Ford Motor Co. is asking the owners of 17 dealerships in the Salt Lake City area to sell their stores so the company can retail Ford, Lincoln, Mercury - and eventually Mazda - vehicles under one roof.
Ford wants to replace the 17 dealerships with five multibrand superstores and 10 satellite service centers, according to sources familiar with Ford's plans. Three Ford executives met with the Utah dealers last Thursday, June 12.
Salt Lake City is the second step in Ford's radical retailing experiment in the United States. Ford is reacting to various challenges to traditional family-owned retailing, such as superstores and H. Wayne Huizenga's Republic Industries Inc.
On May 5, the company asked 20 Ford and Lincoln-Mercury dealers in Indianapolis to sell out. Ford wants to replace them with nine superstores - six Ford and three Lincoln-Mercury - jointly owned by Ford and the dealers.
The Utah dealers met alone for about 40 minutes after Ford's presentation last week. The consensus: If the vote were taken now, the plan would probably fail.
DIFFERS FROM INDY
'I don't think the Ford dealer body will go for the change,' said John Russo, owner of Westland Ford in Ogden, Utah. 'I think they are happy with the way things are.'
Ford will take step three in an as-yet-unidentified market. In the third market, Ford will seek a combination of the Indianapolis and Salt Lake City plans: one-brand superstores and multi-brand superstores, sources said.
Ford is seeking dealer consolidations in as many as eight markets in the United States and expects dealers in at least three to agree, the sources said.
Under Ford's Salt Lake City plan, the superstores will initially retail Ford, Lincoln and Mercury vehicles. But Ford plans to add Mazdas to the showrooms after the details of the pioneering arrangement are worked out with the Japanese automaker, dealers said. Ford holds a controlling interest in Mazda Motor Corp.
Ford's target area in Utah has four Mazda dealers: two in Salt Lake City, one in Ogden and one in Provo. Provo is the southern boundary and Ogden is the northern boundary in Ford's plan. Both are within 50 miles of Salt Lake City.
Mazda dealers were not invited to last week's meeting in Salt Lake City, which was led by Tom Wagner, Ford vice president of customer communication and satisfaction; Ross Roberts, Ford Division general manager; and Jim O'Connor, Lincoln-Mercury general manager.
However, one of the dealerships includes a Mazda franchise.
Mazda spokesman Fred Aikins said a company official was unavailable.
Jaguar, owned by Ford Motor, was not mentioned in last week's meeting, according to sources. But the luxury brand has been depicted in superstore renderings shown by Ford. The Utah territory has one Jaguar store.
Utah dealers will be offered a combination of cash, Ford stock or stock in the new venture - an arrangement identical to the Indianapolis proposal. Ford did not specify how much it is willing to spend on the Utah buyouts.
In Indianapolis, the automaker told dealers it is willing to spend $155 million on the venture. Ford will not confirm the figure. Ford and its dealers in Indianapolis are still discussing the proposal.
While the dealers would own a substantial share of the new corporations, Ford has said it would hold a controlling interest. Thus, a dealer who buys in would be an employee, not an entrepreneur.
'Dealers might think Ford's idea might be wonderful but they won't go for it,' said Russo, who is building a new $6 million Ford store. 'They want the dealerships to pass on to their families. This is a very conservative community with very strong family ties.'
Added another dealer: 'If it doesn't go here, that will be the No. 1 reason - family ties.'
Indeed, at least six of the dealers attended the Thursday meeting with children who work in the Utah stores.
'There was a lot of family in that room today,' said a dealer who attended the meeting. 'This is a community where sons grow up at the dinner table wanting to replace their father as a dealer.'
Ironically, the dealer hand-picked by Ford to head the Ford-controlled corporation is a third-generation Utah dealer - Duff Willey, owner of Willey Ford in Bountiful, according to sources familiar with the plan.
'I don't know how Salt Lake will shake out,' said an affected dealer. 'But I believe Ford Motor Co. - because they care about distribution in the 21st century - will go to extraordinary lengths to make these tests happen. I sense an urgency about what they want to do.'
Ford is moving to take over retail distribution in selected markets to battle the growth of publicly held chains, trim its dealer ranks and test retailing concepts such as large vehicle inventories, easy-to-reach service centers and no-haggle selling.
In a buying spree this year, Huizenga, who built the Blockbuster video chain, made Republic Industries into the largest dealer group in the United States. He also aims to build Republic's AutoNation USA, which specializes now in used cars, into a national retail brand.
'On one hand, we appreciate (Ford) being aggressive on what the future may be,' said Bart Warner, a third-generation dealer and owner of Warner Super Ford Store and Warner Truckland in Salt Lake City. 'But it has to fit in with what is best for our dealerships and our employees.'
Said Julie Kenley, owner of Ed Kenley Ford in Layton: 'I have a very good operation here, and I'm very protective of that.'
In addition, the lives of many dealers are woven into the community, she said.
Indeed, the Kenley dealership employees are sponsoring a summer concert series in Layton. 'The importance of that type of involvement may be underappreciated,' Kenley said.
Many of the reactions of Utah dealers are similar to those of the 20 affected Indianapolis retailers. But Utah dealers had one advantage last week.
'We had the advantage of knowing why Ford was holding the meeting,' said a Utah dealer.
'We had the chance to pace the floor, chug the Maalox and get over the anxiety stage.'