Buy now, get the chip later? Ford could start shipping unchipped vehicles to dealers

·5 min read

Ford Motor Co. could start shipping unchipped vehicles to dealers around the country, sometime this year — vehicles that cannot be sold to consumers immediately but something to fill dealer lots that are growing barer by the day, the automaker told the Detroit Free Press, part of the USA TODAY Network, on Monday.

When back-ordered semiconductor chips become available, Ford dealers would then insert them into components in cars that customers have selected and send them home immediately and eliminate an additional wait related to post-parts shipping.

“We’re discussing this idea with our dealers so we can gauge interest. We're assessing and it's still very fluid," Ford spokesman Said Deep said. "This is a scenario we are exploring and we want to be prepared should we decide to implement, which is why we are talking to our dealers now.”

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Shipping would not happen right away. If the company moves forward on the plan, shipping could happen before year's end, Deep said.

Dealer technicians are skilled at installing parts and components, a job they do with recall orders and repairs all the time. So this latest development allows Ford to get vehicles to dealers sooner, and allows the final touches to be done on-site, Deep said.

Ford would hold the title until the vehicle is complete, so this strategy does not allow Ford to record vehicles as sold any sooner than normal, as the industry continues to navigate financial challenges amid the supply chain nightmare.

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However, customers would take custody of vehicles sooner.

“Customers can see a vehicle on their dealer’s lot and when the component (that requires a semiconductor chip) is available and installed, the customer can take delivery. This works out in a way that's positive for everybody," Deep said. "The customer doesn't wait for the truck to get shipped. This allows for another quality inspection after a vehicle has left the factory."

He confirmed that the Ranger, which is built in Wayne, Michigan, is the first vehicle that would be shipped unfinished.

While Ford is still working through the details, it also is exploring adding other vehicle lines, including the F-150.

Thousands of unfinished F-Series, which are currently sitting on lots around the country including Detroit, Louisville, Kentucky, and Kansas City.

'Touch, smell and feel'

Ford is holding thousands of F-Series awaiting parts, while General Motors and others have chosen to build and sell vehicles without features impacted by the supply chain.

The chips, which are made mostly in Asia, are in tight supply since COVID-19 disrupted the supply chain and the ability for people to work in factories, after demand for them rose during the COVID-19 pandemic as people bought laptops and other personal electronics that also use them. The chips go into a variety of car parts.

“We are exploring a number of different options as we work to get our customers and dealers their new vehicles as quickly as possible," Deep said. "Dealers are excited about having vehicles in their hands."

Rhett Ricart, seen here on August 14, 2019 at the Ricart Mega Mall in Columbus, Ohio is standing beside a 1977 Ford Bronco and 1955 Ford Crown Victoria. He said on July 19 that dealers are eager for inventory and happy to have techs install semiconductor chips when they arrive.
Rhett Ricart, seen here on August 14, 2019 at the Ricart Mega Mall in Columbus, Ohio is standing beside a 1977 Ford Bronco and 1955 Ford Crown Victoria. He said on July 19 that dealers are eager for inventory and happy to have techs install semiconductor chips when they arrive.

Dealers say they want to get vehicles into showrooms to create excitement and give people something to experience, and this latest idea creates a new solution to ongoing problems, dealers told the Free Press.

"It's brilliant, actually. We've been doing recall work on vehicles forever," said Rhett Ricart, owner of Ricart Ford in Columbus, Ohio.

"I think we have 3,100 Ford dealers and thousands of technicians, all certified. To do the actual installation of the chip is as easy as it gets when it comes to these types of repairs," he said.

Meanwhile, as dealerships await the missing part, technicians can begin quality reviews that include removing plastic packaging and testing electronics and programs that are required prior to releasing a vehicle to a new customer, all work that can take hours after a vehicle is purchased, Ricart said.

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"We can install a chip in under an hour," he said. "This is the right thing to do. Get the vehicles to dealers. Let the customer touch, smell and feel the vehicles. And as these chips come in, we'll install them," said Ricart, who also sells Nissan, Hyundai, Kia, Mitsubishi and Harley-Davidson motorcycles.

"Dealers have customers trying to buy vehicles and don't have anything on the lot to see, " said Ricart, past chairman of the National Automobile Dealers Association.

Jeoff Burris, founder of Plymouth-based Advanced Purchasing Dynamics, said when he bought his 2018 F-150 from Bill Brown Ford in Livonia, inventory was great.

"I called Tony (Juncai) and he had my two top choices ready for me when I arrived. I looked them over, made my decision and was done,” Burris said. “Now, the trucks with missing chips are held by Ford while dealer lots are empty. Putting the trucks on dealer lots makes them accessible to potential truck buyers and salespeople. The buyer picks their truck, the chip is installed and everyone is happy.”

2021 Ford F-150 pickup trucks fill private parking lots around Detroit Metro Airport. This image was taken on December 11, 2020.
2021 Ford F-150 pickup trucks fill private parking lots around Detroit Metro Airport. This image was taken on December 11, 2020.

While dealers are eager to get vehicles into the hands of customers, this whole situation is unchartered terrain that creates uncertainty.

"They’re going to run out of places to put these vehicles after awhile," said Chad Wilson, general manager of Wilson Ford in Saginaw and Midland Ford. "You've got a car here to show a customer that's real, and there's a lot to be said for that."

But what happens if a hurricane hits a dealership and vehicles inside that are still owned by Ford are damaged, what's the liability?

These are details Ford is ironing out, to make sure all bases are covered, Deep said.

Meanwhile, dealers are watching and waiting.

"At the end of the day, having cars on the ground is better than bare asphalt," Wilson said.

This article originally appeared on Detroit Free Press: Ford chip shortage fix: Get vehicles to dealers, add component later