Ford Motor Co. dealers are looking nervously at Ford's decision to enter the collision-repair business.
But Ford says its purchase of a stake in a repair-shop chain may eventually boost dealer body-shop business and increase the company's sale of crash parts.
Ford has purchased a minority stake in Indianapolis-based Collision Team of America, a privately held collision-repair company with 15 locations in Indiana, Texas and Illinois.
Ford eventually could sell crash parts directly to independent repair shops, dealers argue. Currently, only dealers can sell Ford Motor collision-repair parts.
Ford now will be competing with dealers in the repair business, dealers also said.
But Ford sees the partnership as a route to a larger share of the huge body shop market.
A LINK WITH DEALERS
Ford expects Collision Team of America to expand nationally. As it does, Ford wants to link the small, entrepreneurial company with Ford, Lincoln and Mercury dealers.
Eventually, Collision Team of America may operate or even own body shops at Ford Motor Co. dealerships in many markets, said Mike Jordan, executive director of the Ford Customer Service Division in North America.
Ford wants to capture more of the collision-repair business that is now dominated by independent body shops, Jordan said.
'We want to learn if there is a better model for the collision business,' Jordan said. 'We will take the learning and see what is transferable to our dealers.'
Jordan would not reveal Ford's investment. The company will not be licensed to use Ford trademarks, Ford said.
As vehicle quality improves and warranty repairs shrink, Ford's Customer Service Division has been trolling for new sources of profitable income.
The collision-repair industry generates $27 billion in annual revenue, said John Loftus, executive director of the Society of Collision Repair Specialists.
Collision Team of America, which was founded in July 1997, does not rank with the nation's largest repair chains.
'Ford would like to grow their crash-parts business,' said Sam Pack, secretary of the National Automobile Dealers Association, Ford NADA line group chairman and the owner of two Ford dealerships in Texas.
'They feel one way to do that is to have a better understanding of the collision and body shop business,' he said.
Dealers eventually could benefit from the new deal, Pack said. If Ford increases its sale of crash parts, dealership revenues also should rise.
For that to happen, Ford must maintain a current policy that allows collision parts to be sold only through franchised dealers, Pack said.
'The biggest fear of most parts people is that sooner or later Ford Motor Co. will sell parts directly and circumvent dealers. Many dealerships have a big wholesale business,' said Jack Steinkamp, founder of the Ford Parts Managers Association, a group of 18,000 Ford, Lincoln and Mercury parts and service managers.
'Why isn't Ford focusing their energy and resources on improving the parts and collision business at dealerships rather than creating competition for its dealerships?' Steinkamp asked.
Collision Team of America conducts business in Indiana as Church Brothers, in Illinois as Tatman Collision Centers, and in Texas as Alamo Body and Paint.