Ford will further shrink its 'oversized' European retail network

PARIS -- Ford's dealer network in Europe is still "oversized" and will have to shrink in coming years, a top company executive said.

"Overall our dealer network is oversized, we have to restructure," Martin Sander, head of Ford's passengers cars business in Europe, told the Automotive News Europe Congress here on Wednesday.

Ford is exiting market segments such as small and compact cars in Europe as it focuses on SUVs and crossovers that have higher profit margins, reducing its need for a large dealership network that was set up to deal with volume sales.

"Our ideal network is smaller than today but still large enough to serve our customers everywhere in Europe," Sander said. Some markets already have the right network in place to sell smaller volumes, while others "still have work to do," he said.

"We have discussed this with the dealers. They know what is coming," Sanders said.

In the U.K., Ford’s largest European market, the U.S. automaker shed 20 dealerships in 2022 and 25 in 2021 according to data compiled by Car Dealer. Ford still has the U.K.'s largest dealer network.

In July Ford will build the last ever Fiesta, once the automaker's best-selling model in the region and for a long time the No.1 small car in Europe by unit sales.

Its Fiesta factory in Cologne, Germany, has been revamped to build full-electric cars based on Volkswagen Group's MEB platform that underpins VW models such as the ID3 and ID4, starting with the Explorer compact electric SUV.

Ford plans will sell only full-electric passenger cars in Europe by 2030.

Ford's European market share fell to 3.7 percent in the first four months, down from 4.5 percent the year before, according to data from industry group ACEA. Ford's market share has more than halved in recent years from 8.2 percent in 2006.

Agency sales model 'the future'

Ford is introducing a so-called agency direct sales model in Europe, which means moving from wholesaling cars to dealers to selling directly to the customer. The dealer becomes a sales 'agent' paid a fixed percentage of the sale price.

Ford started the move to the agency model in the Netherlands early this year, ahead of implementing it across Europe "over the next years," Sander said.

"I'm deeply convinced agency is the future" of auto retailing, he told the Congress.