Ford Motor Co. dealers are making lots of money with popular products in a booming American market. So why are they so unhappy?
It's a three-letter answer: FRN. The Ford Retail Network stores were the talk of last week's NADA convention. Dealers for Ford, Lincoln Mercury and even other automakers are edgy over this intrusion of the factory into retailing.
Ford dealers fear that Ford's Auto Collection joint ventures will drown the privately owned dealership structure that has been the backbone of American car sales for almost a century. They fear that Ford will show favor to its own retailers.
Well, let's all calm down.
Whether or not the FRNs in Tulsa, San Diego and elsewhere succeed, Ford has a right to experiment. Remember, nobody is holding a gun to the heads of the dealers who are selling to the FRNs. It's the market at work. Ford honestly wants to see what happens when the dealers of all Ford brands compete only with other automakers' brands, not with each other. And Ford wants to test whether standardized systems for customer handling will increase customer happiness.
If the critics are right, they have nothing to fear. The FRNs will fall of their own weight. If the FRNs succeed, it's the marketplace at work.
And no Ford dealer should worry that Ford will favor the FRNs. A neighboring, competing Ford dealer who suffers discrimination on allocation, for example, would soon own Ford after winning a lawsuit.
Certainly, there is no history of successful factory-owned or -controlled stores. There is a long history of successful automotive sales and distribution by the franchised dealer. We suspect that within five years, Ford will sell out its share of the FRNs, having learned some lessons. Everything is up for grabs today. Dealers' fears are understandable. But ultimately the customer will determine which business model wins.