James Farley, the CEO of Ford, the world’s grandfather of automobile makers, told a group of analysts: “I'm not convinced we need public advertising.”
And he’s serious about that. Specifically he was talking about electric vehicles.
The thing is, they sell themselves. The industry can’t make enough of them. Ford doesn’t even need dealers. Online sales could do that.
Part of the success of the Ford Motor Company, apart from its assembly line manufacturing methods bringing cars in reach of the middle class, has been advertising.
This included a focus in the 1920s on freedom and reliability. The Model T could "Cancel Distance & Conquer Weather".
And Ford is still a serious advertiser with an annual budget of about $3 billion.
In Australia, $653 million was spend in 2021 on motor vehicle advertising,according to Nielsen Ad Intel's Top Advertising Report.
But electric vehicles could change that. In the US, Farley says Ford stopped advertising the Mustang Mach-E because it’s been sold out for two years.
“It's early days … but I'm not convinced we need public advertising,” he says.
The advertising cost per vehicle is $600 to $700 for Ford.
He had an epiphany when he studied Tesla. That pure electric vehicle company has superior profitability.
Ford estimates that it costs Tesla $2,000 less per vehicle than Ford spends on selling through its dealers.
“We think our distribution model today is about $2,000 per unit, more expensive than Tesla,” he says.
“About the third of that is inventory. We have all this inventory sitting around the dealers, in transit. Got to get rid of all that. Public advertising, another third.”
Farley, a former chief marketing officer, says the Ford model is messed up.
“We spend nothing post-warranty on the customer experience. And the promise on parts business, which historically has been very profitable, we only get maybe 10% or 20% of the customers coming back to us.
“It would be much better if we try to develop an ecosystem where 100% came back, and we gave them experiences and that's our marketing.”
So, if you buy a Ford Model e, the after sales service is the experience.
“After a year, we're going to give you a complete detail of the vehicle, check all your software is up-to-date … a complete birthday for your vehicle,” Farley says.
“We should be doing stuff like that instead of doing Super Bowl ads.
“If you ever see Ford Motor Company doing a Super Bowl ad on our electric vehicle, sell the stock.”
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