Lincoln Commitment Program Creates Potential for Competitive Disadvantage
The Lincoln Commitment Program (LCP) was first announced by Ford’s Lincoln Division in 2018. Due to the tremendous push-back from both dealers and Dealer Associations as to the facility requirements of the LCP, Ford withdrew the Program. The LCP has not been reissued with very little substantive change. The Program pays 5.75% of MSRP per car sold to dealers who meet certain requirements. By February of 2020, dealers will have to commit to providing an exclusive Lincoln facility or lose 2.75% of the MSRP per vehicle (i.e. paying only 3.00%). The 2.75% incentive would equal approximately $2,000 on a $70,000 vehicle.
BSM has been retained by a number of Lincoln dealers as well as state and metro Dealer Associations to assist in notifying Ford that the new LCP continues to violate state franchise laws. Thus far, Lincoln is responding to these letters with the usual “we don’t agree with your interpretation of the franchise law” and “the program is fair and reasonable” response.
In most states, the motor vehicle franchise laws provide that a per car incentive must be practically and reasonably available to all dealers. Most Lincoln dealers cannot financially justify providing an exclusive facility and, thus, the LCP incentive is not practically and reasonable available to those dealers. In some states, the motor vehicle franchise laws go a step further and strictly prohibit the payment of different per car incentive amounts to different dealers no matter what contingencies are placed on receiving the incentive.
Ultimately, Lincoln dealers are going to have to make the decision to enforce their rights under the state franchise laws in order to force Lincoln to revise the LCP to contain incentives which are reasonably attainable by all dealers.