Ford Motor Co. may soon try a second radical dealership experiment in another market - even if Indianapolis dealers turn over their territory to the automaker.
Ford intends to try several new retailing formulas, Ford Division General Manager Ross Roberts said in a satellite address to Ford Division dealers Thursday, May 29.
Example: The company may create dualed Ford-Lincoln-Mercury megastores in another market, Roberts said. In Indianapolis, dealers have been shown a dealership rendering that shows sale areas for Ford, Lincoln, Mercury, Jaguar and Mazda. Ford's Indianapolis proposal does not call for such stores.
'We've got to go out and try different things,' Roberts said. 'We've been studying this thing for many months. We looked at a lot of different markets.'
MORE AREAS EYED
Ford is moving to take over retail distribution in selected markets, in part because the automaker wants to trim its dealer ranks, Roberts told dealers.
'We have too many dealers in a lot of our markets,' Roberts said. Ford wants to know 'what should our representation patterns be.'
Roberts didn't say where Ford will turn next.
'We are looking at other markets to see if it would work,' he said. 'We are looking at another one, maybe rather quickly. It is still in the deciding stages.
'I don't know if it will be two more markets. I don't know if it will be three more markets.'
One dealer asked if Miami is being targeted. Roberts said no. Another dealer asked if he should proceed with dealership relocation plans in Palm Springs. Roberts said yes.
No matter where Ford goes, the automaker will control the venture, Roberts said. 'Ford Motor Co. will have voting control of the corporation,' he said, adding that the percentage of dealer ownership in the venture may vary by state.
In Indianapolis, Ford wants to set up a Ford/dealer corporation to oversee sales and service in the entire market. 'In Indianapolis, we will own 49 percent of the operational corporation. But it will be controlled by Ford Motor Co.,' Roberts said. All of the affected dealers in a market must agree to the proposal or Ford will abandon the plan, Roberts said.
Ford has determined that the new company-controlled retail strategy does not violate federal anti-trust laws, he said.
'For the vast majority of dealers, there will be no impact whatsoever,' he said. 'We have no plans to go into small markets with a single point. We have no plans to go into great big markets.' Ford is targeting medium-sized markets with multiple points, he said.
In Indianapolis, Ford seeks to buy out 20 dealerships - 14 Ford, five Lincoln-Mercury and one Ford truck dealership that sells both light and heavy trucks, Roberts said. (Ford's pending sale to Freightliner Corp. of its entire heavy-truck operation is under government review.) Those stores will be replaced with five or six Ford points, two or three Lincoln-Mercury stores and five or six satellite service centers, he said.
A dealer asked Roberts what would happen if the Indianapolis experiment fails. His response: Ford would still succeed in having fewer points and would continue to learn the desirable number of dealerships for the market.
TOO MANY DEALERS
Like General Motors, Ford is grappling with an unwieldy dealer base. Ford Motor had 5,014 dealerships on Jan. 1, 1997, down 20 from a year earlier.
The company already has begun trimming its dealer ranks. Market-by-market, Ford Division is working with dealers to reduce its dealer count gradually. Ford expects most of the consolidation to occur in the mature markets of the Northeast and in rural areas.
Three years ago, Ford Division created a process for the company and its dealers to do a cyclical review of each market, studying trends in population, demographics and highways. The company has discovered that location is as critical as the right number of dealerships.
Indeed, Roberts said that in Indianapolis, Ford is willing to close existing stores and build new facilities to get the right location.
Lincoln-Mercury has said it will eliminate several hundred Lincoln franchises in the next few years. Lincoln had 1,621 dealers on Dec. 31, 1996. Lincoln-Mercury Division General Manager Jim O'Connor has met with Lincoln's least productive dealers, mostly Ford-Lincoln-Mercury stores in rural areas and small towns.
But even as the number of dealerships decreases, Ford wants to retain many 'points of contact' with its customers, said Robert Rewey, Ford group vice president of marketing and sales. That's why satellite service centers are crucial to the Indianapolis plan.