Read the attached article about Ford dealerships needing to invest in equipment to repair the new aluminum F-150.
Read the attached article about Ford dealerships needing to invest in equipment to repair the new aluminum F-150. 1. Compute the total cost of the equipment that Ford recommends dealers buy: 2. If a dealership is looking for a payback of no more than 3 years, how much annual cash flow must the dealership generate from this investment? 3. If a dealership requires a 10% return on its investments, and is looking at a 3 year time frame, how much annual cash flow must be generated from the investment using the net present value method? Present Value of $1 Period 2 3 4 8% 10% 12% 14% 16% 18% 20% 0.926 0.909 0.893 0.877 0.862 0.847 0.833 0.857 0.826 0.797 0.769 0.743 0718 0.694 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.681 0.621 0.567 0.519 0.476 0.437 0.402 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.583 0.513 0.452 0.400 0.354 0.314 0 279 0.540 0.467 0.404 0.351 0.305 0.266 0233 0.500 0.424 0.361 0.308 0.263 0.225 0.194 Present Value of an annuity of $1 8% 10% 12% 14% 16% 18% 20% 0.926 0.909 0.893 0.877 0.862 0.847 0.833 1.783 1736 1.690 1.647 1.605 1.566 1.528 2.577 2.487 2.402 2.322 2.246 2.174 2.106 3.312 3.170 3.037 2.914 2.798 2.690 2.589 3.993 3.791 3.605 3.433 3.274 3.127 2.991 4.623 4.355 4.111 3.889 3.685 3.498 3.326 5.206 4.868 4.564 4.288 4.039 3.812 3.605 5.747 5.335 4.968 4.639 4.344 4.078 3.837 6.247 5.759 5.328 4.946 4.607 4.303 4.031 090 8 Because aluminum dust causes corrosion on steel, the section of a body shop that works on the aluminum Ford F-150 must be isolated from the rest of the shop. Ford dealer Ed Jolliffe has been calculating the cost of getting his body shop ready for the 2015 aluminum F-150 pickup and finds the numbers sobering. "It's going to cost anywhere from $50,000 to $100,000. That's a hell of a chunk," said Jolliffe, who owns Gorno Ford in Woodhaven. "I don't think it's for the faint of heart. All the small shops won't be able to touch it." He figures it could take five to seven years to recoup that investment, which he deems essential to stay in the body shop business. Ford Motor Co. is targeting dealers with large body shops as it tries to organize the F-150 aluminum body repair system. For those dealers, the investment will exceed the $30,000 to $50,000 that Ford has cited for a single repair bay. Like Jolliffe, many dealers say the cost could be $70,000 or more. Ford's effort is creating the Ford National Body Shop Network of dealers and independent shops capable Ford shies away from the term "certified" of large structural repairs. The network, whose members have the proper tools and training, will be Ford's conduit for insurance company repair referrals. Ford wants to assure customers and insurance companies that collision repair rates will be competitive with rates on the current steel-bodied truck. Those dealers and independent repair shops who invest in equipment and training can hang a Ford National Body Shop Network sign in their showrooms and will be listed on a body shop locator on ford.com. By year's end, Ford wants a network of about 1,500 aluminum-capable body shops, including its 460 dealerships and more than 1,000 independent shops. A dent in dealer budgets Equipment that Ford recommends dealers and independent shops buy to repair the aluminum F-150: Rubberized curtains to isolate work area: $1,678 MIG (metal inert gas) welder: $7,994 Fume extractor: $3,329 Dust collection system: $10,125 Aluminum spot weld station: $7,950 Aluminum rivet gun: $7,729 Collision shops need separate tools and work areas for aluminum to prevent aluminum dust from getting on steel parts, which causes corrosion. Ford officials say most dealers still will be able to repair routine fender benders. Dealers are not required to join the network. "We're looking for the guys who are really in the body shop business," said Paul Massie, Ford collision marketing manager, speaking of the prime candidates for the repair network. The $30,000 to $50,000 amounts to a starter kit for aluminum repair. It includes a rivet gun, metal inert gas welder, hand tools, a vacuum cleaner for aluminum dust and curtains or walls to separate the steel and aluminum work areas. That's necessary because aluminum and steel do not mix. If minute amounts of aluminum dust end up on a steel body part in a paint shop, galvanic corrosion occurs, eventually causing rust like spots to bleed through the paint. Mitchell Dale, owner of McRee Ford in Dickinson, Texas, says the investment is going to be higher than he had expected - about $70,000. "But it's something we've got to do," he said. "For shops like us, we're not looking at just one workstation. Down the road, I see us having two or three workstations. Jim Farley, Ford Motor Co.'s executive vice president of global marketing, sales, service and Lincoln, said Ford is about halfway to the goal of 460 dealership body shops. Ford wants the dealer network to be in place by Oct. 31. Independent shops have until year's end. The 2015 F-150 is scheduled to arrive in showrooms late this year. Read the attached article about Ford dealerships needing to invest in equipment to repair the new aluminum F-150. 1. Compute the total cost of the equipment that Ford recommends dealers buy: 2. If a dealership is looking for a payback of no more than 3 years, how much annual cash flow must the dealership generate from this investment? 3. If a dealership requires a 10% return on its investments, and is looking at a 3 year time frame, how much annual cash flow must be generated from the investment using the net present value method? Present Value of $1 Period 2 3 4 8% 10% 12% 14% 16% 18% 20% 0.926 0.909 0.893 0.877 0.862 0.847 0.833 0.857 0.826 0.797 0.769 0.743 0718 0.694 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.681 0.621 0.567 0.519 0.476 0.437 0.402 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.583 0.513 0.452 0.400 0.354 0.314 0 279 0.540 0.467 0.404 0.351 0.305 0.266 0233 0.500 0.424 0.361 0.308 0.263 0.225 0.194 Present Value of an annuity of $1 8% 10% 12% 14% 16% 18% 20% 0.926 0.909 0.893 0.877 0.862 0.847 0.833 1.783 1736 1.690 1.647 1.605 1.566 1.528 2.577 2.487 2.402 2.322 2.246 2.174 2.106 3.312 3.170 3.037 2.914 2.798 2.690 2.589 3.993 3.791 3.605 3.433 3.274 3.127 2.991 4.623 4.355 4.111 3.889 3.685 3.498 3.326 5.206 4.868 4.564 4.288 4.039 3.812 3.605 5.747 5.335 4.968 4.639 4.344 4.078 3.837 6.247 5.759 5.328 4.946 4.607 4.303 4.031 090 8 Because aluminum dust causes corrosion on steel, the section of a body shop that works on the aluminum Ford F-150 must be isolated from the rest of the shop. Ford dealer Ed Jolliffe has been calculating the cost of getting his body shop ready for the 2015 aluminum F-150 pickup and finds the numbers sobering. "It's going to cost anywhere from $50,000 to $100,000. That's a hell of a chunk," said Jolliffe, who owns Gorno Ford in Woodhaven. "I don't think it's for the faint of heart. All the small shops won't be able to touch it." He figures it could take five to seven years to recoup that investment, which he deems essential to stay in the body shop business. Ford Motor Co. is targeting dealers with large body shops as it tries to organize the F-150 aluminum body repair system. For those dealers, the investment will exceed the $30,000 to $50,000 that Ford has cited for a single repair bay. Like Jolliffe, many dealers say the cost could be $70,000 or more. Ford's effort is creating the Ford National Body Shop Network of dealers and independent shops capable Ford shies away from the term "certified" of large structural repairs. The network, whose members have the proper tools and training, will be Ford's conduit for insurance company repair referrals. Ford wants to assure customers and insurance companies that collision repair rates will be competitive with rates on the current steel-bodied truck. Those dealers and independent repair shops who invest in equipment and training can hang a Ford National Body Shop Network sign in their showrooms and will be listed on a body shop locator on ford.com. By year's end, Ford wants a network of about 1,500 aluminum-capable body shops, including its 460 dealerships and more than 1,000 independent shops. A dent in dealer budgets Equipment that Ford recommends dealers and independent shops buy to repair the aluminum F-150: Rubberized curtains to isolate work area: $1,678 MIG (metal inert gas) welder: $7,994 Fume extractor: $3,329 Dust collection system: $10,125 Aluminum spot weld station: $7,950 Aluminum rivet gun: $7,729 Collision shops need separate tools and work areas for aluminum to prevent aluminum dust from getting on steel parts, which causes corrosion. Ford officials say most dealers still will be able to repair routine fender benders. Dealers are not required to join the network. "We're looking for the guys who are really in the body shop business," said Paul Massie, Ford collision marketing manager, speaking of the prime candidates for the repair network. The $30,000 to $50,000 amounts to a starter kit for aluminum repair. It includes a rivet gun, metal inert gas welder, hand tools, a vacuum cleaner for aluminum dust and curtains or walls to separate the steel and aluminum work areas. That's necessary because aluminum and steel do not mix. If minute amounts of aluminum dust end up on a steel body part in a paint shop, galvanic corrosion occurs, eventually causing rust like spots to bleed through the paint. Mitchell Dale, owner of McRee Ford in Dickinson, Texas, says the investment is going to be higher than he had expected - about $70,000. "But it's something we've got to do," he said. "For shops like us, we're not looking at just one workstation. Down the road, I see us having two or three workstations. Jim Farley, Ford Motor Co.'s executive vice president of global marketing, sales, service and Lincoln, said Ford is about halfway to the goal of 460 dealership body shops. Ford wants the dealer network to be in place by Oct. 31. Independent shops have until year's end. The 2015 F-150 is scheduled to arrive in showrooms late this year
