Dealers

As the public face of Ford within our communities, our dealers are key employers and contributors to local economies, especially in rural areas and small towns. At our current and expected future U.S. market share, however, we have too many dealers, particularly in metropolitan areas, which makes it difficult to sustain a healthy and profitable dealer base. To address this overcapacity, we are working with our dealers in efforts to downsize, consolidate and restructure our Ford, Lincoln and Mercury network in our largest 130 metropolitan market areas in the United States, to provide targeted average-year sales for Ford dealers of around 1,500 units and for Lincoln Mercury dealers of around 600 units. As part of these efforts, the number of dealers in our Ford, Lincoln and Mercury network in the United States has been reduced from about 4,400 at the end of 2005 to 3,550 at the end of 2009. (For more on our dealer restructuring, please see the Economy section of this report.)

Although we are reducing our dealer count in the United States to better match market demand, we are working to expand our network of dealers in markets where we have growth opportunities.

Dealer Diversity

Ford continues to lead the automotive industry in its percentage of minority-owned dealerships – with 215, or 5.6 percent, of our 3,871 U.S. dealerships.1 Over the past year, we restructured our Dealer Development (DD) Investment Program, which had provided funding for qualified candidates who dedicated themselves to a career in automotive retailing. As part of an effort to reduce the number of DD dealerships, we worked with 32 minority dealers so they could become private-capital owners through one-time discount buyout offers. We expected to complete another 10 minority dealer transitions by the end of the first quarter of 2010.

This year, we are restructuring our Minority Dealer Operations office to better support our minority dealer base. We are launching a Diversity Dealer Advisory Board for formalized relationships with Ford senior management. We aim to create minority retail career opportunities, enhance existing dealer profitability/viability, identify multicultural marketing opportunities, and improve existing education, training and community involvement.

Dealer Sustainability Program

In 2010, we launched a voluntary sustainability initiative for our Ford and Lincoln Mercury dealers to reduce their carbon footprints and improve the energy-efficiency of their dealerships. The goal of the "Go Green" Dealer Sustainability Program is simple: collaborate with dealers to implement cost-effective ways to improve the energy-efficiency of their facilities. We partnered with the Rocky Mountain Institute, a leading energy-efficiency organization, to pilot new technologies and architectural design principles.

Dealers who choose to participate will receive a comprehensive energy assessment from sustainability experts at Ford. After the assessment, Ford and the dealer will collaborate on energy-saving options available and will tailor a program to meet the specific needs of each dealer.

Ford dealer Brian Jarrett, president of Jarrett Gordon Ford in Winter Haven, Florida, for example, expects to cut his monthly energy bill by 80 percent by adopting all of the recommendations from the program. He plans to invest about $500,000 to change the 1,000-watt exterior light bulbs on his lot to 175-watt LED bulbs. He also plans to install energy-efficient interior lights, light sensors and low-flow toilets. He calculates that his energy savings will pay for his investment in six years.

Engagement with Dealers

Dealer relations is a key priority for us. The Dealer Council was created as a forum for open dialogue between Dealer Council members and Ford. Through the council process, dealers can voice their concerns, needs and ideas for working more productively as a team. To ensure that communication lines remain open, Dealer Council members also participate as members of National Dealer Advisory Panels, including the following:

• Customer Viewpoint Advisory Panel – customer satisfaction rating system, Viewpoint survey
• Product Committee – current and future product cycle plan, including lineup, design, styling and color/trim
• Order Complexity Task Force – reduction of vehicle ordering complexity, order guide simplification
• Marketing Dealer Advisory Board – vehicle packaging strategy, advertising creative, incentive programs
• Training Advisory Board – dealership employee training and recognition
• Parts and Service Manager Advisory Committee – fixed operations programs, including employee recognition/retention
• Commercial Truck Advisory Board – sales, marketing and product programs
• Service Marketing Advisory Committee – service marketing strategy and advertising
• Consumer Experience/Dealer Profitability Committee – enhancing the overall consumer experience and network profitability

The feedback gathered through these interactions has helped us develop various programs, change policies and enhance processes to improve customer handling and other significant elements of the dealers' business. Dealer priorities and Ford management responses are published annually, providing transparency to the discussions between the Company and its dealers.

In addition to the Dealer Councils and Advisory Panels, dealer satisfaction is measured in various ways, including the biannual survey of the National Automobile Dealers Association (NADA), as well as day-to-day interaction with our dealers. Approximately 54 percent of dealers provided feedback through the Summer 2009 NADA survey process, which showed notable improvement in many areas – including some of the highest ratings ever from Ford and Lincoln Mercury dealers. With respect to our Ford dealers, we saw significant positive changes in every overall score – something we are particularly proud of, given the difficult year the industry faced. Our dealers rated us more favorably in terms of franchise value, policies and procedures, and people. In fact, the Overall Index Ranking shows Ford dealers moved up 14 spots and are now included in the Top 10 list of automotive brands.