It's about time that Ford Motor Co. got around to thinning its dealership ranks. But Ford shouldn't rush the process. Although it might be tempted to play catch-up to General Motors and the Chrysler group, which already are restructuring their dealership organizations, Ford must take the time to craft a reasonable plan.
At the end of 2005, Ford Motor had 4,396 U.S. Ford, Lincoln and Mercury dealerships. The automaker plans to slash its domestic-brand dealerships in 18 major metropolitan markets as a way to size its distribution network to reflect the fact that its U.S. dealerships sold a million fewer units in 2005 than they did just five years before. The average U.S. Ford-brand dealership sold 696 new vehicles last year, compared with 1,613 sold at the average Toyota-brand store.
But it's not just a matter of numbers. It's about people as well as rooftops.
Individual situations demand that Ford use grace and skill to make sure dealers have choices and that those who leave the business have a soft landing. Another challenge facing the automaker is to be mindful of the need to increase diversity in its dealer body.
No one likes to see dealerships go out of business. But in markets where the company's sales have withered in the face of competition, fewer dealerships will mean healthier dealers. And Ford needs to come out of its restructuring with a healthy dealer body.
Ford Motor's dealer network has long been an asset when there has been the right number of stores in the right markets. Its network will be a bigger asset once it is pruned to the right size, because Ford, Lincoln and Mercury dealers can sell appealing vehicles in large numbers.