Ford bonus system changes

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The Independent Online
Evans Halshaw, the Solihull-based car dealership group, yesterday signalled a fundamental shift in the way the Ford car giant offers bonus incentives to dealers.

The change, which took place last month, means that for the first time in many years Ford dealers will not receive cash bonuses based on their monthly sales targets, a tactic widely blamed by experts for encouraging showrooms to "pre-register" large numbers of cars to boost the statistics artificially. Instead dealers will receive annual bonuses and will be discouraged from under-cutting rival Ford agents outside their franchise area.

Alan Smith, Evans Halshaw's chief executive, welcomed the change, though industry sources have blamed it for the huge drop in Ford sales in February to just 16.4 per cent, compared with 21 per cent a year ago. Mr Smith said: "In the longer term we will see improved profits margins. It's a very positive change." The company has 14 Ford dealerships.

Evans Halshaw yesterday said it plunged to losses last year of pounds 9.3m, down from profits of pounds 13.6m in 1995, following exceptional charges totalling pounds 20.4m. Last year Evans announced a management shake-up, including Mr Smith's appointment, and a restructuring programme which involved the closure or sale of 19 dealerships, reducing the number to 76. The cuts cost the company pounds 11.3m, while goodwill write-offs accounted for further provisions of pounds 8.8m. Underlying profits excluding these one-off costs fell from pounds 13m to pounds 11.1m.

The group's total car sales fell by more than 8 per cent last year to 36,000, though used car sales on a like-for-like basis increased by 3 per cent. Mr Smith blamed the reduction on UK manufacturers cutting the number of cars sold at heavy discounts to company fleet buyers.