Five Ford dealers are suing Ford Motor Co., contending the company's Blue Oval certification program discriminates against some dealers.
In the 2001 model year, Ford is returning 1.25 percent of each new vehicle's invoice price only to its Blue Oval, or top-rated, dealerships. That means certified dealers will be reimbursed more than $250 for a 2001 vehicle with an invoice price of $21,000.
The lawsuit says dealers not certified by Ford will suffer severe financial penalties. The company is trying to thin its dealer ranks with the program, the lawsuit alleges.
Ford and its dealers now face potentially drawn-out legal and state legislative battles over the certification program. In an interview before the lawsuit was filed, Ford CEO Jac Nasser said the company would proceed with Blue Oval despite dealer lawsuits.
'We can put our head in the sand, or we can start to really drive toward higher levels of customer satisfaction,' Nasser said in an interview with Automotive News. 'The best dealers can see it as an opportunity. For those dealers that see it as a threat, then maybe there is a threat in it for them.'
SEEKING CLASS ACTION
The five dealers are requesting class-action status to cover all Ford dealers. The lawsuit was filed Nov. 6 in U.S. District Court in New Jersey by dealers in five states.
Ford says the 1.25 percent payments are merely incentives and are legal. Critics label the practice two-tier pricing.
Meanwhile, the Ford Dealer Alliance, a Hackensack, N.J., group that represents dealer interests, is trying to raise at least $1.5 million to fund the lawsuit.
The National Automobile Dealers Association and state dealer associations also oppose the monetary awards. In August, Ford revised some elements of the program but refused to drop the contested financial provisions.
State dealer associations lead the opposition, fearful that Ford's practice will spread throughout the industry.
'State associations will continue to oppose programs like Blue Oval judicially, legislatively and with the influence of dealers of all lines,' said Martha Martell, general counsel for the Iowa Automobile Dealers Association. 'Mr. Nasser has another fight on his hands.'
The North Carolina Dealers Association will meet this month to formulate a 'final response to Ford Blue Oval,' said Bob Glaser, executive vice president of the North Carolina association. In June, the association's board voted to pursue legal action, if needed, to derail Blue Oval. A coalition of state associations has hired antitrust lawyers.
Throwing up legal roadblocks isn't the answer, Nasser said.
'Anyone who is going to hide behind legal fences better have an exit strategy, because it won't work longer term,' he said. 'Customers are demanding higher levels of satisfaction. And the companies and the dealers that provide that will win.'
NADA opposes the monetary reimbursements but does not plan a formal assault on the program.
'The Ford dealer council has endorsed Blue Oval,' said dealer Lou Kairys, chairman of the NADA industry relations committee. 'NADA is not in a position to fight the dealer council.'
The Ford Division National Dealer Council endorsed the amended Blue Oval program in August.
While Blue Oval dealers receive payments equal to 1.25 percent of invoice, Ford raised invoice prices 1 percent on 2001 vehicles. Thus, Blue Oval dealers only gained 0.25 percent of invoice this model year.