FRANKFURT - Ford of Europe is negotiating to buy shares in several large European dealer groups.
The development follows similar retail investments by Ford in England and the United States.
With the future of European car retailing rules in doubt, Ford wants to make its dealerships more profitable, said Earl Hesterberg, vice president of marketing, sales and service for Ford of Europe.
Giving dealers larger territories, especially in big cities, can help them make more money.
'It's also possible we would consider investing in large cities on the continent of Europe, especially where the cost of land and building is an issue for private capital,' he said. 'We're discussing several opportunities, but for obvious reasons they'll remain confidential.'
Europe's block exemption rules, which grant temporary exemption from European antitrust laws, protect the exclusive distribution system auto manufacturers and their franchised dealers enjoy in Europe. But many observers expect regulators to kill off the block exemption in 2002 because of continuing criticisms of vehicle retailing in Europe.
RIVALS OWN STORES
Ford already has bought an interest in several large dealer groups in England and the United States. Ford has set up dealer companies under the Auto Collection name in several U.S. cities.
Most recently, Ford bought 49 percent of a holding company that owns the Ford dealerships of Pendragon PLC, one of its largest United Kingdom dealer groups. Ford now has a stake in about 15 percent of its United Kingdom distribution.
'Some of our competitors have been operating factory-owned dealerships for many years,' said Hesterberg. 'Renault has many factory-owned dealerships, for example.'
A WAY TO COMPETE
Factory-owned dealerships have become an important competitive factor in some German cities, he said, and Ford must find a way to compete with them.
Hesterberg stressed that the dealership situation varies substantially from country to country and even within countries. In Germany and France, for example, there is a gulf separating big-city dealerships from their small rural counterparts.
Ford must strike a balance between consolidating its network and keeping main dealers and service satellites convenient for customers, he said.
As Ford consolidates, it will have fewer main dealerships, but it will probably keep an equal number of subdealerships where customers can get their vehicles serviced.
Hesterberg said: 'A driving theme of our operations is consumer focus. We want to make sure our customers don't have to drive too far to have a vehicle serviced, or even to shop for a Ford product.'