It's the dealers' show in Salt Lake City.
This time around, dealers say they will play a larger role in Ford Motor Co.'s market consolidation in Salt Lake City. In 1997, when a consolidation attempt failed, Ford was the ringmaster.
Eight dealers are selling 12 Ford, Lincoln, Mercury and Mazda dealerships to create a network of multibrand superstores and service centers in the Salt Lake City market, Ford said last week.
Salt Lake City dealers revived talks with Ford in the face of sweeping consolidation throughout the industry and an apparent flexibility by Ford in structuring the new deal.
The new venture would have $750 million in annual gross revenue and 1,500 employees, said Duff Willey, owner of Willey Ford in Bountiful, Utah, and CEO of the new enterprise. Willey is a third-generation Utah dealer whose dealership has been in his family for 49 years.
This time Ford is willing to take a smaller stake in the venture and to give dealers a freer hand in shaping the consolidation strategy, Salt Lake City dealers said.
But dealer attitudes also have changed.
Radical changes in automotive distribution have sparked growing acceptance of Ford's retail ideas.
'There is a totally different cooperative spirit, not only between Ford and the dealers but among the dealers as well,' said Richard Watts, co-owner of Tri-City Ford Inc. in American Fork, one of the dealerships in the venture.
The eight selling dealers are all thought likely to invest in the Ford Retail Network, Willey said. Dealers will hold the majority stake in the venture, he said. Dealers have not yet indicated if they will work for the venture, Willey said.
Precise percentages of ownership will not be known until due diligence proceedings are concluded and dealers determine how much to invest in the venture. Dealers also may choose cash or Ford stock.
Watts said dealers expect to have a larger, controlling stake in the venture this time.
In 1997, Ford carried a blueprint for consolidation into Salt Lake. Now, dealers will spend the next 60 to 90 days creating the consolidation strategy, dealers said.
'They came in a year ago saying this is the way it will be, accept it or reject it,' said Robert Garff, chairman of Garff Enterprises. Garff Enterprises owns three of the affected dealerships and holds a financial interest in Tri-City Ford. 'This time, they are more willing to manage it like a public corporation and listen to the dealers.'
For example, in 1997, Ford told dealers it planned to open five multibrand superstores in the market. Now, those running the new venture will determine how many superstores are needed and in what locations.
TAKING ANOTHER LOOK
But sweeping consolidation in automotive distribution also prompted Utah dealers to take another look at Ford's plan.
Just weeks after Ford left town in September 1997, the dealers met to discuss the future, Willey said.
Dealers began to envision a future in which they had to compete with publicly held companies enjoying economies of scale and selling vehicles at lower prices, he said.
'As we watched the industry evolve, we felt there was the potential for someone to come into the Salt Lake market, and we began to think about how do we protect our assets,' Willey said. 'It became clear Ford could be a good partner, so we invited them back.
'Over the course of the year, we became more comfortable with each other and with the concept,' he said. 'It allowed us to take some of the emotion away and consider it as a business decision.'
Said Garff: 'The industry environment was a major factor. It has changed in a year and is a driving force.'
The Salt Lake venture includes six Ford, three Lincoln Mercury and three Mazda stores, Ford said. In 1997, Ford proposed to consolidate 17 Ford, Lincoln and Mercury stores and to add additional Mazda outlets eventually.
In 1997, the plan included an area north of Salt Lake City that is not in the current venture.
Ford continues to negotiate with Garff to add Jaguar to the superstore mix. Garff said he holds six luxury import franchises and may need to retain Jaguar as part of his market strategy.
Ford also continues to negotiate with dealer Brent Butterfield of Butterfield Ford in Sandy, Utah. The dealership is in the heart of the new venture. The store is the largest-volume dealership at a single location in Utah and retailed 2,300 new units in 1997, Butterfield said.
'I'm in the middle. They will be on all sides of me,' Butterfield said. 'How can Ford be both my supplier and my competitor?'
Butterfield said he left the dealership Tuesday, May 12, to attend a Ford leasing seminar and returned Friday, May 15, to discover the deal was all but wrapped up.
'There were still issues to be addressed and questions that needed answers. I thought there was a dialogue still going on,' he said.
Butterfield and Willey said lines of communication remain open. But Butterfield said he may continue to operate independently the dealership that has been in his family for 61 years.