Ford Motor Co. acknowledges that its plan to consolidate dealerships is a full-blown retail strategy and is no longer an experiment.
Various factors, including electronic commerce, a desire for more brand control and 'competitive pressures,' prompted the change, Ford Division President Jim O'Connor said in a memo.
He sent the memo to Ford dealers before last week's National Automobile Dealers Association convention.
'I must admit we have not communicated clearly or consistently our Ford Retail Network initiatives and strategy,' O'Connor said in the memo.
Under the strategy, the company consolidates all Ford Motor Co. dealerships in a market into a single entity. The venture is owned and operated jointly by the company and investing dealers.
'Ford Retail Networks, originally thought of as learning laboratories, were going to provide Ford Motor Co. an opportunity to learn about distribution costs and various retail marketing concepts,' O'Connor said in the memo.
A GLOBAL RETAIL STRATEGY
In January, Robert Rewey, Ford group vice president of marketing, sales and service, said the Ford Retail Network consolidations are a global retail strategy. Dealerships in the United States, Canada, Britain, Germany, Australia and New Zealand already have been consolidated.
In the United States, the consolidated ventures operate under the Auto Collection retail name. Auto Collections are operating in San Diego and Tulsa, Okla. Three more will begin operations this quarter.
Ford has altered its original plan, launched in May 1997, because of several changes, O'Connor said:
A desire to retain control of the Ford brand and minimize distribution costs.
Electronic commerce. O'Connor did not elaborate in the memo.
Competitive pressures' and 'aggressive' solicitation of company dealers by public corporations.
NO SPECIAL TREATMENT
In the months since the launch of the Ford Retail Network strategy, Ford reshaped its brand strategy, clearly defining identities for Ford, Lincoln, Mercury, Mazda, Jaguar and Aston Martin.
Ford expects the consolidations to improve brand images at the dealerships. At the same time, it expects operating efficiencies within the consolidated ventures to reduce vehicle distribution costs.
Markets consolidations will proceed 'always on a voluntary basis,' O'Connor said in his memo. He also maintained that Ford Retail Networks 'will be treated exactly like every other dealer.'
Independent dealers have worried that consolidated entities will receive preferential treatment because the factory is a partner in those ventures.