Ford takes write-down for investment in stores

DETROIT — As it works to shrink its retail network, Ford Motor Co. is writing off some of the investment it has made in U.S. dealerships.

The automaker booked a $108 million charge during the first quarter related to its dealership consolidation program.

Most of it was caused by a write-down in the value of dealerships in which Ford owns a stake, CFO Don Leclair said last week after Ford's first-quarter earnings announcement.

Ford has an ownership position in 82 dealerships. The company owns Manhattan Ford outright. The others are part of the automaker's dealer development program, in which ownership is shared with an entrepreneur. The program aims to give would-be dealers without adequate capital the opportunity to acquire their own stores over time.

This year Ford offered to buy out their partners' stakes in the 81 dealerships in the program. Most of the stores are represented by minority dealers. A Ford official said the automaker would close or reassign stores where buyouts were accepted.

Dealers at fewer than 10 of those dealerships have accepted the offer, Ford spokesman Jim Cain said last week. The stores remain open as Ford makes arrangements.

Leclair said last week that a portion of the $108 million charge also covered the cost of buying dealers out of their stores. In addition to dealer development buyouts, Ford has offered money to independent dealers to encourage them to close or sell their stores. Ford won't say how much it is spending on buyouts.

Ford trimmed 340 U.S. dealerships in 2006 and 2007, leaving it with 4,056 stores at the end of last year. Ford isn't giving hard targets for the number of dealerships it plans to cut. At one point, executives said they wanted to cut 600 stores but later said the number could be larger.

Ford doesn't anticipate significant future charges related to the dealer development program, a spokesman said last week. But the company expects costs will continue for the broader consolidation program. 

You can reach Amy Wilson at awilson@crain.com

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