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Ford cancels plan to reduce customer-care payments to dealers

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#1 ·
December 17, 2002
BY BILL KOENIG
BLOOMBERG

Ford Motor Co. canceled a plan to cut payments to dealers who meet customer-service goals after dealers complained the move would worsen relations between the second-biggest automaker and its retailers.

The automaker's flagship Ford division told dealers last month it might cut the payments 60 percent by 2005. Dealers objected, saying the payments should continue through 2005 as planned. Ford said today that it will make the payments through March 31, 2005. After that, Ford will put in place a customer-satisfaction program that doesn't include cash payments, the company said in an e-mailed statement.

The program, called Blue Oval Certified, "has helped Ford make significant improvements in customer satisfaction and dealers have been rewarded for doing so," Ford division President Steve Lyons, said in a statement.

Ford, which lost $5.45 billion last year, spends $700 million annually on the payments and sought to reduce the expense to cut costs. The Dearborn, Michigan-based automaker has said improving relations with dealers is a priority since 2001, when it backed away from a plan to operate its own stores. That plan angered dealers who didn't want to compete with their supplier.

"This probably pleases the most number of people," said Michael Kennedy, owner of a Philadelphia Ford dealership and is chairman of Ford's dealer council.

Under Blue Oval Certified, Ford paid dealers a 1.25 percent rebate for each car or they sold. To qualify for the rebates, dealers must train employees in customer service and about 94 percent of Ford dealers participate. When Ford started Blue Oval Certified in 2000, it raised prices to dealers by 1 percen
 
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#2 ·
Ford Cancels Plan to Reduce Customer-Care Payments to Dealers

Dearborn, Michigan, Dec. 16 (Bloomberg) -- Ford Motor Co. canceled a plan to cut payments to dealers who meet customer- service goals after dealers complained the move would worsen relations between the second-biggest automaker and its retailers.

The automaker's flagship Ford division told dealers last month it might cut the payments 60 percent by 2005. Dealers objected, saying the payments should continue through 2005 as planned. Ford said today that it will make the payments through March 31, 2005. After that, Ford will put in place a customer- satisfaction program that doesn't include cash payments, the company said in an e-mailed statement.

The program, called Blue Oval Certified, ``has helped Ford make significant improvements in customer satisfaction and dealers have been rewarded for doing so,'' Ford division President Steve Lyons, said in a statement.

Ford, which lost $5.45 billion last year, spends $700 million annually on the payments and sought to reduce the expense to cut costs. The Dearborn, Michigan-based automaker has said improving relations with dealers is a priority since 2001, when it backed away from a plan to operate its own stores. That plan angered dealers who didn't want to compete with their supplier.

``This probably pleases the most number of people,'' said Michael Kennedy, owner of a Philadelphia Ford dealership and is chairman of Ford's dealer council.

Under Blue Oval Certified, Ford paid dealers a 1.25 percent rebate for each car or they sold. To qualify for the rebates, dealers must train employees in customer service and about 94 percent of Ford dealers participate. When Ford started Blue Oval Certified in 2000, it raised prices to dealers by 1 percent.
 
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