The 'e-price' that FordDirect.com intends to offer consumers on its automotive shopping site has become a potential legal snare as the venture prepares to launch in California.
The Web venture, which is jointly owned by Ford Motor Co. and its dealers, has asked for direction from state regulators before it dives into the California market. And state lawyers have pointed to the e-price as a potential stumbling block.
Here is the problem: The state could consider the FordDirect.com Web site an advertisement. The site promotes an e-price - a maximum price available to Internet customers - on new vehicles that dealers have in stock. California law requires dealers to offer advertised prices to all their customers.
So if the state determines that the FordDirect Web site is an ad, then participating dealers will need to offer the e-price to every customer who walks in the door even if they never saw the Web site. The e-price, an average of local transaction prices, will be below sticker.
Ford dealers already fear that a maximum price will reduce gross profits on new vehicles sold online. Consumers likely will try to negotiate a lower price, which will force many dealers to sell below the e-price to be competitive.
So, now dealers have something else to worry about. If the state calls the FordDirect site advertising, new-vehicle gross profits could shrink across the board.
In other dot-com news:
Reynolds and Reynolds Co., one of the dominant dealer systems vendors, has acquired DealerKid, an Internet software company. The DealerKid software is designed to improve repeat business by helping salespeople follow up with customers.
AutoMedia.com, which provides editorial content for automotive Web sites, has acquired Automedia 2000 Inc., an advertising and publishing company.
A study by research firm Friedman-Swift Associates and Cobalt Group, an Internet software company, shows that 78 percent of online new-vehicle shoppers want to use a new-vehicle 'configurator.' This Web site feature allows shoppers to specify the vehicle they want, calculate its price and search for it online.
You can reach Staff Reporter Donna Harris at (540) 668-7295 or [email protected]