Last Update on : March 11, 2008
Ford offers dealers buyouts
.jpg) Ford Motor Co. is offering to buy out 81 dealerships, most of them minority-owned, but some dealers say the company is not giving them enough time to decide.
The move is part of Ford's decision to curtail part of its dealer development program, which is designed to support novice dealers. It comes as the automaker works to shrink its dealer base in the United States, where Ford says it has more stores than it needs to meet the declining demand for its cars and trucks.
But the automaker says this is not part of that consolidation effort.
Ford's dealer development program, which has been part of its efforts to promote minority ownership of its dealerships, helps first-time franchisees by covering a portion of the often substantial costs of opening a store. The idea is that the new dealers can use their profits to pay Ford back over time until they own their dealerships outright.
As a further incentive, Ford often offered these dealers a guarantee that their initial capital investment would be returned if their stores failed.
"We're ending this policy of returning capital to our dealers," said Ford spokesman Jim Cain. "To be fair to everyone in the program, we're offering one last opportunity to take advantage of it before it goes away forever."
Ford sent a letter to the 81 dealers in the dealer development program in February informing them of the company's decision and telling them that they have until April 1 to decide whether they want to sell their franchises back to Ford.
However, according to Automotive News, Ford's minority dealer associations are crying foul, saying the company is not giving their members enough time to decide.
Cain told The Detroit News that Ford is prepared to work with dealers who need more time on a case-by-case basis, adding that the April deadline was negotiated with dealer representatives before the letters were sent out.
Of the 81 dealers in the program, 62 are owned by minorities. It is not clear how many dealers are considering taking a buyout.
Cain said the Dearborn-based company remains committed to its minority dealers, adding that Ford still has a higher percentage of minority-owned dealerships than any other automaker.
The number of minority-owned Ford dealerships in the United States declined by 28 last year to 309. The automaker has eliminated 340 stores as part of its dealer consolidation effort, but still has 4,056 Ford, Lincoln and Mercury franchises in this country.
Many of those dealers are struggling as Ford's market share continues a decade-long decline.
Erich Merkle, an automotive analyst with IRN Inc., said curtailing the dealership development effort is "tied back to Ford's restructuring program."
"They have to reduce the number of dealerships," he said. "That is part of their turnaround strategy."
|
