Auto dealers who believe that state franchise laws will prevent the factories from becoming their retail competitors may be in for a rude awakening.
A Florida attorney who specializes in auto franchise law said that 'there probably aren't four or five states that actually prohibit factory ownership.'
The best defense against factory incursion into retailing, said attorney Dan Myers of the firm Myers, Forehand & Ful- ler in Tallahassee, Fla., is for dealers to become more visible and vocal in speaking to their state legislators about factory ownership.
Myers said that a recent proposal in Missouri to let automakers operate stores was blocked when dozens of Missouri dealers attended the hearings and participated in the discussion.
Factory ownership is an emotional issue for many franchised auto dealers.
Speaking after he addressed the J.D. Power and Associates International Automotive Roundtable held in conjunction with the NADA convention, Myers called it 'the greatest danger that franchised auto retailing business has ever faced.'
In recent years, General Motors and Ford Motor Co. have launched efforts to acquire and operate dealerships. Last year, GM revealed that it planned to acquire hundreds of dealerships but then backed off. Ford has been trying to unite competing Ford dealerships in various markets into factory-owned networks.
Myers said as long as a manufacturer has a financial stake in one retail store over another, it will be tempted to play favorites in pricing, allocation or other conditions.
'Despite all they say about their well-meaning intentions, it's really about the money,' he said. 'The factories wouldn't be getting into the retail business unless they thought they could make some money.'