Ford dealers in Maine will have to live with a $500 new-vehicle surcharge if they want a higher warranty parts markup.
The 35 Ford and Lincoln-Mercury dealers lost their case against Ford Motor Co.'s practice of adding a surcharge to the new-vehicle invoice price to recover higher warranty reimbursement costs. The Maine Supreme Judicial Court ruled in Acadia Motors Inc. vs. Ford Motor Co. that Ford's surcharges were legal.
The dealers sued Ford in 1999, arguing the state franchise law entitles them to the same markup they get from customers who are out of warranty. Ford was paying dealers cost plus 30 percent or 40 percent, but the factory's suggested retail markup was cost plus 63 percent.
When dealers asked for a retail markup, Ford agreed to give it to them but added a $150 surcharge to the invoice price of new vehicles in Maine. The surcharge grew to $500 last December.
The state supreme court on June 25 sided with a lower court finding that the Maine franchise law does not bar factories from recovering their cost if dealers want higher warranty parts markups.
"We're pleased that the Maine Supreme Judicial Court recognizes that Ford Motor Co. has the right to recover its costs in complying with state law," said Ford spokeswoman Jerree Martin. "The decision is consistent with other cases."
Bruce Gerrity, the attorney for the dealers, said they are unlikely to appeal the case to the U.S. Supreme Court.