Ford Motor Co., in a move that the Detroit News says could damage relations with its United States dealers, plans to drastically reduce bonus cash incentives it pays to franchisees who meet the standards of a customer satisfaction program.

Steve Lyons, head of the automaker's Ford division, broke the news to dealers during a

satellite broadcast Nov. 14. According to several dealers who participated in the broadcast, Lyons said the company can no longer

afford to spend $700 million a year on bonuses for dealers who meet standards in the 2 1/2-year-old Blue Oval Certified program.

Under the program, dealers who meet customer service and other goals receive a refund equal to 1.25 percent of the invoice price of each car and truck sold -- or an average of $250 per vehicle. About 94 percent of Ford's 3,700 dealers qualify for the bonuses -- which can reach $1 million or more a year, according to the Detroit News.

According to the News, Lyons told dealers that Ford proposes to reduce the payment to 1 percent of invoice in April 2003, to 0.75 percent in April 2004, and to 0.5 percent in April 2005.

“NADA is surprised and disappointed by Ford’s announcement that it is very close to finalizing a plan that would dramatically reduce the incentive payments in the ‘Blue Oval Certified’ program,” said H. Carter Myers, III, chairman of the National Automobile

Dealers Association.

“Many Ford dealers, relying on the program’s promises, made major financial commitments to their facilities and other Blue Oval

requirements,” Myers said. “These commitments were undertaken with the understanding that the program, in its current format, would be in place for at least five years. We are concerned that the proposed financial changes could

seriously impair the working relationship between Ford and its dealers going forward.

“Ford has stressed that any changes to the certification requirements of the Blue Oval program would have to be approved by two thirds of its national dealer council,” Myers continued. “To date, that process has kept the program requirements reasonable and attainable, with well over 90 percent of the dealers taking the steps necessary for certification. We believe that this consensus approach ought to apply to any and all changes to the program, including the incentive payments.

“While we understand the importance of a financially healthy manufacturer, it is crucial that the ever-fragile dealer/factory

relationship be weighed heavily against any benefit that might accrue to Ford through a policy change that directly affects not only the dealer’s financial picture, but also the trust and loyalty of so many dedicated Ford dealers. Any decision that reduces resources for dealers to sell Ford products would be counterproductive.

“NADA urges the Ford leadership to reconsider this decision,” Myers said.