Ford Tests Ways to Offer Users Real Prices Online

FRAMINGHAM (08/17/2000) - Prospective vehicle buyers at will find all the gee-whiz features that the $162.5 billion automaker can buy. But one critical component of the car-buying experience - and perhaps the most important - is still missing: the ability to get a final purchase price.

Local franchise laws in the U.S. and Canada prevent automakers from selling vehicles directly, but two new pilot projects from an e-commerce group jointly developed by Ford Motor Co. and Austin, Texas-based Trilogy Software Inc. offer more accurate pricing data and allow consumers to configure vehicles online.

In both online programs, consumers still buy vehicles from dealers, not the manufacturer. But the programs have ushered in new levels of cooperation between the automaker and its dealers, whose relationship has long been marred by conflict, said Robert DeSisto, an analyst at Gartner Group Inc. in Stamford, Conn.

The Ford/Trilogy project "is novel from the standpoint that Ford is providing their channel, in this case the dealer, with technology that [dealers] could not normally afford to improve upon customer relationships," said DeSisto.

If Ford successfully expands the test projects, it will give many customers the ability to buy cars online based on individually negotiated contracts with the dealers, which will streamline the whole order process, DeSisto said.

The first pilot project, Ford Fleet Online (, allows business customers who buy fleets of vehicles to configure and buy them at prices they have already negotiated with dealers. Last week, Dearborn, Mich.-based Ford expanded the program from eight dealers and fleet customers to about 50 of each.

The next phase will enhance the ordering process, such as giving both dealers and customers an opportunity to review and receive an electronic invoice, letting customers leave special instructions with their orders and storing invoices for later viewing. The Windows NT-based online ordering system connects to Ford's back-end vehicle scheduling system, allowing customers to place orders directly with the automaker. It also allows dealers to set up pricing formulas for individual fleet customers, who are prompted with the negotiated price as they configure their vehicles online.

Ford customer Michael D. Sims, vehicle fleet operations manager at the Church of Jesus Christ of Latter-day Saints in Salt Lake City, said the system gives accurate prenegotiated pricing and saves time.

"Rather than go to [an] outside source to spec out a vehicle, we can now do that in one place online," said Sims. "Another advantage is that I'm placing the order as I spec out the vehicle. I don't have to worry about it falling into a black hole, because it's integrated with Ford's system."

On the consumer side, Ford Canada's BuyerConnection pilot program in Ottawa (www2. allows consumers to configure vehicles online and buy from one of the two-dozen local dealers that are participating in the program.

As with existing auto manufacturer sites, consumers can see the manufacturer's suggested retail price (MSRP) for the vehicles. But they can also get a special "e-price" that's based on Ford's negotiations with the 24 dealers who participate in the program, according to Jeff Morton, e-consumer manager at Ford Motor Company of Canada Ltd.

"The e-price is the Internet transaction price," said Morton. "It's a fair price [designed] to save the customer the hassle of going through a long negotiation, because a lot of customers don't like to do that."

For example, the MSRP on a base model Ford Taurus is listed as $27,276 (Canadian), while the e-price is given as $26,039. Consumers are then provided with the contact information for local dealers participating in the e-price program.

More than 200 consumers per week have configured vehicles online, but online sales have been minimal, Morton said. The pilot program includes only 24 of the 565 dealers in Canada and offers pricing on just three vehicle lines, but it may expand. It has connected many prospective customers to dealers, however, which might facilitate real-world sales, he said.

Volkswagen of America Inc. launched a pilot program in May that allowed customers to configure specialty Beetles and negotiate pricing with dealers online using electronic message boards. However, that program offered MSRP pricing as opposed to purchase prices.

Tom Cornellier, Internet retail strategy manager at Ford, said these pilot projects are helping to train dealers to interact with a new breed of Internet-savvy and informed consumers. "It's very frictionless on the Web . . . so it's a matter of getting dealers comfortable with these consumers," he said.

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