Ford Motor Co. and General Motors are jumping into the retail automotive business in a big way. Meanwhile, dealers are trying to get the automakers regulated out of the retail business, state-by-state.
In the long run, the factories are going to win, whether or not their forays into retailing actually succeed. Two reasons:
1. The marketplace, not state legislatures, will ultimately decide the success or failure of dealerships, and even of whole channels of distribution. If the metropolitan-area Ford Retail Networks succeed (and it's a big 'if'), all the king's horses and all the king's men won't put the traditional dealer networks back together again.
2. The National Automobile Dealers Association can't take a firm position on factory ownership, but the factories' association can. Some NADA members think factory control of dealerships is the end of their way of life. Others are happy to have a wealthy factory willing to buy them out. Thus NADA's wishy-washy position: We're not going to fight for more restrictions on factory control of retailing, but neither will we fight to rescind states' current regulations.
Given a unified group of manufacturers, the divided dealers will ultimately watch the factories do things to suit the factory.
If the marketplace likes Ford-controlled stores in a market area, those stores will grow over time. If a public dealership corporation, dominated by GM, takes over much of Saturn Corp. retailing, and if consumers like it, that's going to be the system. A huge risk: If the factories flop, how will they unwind these big, consolidated retail and service operations?
The dealers have a powerful trump card. They know the market and the customer. If the dealer adds value and engenders loyalty, that dealer wins.
The fear that the factory will discriminate against independent dealers is overblown. A harmed dealer could win a lawsuit for billions if a Ford or GM stepped on him in favor of a factory store.
But the genie is out of the bottle. Distribution will belong to those who handle the customer right. Independent dealers have a head start. But they don't have unanimity. So the call to state legislatures for protection won't guarantee victory.