Eight of 13 dealers in the Utah Auto Collection are withdrawing as investors, leaving Ford Motor Co. with a controlling share.
Ford will own about 70 percent of the 7-month-old retailing venture, up from 45 percent, according to Stephen Wade, one of the dealers who is selling his share.
The Utah ownership shuffle comes as Ford struggles to overcome two years of dealership consolidation troubles. Ford is slowing the pace of new deals and forming smaller consolidations as it tries to find a successful retailing formula. Early efforts have been marked by falling sales, merger headaches, employee turnover and dealer body unrest.
For example, through September, Ford Division truck sales at the Utah Collection were down 28.8 percent from last year when the stores were independent. The venture's Ford Division car sales were off 13.3 percent, according to a source familiar with the zone's sales.
FORD: WE WON'T WALK
The Utah ownership changes, which should be completed by Oct. 31, come just a month after Ford purchased a majority interest in the troubled Tulsa Auto Collection, paving the way for a management overhaul.
Despite unconfirmed reports among dealers that Ford plans to scuttle the Auto Collection concept, Ford said it will not walk away from its strategy that combines multiple dealerships into a single business entity.
'There is absolutely no truth to the rumor it is going to be unwound,' said Ross Roberts, president of the Ford subsidiary implementing the Auto Collections.
Roberts also denied dealer speculation that Ford will sell the Auto Collections en masse to a large dealership group such as AutoNation Inc.
'There is no plan to sell any of the Auto Collections to anyone,' Roberts said.
Ford would not disclose the size of its ownership stake in Utah, nor has it done so in the past.
'We have a larger equity,' Roberts said. 'It is nowhere near the level we did in Tulsa.' In Tulsa, Ford increased its 40 percent stake to an unspecified majority interest.
DEALERS SOUGHT CHANGES
'In Utah, the dealers will still be strong principal owners,' Roberts said. 'They will still be running it. There are no management changes contemplated at this time. Duff Willey will continue as CEO.'
Dealers sought the ownership changes in Utah, Roberts said.
'This is the result of some of the investors having other interests outside that they would like to have their investment in,' he said.
Richard Watts, one of the investing dealers, said he is withdrawing for personal reasons. Watts said he held 'a very small' stake in the venture.
'There was an incident within the family that required capital. If I had the liquid availability of cash, I would have stayed in,' Watts said.
Watts, the information technology director for the Auto Collection, will continue to work for the venture. The performance of the Auto Collection was not a factor in his decision, he said.
'The performance is turning around, and it is doing well,' he said.
Dealer Wade, who sold a 3.5 percent stake, said sales are improving and the venture is beginning to make money.
'It will ultimately work,' Wade said. After centralizing management, dealers recently returned to the dealerships to overcome employee unrest and turnover, one of the organization's biggest head-aches, he said.
`QUITE A DROPOFF'
Roberts did not confirm or deny the percentage of decline in the Utah Auto Collection's Ford Division sales.
'There has been quite a dropoff this year in the industry numbers for Salt Lake City. We do not know why,' Roberts said. 'We are not selling as well as we would like in Salt Lake on trucks. Duff Willey is addressing that right now.'
A memo to employees written by CEO Willey said several ownership changes are planned. Roberts confirmed the memo's content.
Watts, CFO/COO Jerry Zmyslo and Dennis Dahle, vice president of variable operations, will cease to be investors but will continue to work for the Auto Collection.
Willey; Gregg Middlekauff, marketing and business development director; and Mike Day, facility project director, will remain investors and employees.
Brad Eichers and Robert Garff will remain investors who do not work in the venture.
The other five divesting dealers will no longer have ties to the Auto Collection.
Salt Lake is Ford's largest U.S. Auto Collection with an estimated $750 million in annual gross revenue, 1,500 employees and 14 Ford, Lincoln, Mercury and Mazda stores. Ford also has Auto Collections in Oklahoma City and Tulsa, Okla.; San Diego; and Rochester, N.Y. AutoNation manages the Rochester operation.