DETROIT - Ford Motor Co. is throttling back its dealership-consolidation plans.
The automaker is rebuffing some dealers who want to consolidate markets, and it says it wants to:
Learn from existing consolidations
Slow the pace of new deals
Form smaller consolidations in the future.
Ford's dealership consolidations, called Auto Collections, have had a short and troubled history. The automaker's goal two years ago was to find a new way to sell and service vehicles that saves money, pleases customers and fights publicly owned chains.
So far, however, Ford has created only a patchwork of market consolidations, not a consistent retailing formula. For example, one-price selling was a major tenet of the Auto Collection philosophy until this spring when Ford relaxed the requirement.
'We want to get things right,' said Ross Roberts, president of the Ford subsidiary implementing the Auto Collections. 'One of the things we want to do is prove out our model. We want to get our model straight and adjust what we learn.'
Roberts' comments are an about-face from the heady days of late 1998. At that time, then-Ford Chairman Alex Trotman said the company would pursue consolidations vigorously and would hold an ownership stake in a large percentage of its U.S. and Western European dealerships within five years.
Ford introduced its retailing idea as an experiment in May 1997. By early 1999, the company characterized the dealership consolidation plan as a full-blown, global retail strategy.
Currently, five U.S. Auto Collections operate in Salt Lake City; Oklahoma City and Tulsa, Okla.; San Diego; and Rochester, N.Y. Consolidated ventures also operate in Canada, Great Britain, Germany, Australia and New Zealand.
Auto Collections are owned jointly by Ford and investing dealers. Dealers sell their stores to a new corporate entity that oversees sales and service in a market.
Future Auto Collections likely will be smaller, Roberts said.
For example, in April 1998 the Tulsa Auto Collection was created when six dealers pooled eight stores employing nearly 1,000 people in a venture expected to generate $400 million in sales in 1999.
'It will be very difficult to ever have another Tulsa,' Roberts said. 'It is going to be very difficult for anyone to consolidate all of the dealers in a given market. That is one of the things we have learned. There are too many people buying stores and a lot of the stores are already bought.'
Acquisition mania is sweeping automotive retailing, forcing Ford to compete with aggressive public chains such as AutoNation Inc.
Even early believers in the Auto Collection are adopting a more limited vision.
For example, Don Thornton, former CEO of the Tulsa Auto Collection, said the business model is unlikely to work in large metropolitan areas where competing dealers easily undercut a nonnegotiable price.
The Tulsa Auto Collection has endured a string of troubles. Sales suffered as diverse dealership cultures were merged. Competitors hammered the venture's nonnegotiable pricing policy. Losses incurred from selling unneeded stores forced the company to raise more capital.
'It was a very heavy learning experience,' Roberts said. 'The process changes we put on our people were very, very heavy.'
Ford continues to negotiate with dealers interested in consolidation, Roberts said. But the company is saying 'no' more often than in the past. Roberts said 'several' market consolidations have been denied.
He would not specify how many markets are considering Auto Collections. In June, Roberts said up to 10 markets were poised for consolidation, a number he now declines to comment on.
Turning down the consolidation heat is good news for dealers, said Ron Boyer, chairman of the Ford Division National Dealer Council and managing partner of Courtesy Ford in Portland, Ore.
'Dealers will be glad to see them slow down' Boyer said. 'Dealers have been worried about them traipsing all over the country, buying up tons of stuff and unsure of what their plan was.