Dealers in Virginia are rallying to stop Ford Motor Co. from opening an Auto Collection in Richmond.
In November, Ford agreed to purchase Dick Strauss Ford and negotiated terms to buy Ashland Ford in the Richmond area. The deals pave the way for a Richmond Auto Collection, according to Ford documents obtained under the federal Freedom of Information Act by a source familiar with the situation.
The Virginia Automobile Dealers Association will fight Ford in the courts and state Legislature, arguing that auto manufacturers cannot own or operate dealerships under Virginia law.
'This is a Trojan horse being rolled into Richmond,' said Donald Hall, CEO of the Virginia dealers association. 'The factory is up to one thing and one thing only: to own and operate a store in Virginia, and our state prohibits that practice. They want to control the retail process in Richmond.'
In 1997, Ford started establishing Auto Collections in metropolitan markets. Dealers and the automaker jointly own Auto Collections, which oversee sales and service in an entire market.
But the company scaled back its plans this year after Auto Collections in Tulsa, Okla., and Salt Lake City performed poorly. Ford says its Auto Collections are profitable and more dealership consolidations are coming. But the company is slowing the pace of new deals, turning down some dealers who want to consolidate and forming smaller ventures.
Dick Strauss, former president of the National Automobile Deal-ers Association, confirmed the sale of his store to an unidentified 'dealer/investor' who was represented by Ford. Carolyn Leake, owner of Ashland Ford, did not return phone calls requesting comment.
'We are in the process of locating an investor for the Richmond Auto Collection and we expect to have one in place by the end of the first quarter of 2000,' Ford said in a Nov. 22 letter to the Virginia Department of Motor Vehicles.
Allowing Ford into dealerships will undermine independent retailers, squelch competition beneficial to consumers and allow the automaker to give preferential treatment to factory stores, said Hall of the Virginia dealer association.
Ford and the dealer association are likely to go head-to-head when Ford applies to the Department of Motor Vehicles for a dealer license. The association will oppose license issuance to an Auto Collection, Hall said.
NOT DEALER DEVELOPMENT
Pete Olsen, Ford spokesman, declined to comment on the Richmond Auto Collection. 'We don't comment on future business activities,' Olsen said. Ford maintains it is complying with Virginia law in the letters to the Department of Motor Vehicles.
Hall charges that Ford is defying state laws that bar auto manufacturers from owning and operating dealerships. Ford is 'blowing a hole' in state statutes by invoking laws that permit factory involvement in dealer development stores, he said. Dealer development programs allow dealership operators without sufficient capital to buy a store using factory financing.
'According to their documents, the name of this is going to be the Richmond Auto Collection,' Hall said. 'Auto Collection is a branded name that means something to dealers nationwide and that is a factory-run operation.'