COLOGNE, Germany - Ford has been forced to back away from the rapid consolidation of its German dealerships because dealers were unhappy with the process.
Ford had planned to slash the number of dealer marketing areas to about 130, from more than 900.
Only one dealer in each territory would negotiate directly with Ford to purchase vehicles, buy parts and participate in advertising campaigns. The other dealers would have worked through that single dealer.
But dealers don't like the plan, said Earl Hesterberg, Ford's new European sales and marketing chief. 'We had guys who had been competing for 30 years, and we were asking one to be the subdealer for the other,' he said.
Ford has met with dealers to work out the difficulties. Ford will not undo consolidations already implemented or restore subdealers to main dealer status. But Ford now expects to reduce the number of customer marketing areas to about 250, about double the original plan.
Ford was designating one dealer in each territory and putting that dealer in charge of the consolidation within that area. Now there will be more than one in many cases.
'A lot of the burden was being placed on that main dealer to buy out small dealers and make them subdealers,' said Hesterberg, who was recruited by Ford of Europe President Nick Scheele last summer to reverse Ford's sagging sales in Europe. 'In some cases, that just wasn't going smoothly.'
Hesterberg said the cutbacks in the consolidation effort would mainly affect rural dealers. 'We told the dealers that we would ease up on consolidation in smaller markets,' he said.
The effort, which began a year ago, was affecting performance, he said: 'We had taken dealers' eyes off the ball. They were spending more time worrying about what was going on in Ford than worrying about the marketplace.'
Ford faces a difficult balancing act in Germany. It wants to keep the high number of customer contact points while streamlining its sales organization to operate more efficiently in a country where dealer margins are razor-thin.
Ford's German network is a complicated maze of dealers, secondary dealers, subdealers and service outlets. There are 631 large main dealers, 285 small main dealers, 285 branches and 1,090 service points.
'We are trying to give dealers bigger territories so that they can be more profitable and we can be more efficient,' said Hesterberg. 'This can reduce the number of stocking points and we can get land and buildings and costs out of the system.'