Unwilling to slug it out with angry dealers, Ford Motor Co. has abandoned a planned Auto Collection in Richmond, Va.
Ford's retreat is a victory for the Virginia Automobile Dealers Association, a battle-ready group with the clout and grass-roots organization to enforce its dealer-rights agenda.
Ford's withdrawal in Virginia is another sign that the company is trying to repair fractured relations with its dealers. Last fall, Ford began retreating from its ambitious strategy to consolidate markets around the world into Auto Collections. Now, Ford plans merely to test new retailing practices in a handful of Auto Collection stores.
In Virginia, Ford had no appetite for a protracted legislative or court battle with the dealer association to open a Richmond Auto Collection.
Last spring, Virginia dealers vowed to fight a Ford dealership consolidation. They argued that auto manufacturers cannot own or operate dealerships under Virginia law. In Auto Collections, Ford invests with dealers to consolidate sales and service in a market.
'Despite our assurances to the State of Virginia that we would comply with all aspects of the law, they still did not feel comfortable with our presence there,' said Ford's Barry Merrill. 'We are not going to do an Auto Collection there.'
Merrill is regional director of North American East operations for Ford Investment Enterprises Corp., the Ford subsidiary that oversees the Auto Collections.
Ford did not want to make a well-known and respected dealer a casualty in a protracted battle over factory involvement in retailing, Merrill said.
In November, Ford agreed to purchase Dick Strauss Ford in Richmond. Owner Dick Strauss has been a dealer-rights crusader for three decades. Strauss is a former president of the National Automobile Dealers Association and remains active in both the Virginia dealer association and NADA. Both groups oppose Auto Collections.
'Dick Strauss would have been the loser, and I didn't want to do that to him,' Merrill said. 'We can't enter into a transaction with Dick Strauss until we have a license to be a dealer in the existing Dick Strauss facility. The State of Virginia grants the license.' The dealer association pledged to fight the license.
Now, Ford and Strauss are 'working to figure out something else,' Merrill said, adding that it would be premature to disclose details. For example, Ford could buy the dealership and then sell it to another dealer, a practice permitted under Virginia law.
'I feel Ford has been totally decent and fair about the whole situation, and I am not upset,' Strauss said last week. 'I think that when all is said and done, I will have a positive result.' Strauss declined additional comment.
The dealer association began mobilizing against a Richmond Auto Collection after Ford's plans became known in the spring of 1999.
'I didn't have a single dealer in Virginia who thought our course of action was incorrect,' said Donald Hall, president and CEO of the Virginia Automobile Dealers Association. Ford sought changes to Virginia law that would permit factories to own or operate dealerships, Hall said.
'We made it abundantly clear that under no circumstances would we accept any changes to what is on the books,' he said. 'We laid the groundwork for grass-roots opposition.'
Five Auto Collections operate in the United States. They are in Tulsa and Oklahoma City, Okla.; Rochester, N.Y.; San Diego; and Salt Lake City.