As Ford Shuts Down Sedan Models, Dealers Brace for Trouble

By Douglas A. McIntyre Updated Jan 12, 12:20AM EST · Published Apr 29, 7:28AM EDT

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As Ford Shuts Down Sedan Models, Dealers Brace for Trouble — © courtesy of Ford Motor Co.

Car dealers often carry the financial consequences of decisions manufacturers make about model line, model distribution and model survival. Among the best examples of this is when General Motors Co. (NYSE: GM) shuttered Pontiac, Hummer, Oldsmobile and Saturn almost 15 years ago as the largest car company struggled to survive. Ford Motor Co. (NYSE: F) is in a related struggle, although not life-threatening. It will kill the Taurus, Fusion, C-Max and Fiesta. Some of its dealers will be left with only two car brands: the Mustang and new Focus Active.

Perhaps Ford thinks dealers will be happy with the sport utility vehicles they have left, which include the Expedition, Flex, Explorer and Edge, and the best-selling vehicle in the United States, the Ford F-150. However, dealers will have less foot traffic as consumers buy competitive products to the ones Ford has killed. Chevy, Honda Motor Co. Ltd. (NYSE: HMC) and Toyota Motor Corp. (NYSE: TM) will all get new dealer traffic. To add insult to injury, some of Ford’s disconnected models sell well and have brought dealers some degree of income, both from sales and service. Fusion sold 43,136 units in the first three months of this year. Fiesta sold 12,298. The discontinued models sold 65,000 units through the January to March period.

Undoubtedly, Ford’s math in sunsetting these models makes sense, unless gasoline prices rise above $4 as they did in 2008. It could be persuasively argued that will not happen again, but oil prices are rising, and geopolitical trouble and OPEC strategies could push prices higher. The average price of a gallon of regular gas is pushing toward $3.

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Ford dealers have little choice in the matter. Some could add Japanese brands. It would be a way to bolster sales, and a sort of revenge against Ford. Likely they were not queried about the model discontinuations, which makes the decision insulting.

Ford could not expect to make its decision without fallout. In terms of dealer reaction, that fallout could be worse than expected.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.