Leading dealers in California and Illinois are searching for ways to halt Ford Motor Co.'s auto-concierge business even as the company considers expanding the service into the nation's 25 largest markets.
In Los Angeles and Chicago, Ford is testing the use of auto concierges who cater to owners of any vehicle make. The Ford employees arrange, for example, routine maintenance, car washes and new- and used-vehicle purchases of any make.
Ford's 'future target' for the concierge rollout is 'large metropolitan areas (top 25 major cities)' in the United States, according to a company document obtained by Automotive News.
Angry Ford dealers say Ford is taking control of the customer at the expense of its dealers. Dealers characterize the auto-concierge program as a brokering service that undermines the tie between local retailers and their customers. Moreover, dealers say they resent a Ford-sponsored program that sells vehicles and services for competing makes.
But Ford defends the program, saying that the auto concierges will generate new customers and additional business for Ford dealerships.
The company denies that the auto concierge will weaken the relationship between dealers and customers, noting that services such as car washing or routine fueling are not typically offered by dealerships. New-vehicle sales are a small part of the program, Ford said.
'We are opposed to the manufacturer entering the direct retail market,' said Jack Cronan, president of Oakfield Ford in Villa Park, Ill., and the Chicago area representative to the Ford Division National Dealer Council. 'We feel that retail operations whether sales or service should be conducted by the franchised dealer, not the manufacturer.'
17 IN CHICAGO; 10 IN L.A.
On Wednesday, Aug. 18, the Los Angeles area Ford Dealer Advertising Fund group meets to consider a course of opposition.
For example, dealers are investigating whether Ford's program complies with California law that requires the licensing of automotive salespeople, dealers and brokers; the disclosure of commissions and other practices related to vehicle sales.
The Chicago Metropolitan Ford Dealers and the Chicago Metropolitan Ford Dealer Advertising Fund group have written to Jim O'Connor, Ford Division president, objecting to the program.
Dealers were 'blind-sided' by Ford, said Sal Quatrochi, dealer principal at Westfield Ford in LaGrange, Ill., and president of the Chicago Metropolitan Ford Dealer's Association.
The pilot programs employ 17 auto concierges in Chicago and 10 in Los Angeles, the company document says. Each concierge tries to contact 20 customers daily, the document said.
Customers pay the concierges a service fee in addition to the charge for scheduled work.
Ford has been running the Chicago program since November 1998. The Los Angeles service is just beginning. In Chicago, dealers inadvertently learned of the service in July 1999 when an employment ad for Ford concierges was discovered on the Internet, Quatrochi said.
'We are not going to wait around for the test program to continue,' Quatrochi said. 'We are talking about how we should proceed but nothing is determined yet.
'We are opposed to the fact that they are in our market soliciting our customers,' he said. 'We spend a lot of money advertising and building a reputation.'
TIME FOR CHANGE
Ford defends its program; it argues that the changing retail environment demands a new way of doing business.
'Ford is prepared to challenge the traditional way of doing business to stay ahead of the `customer wants' curve,' the company said in a second document prepared by the public affairs department to provide background on the program. Non-traditional customer services will build owner loyalty and increase sales, Ford said.
'It is in the pilot stage and we are testing a number of possibilities,' Kathleen Vokes, Ford spokeswoman, said last week. 'But we are convinced this will bring incremental business to our dealers.'
The hot button for dealers is new-car sales.
Opposing dealers characterize Ford as a third-party broker that charges $300 in the test markets to handle new-vehicle purchases between the local retailer and the customer. Dealers fear the auto concierges will play one dealer against another during sales negotiations.
In addition, Ford dealers say they resent Ford-employed concierges handling the sale of new Chevrolets, Toyotas and other competing makes.
'We have a problem with an employee of Ford going to buy another manufacturer's vehicle,' said Ray Dixon, owner of Board Ford in Whittier, Calif. Dixon is the Los Angeles representative to Ford's National Dealer Council and is a member of the Los Angeles Ford Dealers Advertising Fund board.
Brokering is a red-flag issue to dealers because Ford typically opposes brokered sales and does not pay vehicle incentives on the sales, dealers said.
The auto concierge service is run by Ford Unlimited Enterprise, a new business group within Ford that reports to Robert Rewey, Ford group vice president of marketing, sales and service.
The Ford document acknowledges that the service includes 'an element of a brokering service.' However, the pilot programs 'are closely aligned with all franchised dealers,' the document said.
The program is open to all Ford dealers, and customers may specify a preferred dealer, Ford said. Dealers in Chicago and California said it is unclear how a dealership is chosen for the concierge customer if no preference is stated.
Herbert Boeckmann II, owner of Galpin Motors Inc. in North Hills, Calif., said he sold a vehicle to a concierge customer but had no advance warning of the customer's arrival in showroom. Boeckmann said he does not know why his dealership was selected.
Three people from the concierge service accompanied the customer to the showroom, Boeckmann said. The customer paid a $300 fee for the service.
'We had no notice until they were here,' he said. 'They were with the customer while the transaction was made.'
FOCUS ON SERVICES
Ford maintains that new-vehicle sales are only a small part of the concierge service and that concierges will not force dealers to compete with each other for their patronage.
'We're trying to build on our strengths, our dealership network, not replace it,' the Ford document said. 'We are attempting to reach a segment of the market that traditionally has not shopped at Ford. The service will ultimately deliver new customers to our dealerships.'
An auto concierge print ad lists five areas of service, including 'vehicle-related errands, purchasing/ leasing a new vehicle, selling/buying a used vehicle, temporary transportation and accessories etc.'
For example, the Ford document said the concierge would assist customers 'who want to sell their vehicle independently by placing classified ads and handling the phone response so calls do not go to the seller's personal business or residence.'
'Car washes/detailing and placing/responding to classified ads are automotive related services that dealers don't generally offer to customers,' the Ford document said.
Ford's pilot business is the automaker's latest foray into retailing. Since 1997, Ford has been taking stakes in dealership consolidations in various markets, such as Tulsa, Okla., and Salt Lake City. Ford also is investing in Carclub.com, an online automotive site selling autos of all makes and a range of automotive services to a national pool of club members.