Despite a setback in court, Ford Motor Co. will continue fighting what it calls dangerous and chilling government meddling in its Internet used-car sales business.
A federal judge in Austin, Texas, this month shot down Ford's efforts to stop the Texas Motor Vehicle Board from blocking the automaker's Web-based sales.
At issue is Fordpreowned.com, a Web site at which consumers can find Ford-owned off-lease vehicles tagged with no-haggle prices. After the initial contact with a customer, Ford transfers title of the vehicle to a local dealer, who sells it to the customer. The dealer earns a fee for the transaction.
The Motor Vehicle Division of the Texas board sent letters to participating dealers warning them of possible fines for 'aiding and abetting' Ford's illegal activities. As a result, Ford closed the site in November.
The motor vehicle board also has filed an administrative action against Ford, contending that by setting a price, Ford was selling cars directly to consumers in violation of Texas' tough franchise laws.
'The law (in Texas) says manufacturers can't sell to consumers, but we don't feel we are selling,' said Ford spokesman Peter Olsen. 'We are offering a venue for consumers to shop for a car.'
FACTORY IS A DEALER
But in denying Ford's motion to halt the administrative action, U.S. District Judge Sam Sparks of the U.S. District Court for the Western District of Texas, Austin Division, said Ford likely will be found to meet the statutory definition of a Texas vehicle dealer.
Carol Kent, the Motor Vehicle Division's director of enforcement, represented the motor vehicle board in court.
'We simply said that what Ford was doing was offering (vehicles) for sale, which is illegal,' Kent said.
Olsen said Ford is pursuing other legal avenues in light of the federal order.
Ford also is ratcheting up a public-relations campaign on the Fordpreowned.com Web site, rallying consumers by saying the government action is 'an unfair attempt to regulate the Internet.'
Andrew Whinston, director of the Center for Research in Electronic Commerce at the University of Texas at Austin, said Ford's rhetoric is not surprising.
'They are laying the groundwork to try and change the laws,' Whinston said, adding that the laws need to be changed to reflect the Internet age.
'E-commerce is the flowering of free enterprise,' he said. 'It's the free-market economy in a more productive environment.'
LEVEL PLAYING FIELD
Walter Wainwright, executive director of the Houston Automobile Dealers Association, said his members support the motor vehicle board's crackdown on the Ford site.
'Most of the dealers in Houston think we have the best franchise laws in the country,' Wainwright said. 'They keep a level playing field between the manufacturers and their franchisees.'
Ford continues to test market its used-car Web site in Atlanta, Boston, San Francisco, Washington and Newark, N.J.