Last March, the National Automobile Dealers Association said it would tolerate Ford Motor Co.'s Auto Collections. Last week, in a reversal of policy, NADA decided enough was enough.
On Tuesday, Oct. 19, NADA directors approved a resolution opposing factory-dealer partnerships such as the Ford Auto Collections and General Motors' San Fernando Valley project in Los Angeles.
Prompting NADA were GM's plan to buy 10 percent of its dealerships and Ford's increasing control over its Auto Collections.
'Factory-dealer partnerships ultimately result in manufacturers owning or controlling such dealerships to the detriment of independent dealers and consumers,' the resolution said.
Whether the resolution has any teeth remains to be seen. NADA is considering revoking the NADA membership of dealers involved in Ford Auto Collections and similar projects. It also wants to throw its weight behind the state dealer associations and help strengthen state franchise laws.
While the leaders of state associations welcome NADA's help, at least one sees NADA's biggest role as keeping the lines of communication open with the automakers.
'They can give us further insight into what's going on,' said Don Hall, CEO of the Virginia Automobile Dealers Association.
In late 1997, Ford started buying up and consolidating dealerships in several markets, including Tulsa, Okla., and Salt Lake City. Despite dealer reservations about the Ford project, NADA tolerated it because Ford was including dealers as investors.
NADA's strongest response came last March, when its directors gave the Auto Collections a reluctant OK as long as 'extraordinary steps' were taken 'to ensure fairness to all competing dealers.'
However, NADA directors began rethinking that policy when GM on Sept. 27 announced it will buy as many as 770 GM dealerships during the next 10 years. Coupled with that, Ford bought controlling interest in both its Tulsa and Salt Lake City Auto Collections.
NADA spokesman Mike Morrissey declined to call the new policy a reversal. 'We have had several months of real-world experience (with the Auto Collections),' he said. 'It's only natural that we would adjust based on that experience.'
Morrissey added that NADA continues to support traditional dealer-development partnerships. That is when an automaker owns a dealership with the stipulation that it will be run by a dealer who buys out the automaker over a period of time.
But more often those dealer-development partnerships are coming under scrutiny.
Dealers in California, for example, have been fighting an unusually large development partnership in the San Fernando Valley, where GM purchased several dealerships and put dealer Wes Rydell in charge. In Florida, dealers have questioned the purchase of seven Saturn dealerships by Roland Daniels through GM's minority-dealer development program.
Hall, of the Virginia dealer association, fears the entry of GM and Ford into the retail business will endanger the dealer-development programs.
If GM and Ford can run their dealerships successfully, the smaller independent dealerships will be forced out of business, he said. That will put the price of admission for minority dealer-development candidates, out of reach.
GM spokesman Terry Sullivan said GM's minority dealer-development program is not in danger.
Said Sullivan: 'We're committed to reaching our goals of getting more minority dealers in place.'