Ford Motor Co.'s dealership consolidations in various cities, no longer viewed as innocent experiments, drew fear and criticism at the National Automobile Dealers Association convention in San Francisco Saturday, Feb. 6, through Tuesday, Feb. 9.
The son of a Ford dealer stood at Ford Division's make meeting and said, 'I thought we were your Ford Retail Network,' referring to the name of the consolidations.
His comment earned a hearty round of applause from the dealers who packed the meeting.
But not only Ford dealers were uneasy. Non-Ford dealers wondered how they would compete if their factories copied Ford.
In the consolidations, Ford dealers sell their stores to a new venture. The new company is owned by both the dealers and Ford. It cuts costs by reducing advertising and other expenses. The new organizations also must adopt no-haggle selling and other customer-friendly techniques.
The two operating now are in Tulsa, Okla., and San Diego. Three more will open soon.
FEAR, ANGER, CONCERN
Initial dealer reactions to the Ford Retail Network were fear, anger and, at the very least, concern. And it showed, according to the chairmen of the Ford and Lincoln Mercury national dealer councils. They insist that their divisions ranked at the bottom of NADA's dealer satisfaction survey - despite record dealer profits - because the survey was taken last summer when fear about the Ford Retail Network was at its peak.
Although some of that fear and anger was still evident at the convention, there were dealers who had adjusted.
One dealer's son had a positive attitude. Brad Richardson, 31, persuaded his father, Jerry, in December to sell their Oklahoma City Ford dealership to the Fred Jones Auto Collection as part of the Ford Retail Network. The store was opened by Brad Richardson's grandfather, Dub, in the 1940s. Fred Jones also is part owner of the Tulsa Auto Collection, which was the first consolidation.
The younger Richardson wanted to sell the dealership because he felt it would offer him and the dealership's employees more career opportunities as automotive retailing continues to change.
'I gave up my future opportunity to run my own dealership,' acknowledged Richardson. 'But I see a lot more opportunities being part of the Ford Retail Network.'
FEAR OF FAVORITISM
As vice president of business development, Richardson works in the new company's corporate office specializing in Internet, fleet and customer satisfaction activities. He likes being a specialist rather than a jack-of-all-trades. He particularly likes one-price selling and sees a jackpot in the potential economies of scale.
Some dealers who may be eyeing retirement said the Ford Retail Network offers them a viable exit strategy.
Although Ford assures dealers who are not part of the Ford Retail Network that it will play fair with them, dealers are skeptical.
Discrimination is only natural, said Frank Pohanka, owner of Pohanka Honda in Fredericksburg, Va., and chairman of the Virginia Automobile Dealers Association, which will oppose factory-owned stores for that reason. 'If two kids are crying and one of them is yours, which one do you help?' he asked.
Ford dealers agree with the factory on a key point: There are too many dealers, and some must go. A recent study concurs. It was conducted by A.T. Kearney Inc., a management consulting firm in Southfield, Mich., with the University of Michigan. The study, which was released at the NADA convention, showed that dealers and manufacturers are unanimous: There are too many dealers. Where their views diverge is on how to reduce the number.
A Danbury, Conn., Ford dealer, who asked not to be named, agrees with Ford that it has too many dealers. In fact, he said, the Ford Retail Network would be suited ideally to the extremely overdealered area of the Northeast, where he does business. But would this dealer sell to the Ford Retail Network?
'No way,' he responded. The Ford Retail Network is a good idea - for the other guy.