Ford Looking At Reducing Inventory, Adding More Customer Ordering

• Longer wait times over microchips giving brand chance to change system

• Lower inventories mean fewer incentives but could offer more choice for buyers

The inventory issues caused by the ongoing microchip shortage is giving automakers the chance to do things differently than they have in the past. Ford has also noticed that buyers are changing how they interact with dealers as a result of the pandemic, preferring more online communication and putting less importance on the test drive. So the company wants to use the new situation to move buyers toward ordering their new Fords instead of picking from a massive supply on the lot.

“We are really committed to going to an order-based system and keeping inventories at 50 to 60 days’ supply,” said CEO Jim Farley, Reuters reports. “I know we are wasting money on incentives, I don’t know where.”

Before the shortages, dealers would often stock hundreds if not thousands of vehicles both on the lot and in remote storage facilities. Enough for months of sales, to ensure that they could supply the specific vehicle a customer wanted (or at least the one the dealer wanted them to want) in days rather than weeks or months. With buyers suddenly spending more time online and becoming accustomed to waiting for vehicles to be produced, Ford thinks that lower inventories and more orders would benefit both.

Farley said that build-to-order would reduce the number of vehicles sitting in dealer storage and reduce the incentives required to move them. An easier order process for customers could also give them increased benefits including being able to more easily pick the colour and trim they want. It could also potentially make it easier for an automaker to produce enthusiast options that may not have made sense under the old way.