Ford Motor Co.'s luxury dealers in the United States will begin opening large dealerships next year that will sell Volvo, Jaguar, Lincoln, Land Rover and Aston Martin vehicles.
Ford's Premier Automotive Group, which manages the company's luxury brands, wants 10 such showcase dealerships to open within 18 months, said Vic Doolan, the executive overseeing the strategy.
The new-store rollout is the latest development in Ford's integration of Volvo Cars and Land Rover. By combining dealerships and back-office operations, Premier wants to create more efficient and profitable retailers. Premier also wants to make its customer handling competitive with world leaders such as Lexus.
Premier has no plans to create the showcase dealerships in Europe but does not rule it out.
While Premier encourages dealers to assemble the brands under one roof in the United States, the company says the effort is voluntary.
'What we are trying to achieve is a better consumer experience for all of our brands while not diluting our brands,' Doolan said. 'Where we can get all of the brands together, we are trying to do that.'
Wolfgang Reitzle, group vice president in charge of Premier, expects that the initial dealerships will be so successful that dealers in other markets will want to follow suit. He was interviewed last week in Stratford, England.
A WAY TO SAVE
Now, old-line retailers such as Lincoln sell fewer units per outlet than newer franchises such as Lexus. For example, in 1999 Lexus averaged 1,027 new sales per dealership. Lincoln averaged only 111 new units per dealership.
The newly constructed dealerships will offer separate showrooms and service reception areas for each brand, said Doolan, Premier's executive director of North American marketing and distribution strategy. Showrooms will be indistinguishable from their stand-alone counterparts, he said.
Service will be centralized. But each service technician will be trained to work on only one brand, Doolan said. Combining back-end operations such as administration will produce savings.
Jac Nasser, Ford CEO, said the approach is pragmatic, designed to wring efficiencies and more profit from the retail network.
'We are saying, what is the best way to attract the best dealers around the brands? How can we do it in such a way that we get economies of scale that can be passed on to the consumer in better service or better value?' Nasser asked last week.
TALKS UNDER WAY
Dealer Jack Terhar will open the first all-luxury dealership in Denver in early 2001. The new store will include Volvo, Jaguar and Lincoln but not Land Rover.
The Premier group is negotiating with dealers in 12 markets throughout the United States, Doolan said. In all but two cases the dealers approached Premier, he said.
'This is voluntary. We are not asking anybody to sell out,' Doolan said. For example, a dealer holding three Premier franchises could try to buy out the local retailer franchised for the fourth brand, he said.
Few of the showcase dealerships will include the limited-volume Aston Martin brand. Ideally the new stores will sell Volvo, Lincoln, Jaguar and Land Rover, Doolan said. Premier already has orchestrated the merger of two or three of its franchises in several markets, he said.
'There are quite a few examples where we have two brands together, such as Volvo and Lincoln, and Volvo and Jaguar,' Doolan said.
The showcase stores will carry the name of the dealer. There is no plan to create a national retail name that would be used by all of the stores, Doolan said.
LAND ROVER STRATEGY
Land Rover has 124 U.S. retail outlets. Eighty-one of them are Land Rover Centres, special showrooms that highlight the Land Rover off-road heritage and sell accessories.
Howard Mosher, CEO of Land Rover North America Inc., said 45 dealers have signed letters of intent to open Land Rover Centres within the next two years. Land Rover expects to expand its U.S. presence to about 185 dealers, he said.
Land Rover is willing to share dealer operations that are invisible to the consumer, such as computer systems, Mosher said.
'I think a Land Rover Centre can operate very nicely on a PAG campus,' he said. 'But shared parts and service would be an issue for us.'
Ford's policy setters have made their vision clear, Mosher said, but also have been open to Land Rover's concerns. The issue has been the focus of continuing meetings.
Some of the showcase stores may include Mercury, a brand historically joined with Lincoln. 'We have a format to do that,' Doolan said, adding that some of the ventures being negotiated include Mercury.
'Mercury is an extremely good brand,' Doolan said. 'It outsells Volkswagen. It reaches very good customers.'