit thing. But more because the POS I bought ain't worth half of what I paid for it and that's the facts.

However, you are neglecting the other means that dealers have to make profit such as advertising incentive/rebate etc etc which quickly will add up to double the suggested profit when looking at RRP and invoice.

As for your final statement I wish I could enjoy myself in the meantime......but I'd have to have a car to do that wouldn't I?
 
#4 ·
I think you're jumping the gun a bit. Ford claim they have a heap of future orders for FPV's and can't build enough of them. Your comments are pure speculation and nothing else. I'm sure resale values will be very good for such in demand products. The dealers are offering virtually no discounts on them so why claim that they will be. You should wait and see what happens in the future before you say things like that. I think Ford have learned their lessons about resale values after the AU fiasco and seem to be doing everything they can to keep resale values up as this will help them to sell more cars to the fleets.
 
#5 ·
Dumb question of the day......
If there are 600 odd FPVs lurking around the dealers why then:
a) there is still a bloodly long wait tp get one. (I know everyone wants domething different but ther are not THAT many colors or options)
b) the ex demo journo cars sold wholesale at nearly new cost.
c) none of the dealers up here have ANY floor stock.
d) every time the local guy gets one it sells immediately (except for the pre ordered ones that are already sold)

N.B. "dealers up here" = Gladstone, Hervey Bay, Maryborough, Noosa, Kunda Park & Caloundra
 
#6 · (Edited)
Resale Value = Good?

What a friggen Joke! not at your post but at the concept of Ford recently holding a resale value!

Even a BA xr8 with over 10,000 on the clock aint worth more than 42k

Imagine with a couple more thousand on the clock, or the influx of the BA2 into the market.

Im sure Ford would be happy to keep potential buyers, and turn them over, but where do they get off thinking that in 12 months a buyer has to pull upto 20K out of their pocket to upgrade to a series 2 or 3?

I think Russell has summed it up nicely, Ford have NOT learned their lesson, good for some - the potential buyers of 2nd hand vehicles, bad for the fools like myself who jumped on the bandwagon and purchased the series 1.


The last of the Tickford range, the best looking and performance car they could manage, has more than 20k missing NEW still gathering dust
 
#8 ·
bossxr8 said:
I think you're jumping the gun a bit. Ford claim they have a heap of future orders for FPV's and can't build enough of them. Your comments are pure speculation and nothing else. I'm sure resale values will be very good for such in demand products. The dealers are offering virtually no discounts on them so why claim that they will be. You should wait and see what happens in the future before you say things like that. I think Ford have learned their lessons about resale values after the AU fiasco and seem to be doing everything they can to keep resale values up as this will help them to sell more cars to the fleets.
That's the beauty of opinions - we're all entitled to them.
As it happens I agree that things are fine at the moment as they have been meeting the backlog of demand. However the (natural) sales slowdown is to be expected in much the same way as Monaro was and as long as production matches demand there won't be a long term issue.

However, I have little confidence that any lessons have been learnt and even less confidence in the claims that FPV are holding substantial forward orders - in fact I know they don't. Further, the issue isn't whether there are people waiting (which they are) because they are waiting because they want specific combinations that haven't been built. The issue is still with the built and unsold cars sitting on dealer floor plans plus the added pressure that will be applied to those units with some of the upcoming product.

Still, time will prove me right or wrong either way and I'm not too fussed which.

Cheers
Russ
 
#9 ·
I am not all that experienced here but I offer two conundrums/reasons that these are not just gathering dust

1. There are in excess of 60 odd FPV dealers ? As I understand it they speculate and take 2-3 for test drive / promo purposes and as they sell them get replacvement ones in return.

2. If the dealers were really concerned about stock turnaround why dont they flog the pants off them in the Newspaper car sections. You hear diddly squat about FPVs in these papers dealer ads.

If there was a stock pile problem why arent the dealers addressing this?

As I said I may be naive or just hoping my new GTP coming tomorrow is going to hold its value a little better than the prophet of doom would suggest
 
#10 ·
Russ,

Do you think that Fords branding strategy will also exacerbate this situation. The move from Tickford/FTE to FPV was done for obvious reasons, but how is the company supposed to build up any brand loyalty and subsequent higher resale values (not withstanding the GT and XR badges) when it keeps on changing its damn identity?
 
#12 ·
From my own experience when I was shopping for a car I had in fact ordered my FPV but pricing was becoming an issue. Ford/FPV were holding firm at RRP with no deals. A walk past a HSV dealership (I am familiar with their stance given I bought a few in my time) saw a Y Series Maloo R8 offered for a far more attractive price than the FPV.

If I wasn't a Ford nut it would have been a far harder choice to stay with the FPV. There's a balance there but it has not been met yet. They want RRP on one end but there's still no return on the resale/trade as I found out trying to get out of my Pursuit.

Let's put it this way. I offered to cash up $10k towards the lease payout with 3500km on the clock and I had no interest from the dealer even though the deal was I'd order another Ford.

Enjoyment of ownership is what it's about - not the finances. However as I said I see no sunshine, only rain.
 
#13 · (Edited)
The FPV’s and HSV's of this world are beautifully engineered versions of vehicles that were intended for general mass market use i.e. Falcon and Commodore. This is general knowledge I know and so does the secondhand cosumer market.

Take FPV out of the equation for a minute and let’s look at HSV as the bench mark. Do they, or do they not have a similar problem when in comes to short term trade in value? The idea of purchasing a reengineered version of a $30k car (commodore) to the point of increasing its purchase price retail to over double of its domestic sibling has got to end in tears doesn't it?

HSV's may have slightly better resale than the Fords due to stronger market demand, but that does not change the fact that a $60 + Commodore will drop between $10k and $15k within the first 12 months and their buyers accept this as a reality. Why would FPV be any different? Even BMW have this problem due to a market association that the M3’s come from the 318i’s etc. :doh:

As a comparison if we take a vehicle that is purpose built for the $60+ supercar market and does not have a domestic sibling in the $30k market i.e. Nissan 350Z, what are they valued at 12 month down the track? I can tell you one thing, its not $10k or $15k less and more like $5k (source www.carales.com.au) One major reason for this is because there is no consumer association with that vehicle being a worth much less in the secondhand market. At least not for a while anyway.

Long term, however the tables may turn as the HSV’s and FPV’s of this world become collectable.

Can anyone see my point here?

IMO the HSV’s and FPV’s in this world are great cars for those who wish to enjoy what they have and hold on the them.

Cheers,
Colville
 
#15 ·
Well its confirmed

A purchased xr8 in April for 55k is only worth 42k as of this morning.

I vow never again to purchase a series 1 model, or a FPV vehicle.

This is a friggen joke...... I think between my xr and T series and AU2 XR8 i have lost over 45k.

I agree with AP, if I wasnt a ford nut, and if I didnt have that relationship with my dealership... then Ford you would have lost me this morning to the dark side......
 
#16 · (Edited)
laminge said:
Well its confirmed

A purchased xr8 in April for 55k is only worth 42k as of this morning.
QUOTE]


laminge, as a general rule most government fleet buyers work on a depreciation of 22% of the RRP including on roads over 12 months as a trade value to dealers. This is for most cars, Ford, Holden and the like. Going to the dark side will not help you at all.

That means that it would be fair to assume that if you bought a car for $55k on road, over 12 months time your car should be valued as a trade in at $42,900.

My point, you’re too early for trade in as you would also get around $42k trade in when your vehicle is 12 months old.

To all, this information may prove helpful when purchasing any new car. If you intend on selling it early, this is what you need to keep in mind at all times.

Cheers,
Colville
 
#18 ·
To those of you who say the dark side aren't better, look at the values of the Ford V8s versus the Ford XRTQE-Turbo. There are dealers who are now beginning to try and sell of a backlog of XR8s at XRTQE-Turbo prices. That hardly helps XR8 buyers who paid over $55k does it?

I see some wholesale prices through an industry friend an VY SS is killing BA XR8 by on average more than $4k+ despite the XR8 costing more when new.

Ford didn't listen - it hardly looks good when a TQE Falcon costing $44k outruns its V8 sibling costing $51k.

Laminge and I had a phone discussion today and it's only the blue blood that keeps us buying Ford. And from where I sit even that's being poorly tested given I've got no damn car and no one from FPV will even call me and tell me what's going on!
 
#20 ·
Aussie Pete said:
I see some wholesale prices through an industry friend an VY SS is killing BA XR8 by on average more than $4k+ despite the XR8 costing more when new.
QUOTE]

That’s another issue all together, but I understand your both upset.

The SS does not have a VY turbo V6 hot on its butt in terms of consumer perception of value for money. Only the SV8, which is priced much further away and is obviously nowhere near as well appointed.

I think it would be fair to say that most people could see that the XR8, although a great car has been positioned in between two other models that have its measure in one form or another. That said, people that buy an XR8's now do so because that is their personal preference and not necessarily because it theatrically a better car. Unfortunately what this does is make the value of them fall faster than the Turbo and SS due to consumer demand and perception of value in the second hand market.

Many discussions on this topic were made on this forum regarding the value of the XR8 compared to the Turbo and most agreed it was a personal choice. The SS does not have a sibling rival that offers better value for money. Many Holden loving folk would not buy a Turbo Ford regardless of its technical value and are not willing to step down so far as to purchase an SV8. That means the SS will retains its value some what better than an XR8 to the private market, but the depreciation of 22% as a trade in still applies in most cases. The trade in value of a 6-12 month VY SS is still around $40k.

Holden have the ‘XR8’ problem with the SV8, which is seemingly a better place to have it. On the other hand this does pose the question of how serious Ford is in supporting the XR8 as a product. Maybe the Turbo is now considered their new king and the XR8 it built purely for the die-hards or as an initiative to go all the way to FPV.

Food for thought

Cheers,
Colville
 
#21 ·
Hey

I still ended up walking away with 2 new fords today

I still have a pasion for Ford

My opinions of the vehicles I will be buying may change over the rest of my purchasing life.

I may even buy a FPV in future, but they can not depend on people like me in future!

but thats my opinion..........
 
#22 ·
laminge said:
Hey

I still ended up walking away with 2 new fords today

you purchased 2 new fords??
what the?
 
#24 ·
Shit what are you guys babbling about.....

If you want to get good resale value get a Hyundai with a 6 stack CD.
Lots of young chicks like to buy them secondhand so you will get most of your money back.

I don't care if the GT-P is worth bugger all in a couple of years. I bought it to play with coz I liked it.

It is 5 months old and has almost 20,000 km on it. It will have over 100,000 when I sell/trade/retire it in a couple of years.

I was offered bugger all tradein on my last car, a AU2 Ghia so I just kept it as a spare.

Life is far too short. I am going to die one day and ALL of the money I could have saved by being a wuss will be of no use to me at all.

My wife of 20 years died about a month ago and when I look at all the stuff we didn't do because it would not have been financially a good idea I get really pissed off. e.g. She always wanted a BMW, just a cheap one, instead I got her a Mondeo. Pretty stupid eh?

It is only money........ there are many more important things in life.
 
#25 · (Edited)
Sorry to hear that flappist. Certainly puts everything back into perspective.

I guess to some it is a disappointment, but there are far worse ways to lose money through depreciation, like buying a boat.
 
#26 ·
flappist said:
Life is far too short. I am going to die one day and ALL of the money I could have saved by being a wuss will be of no use to me at all.

My wife of 20 years died about a month ago and when I look at all the stuff we didn't do because it would not have been financially a good idea I get really pissed off. e.g. She always wanted a BMW, just a cheap one, instead I got her a Mondeo. Pretty stupid eh?

It is only money........ there are many more important things in life.
never a truer word spoken mate
its just a shame it has to come to situations like these to make us realise this sometimes

my condolences
 
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