Five Ford "Collections" is Enough - for Now

Ford's once-ambitious plan to establish as many as 30 city "Collections" of factory-owned dealerships has stopped at five for now.

A combination of adverse factors caused Ford to halt further growth of the Collection effort. But the ones in place in five cities are carrying on.

"We now need to make sure we prove our business model," says Robert S. Rewey, Ford's group vice president of sales, service and marketing, confirming the program's slowdown. "Our resources have been stretched."

Not a company to coast on its oars under its aggressive new President and CEO, Jacques A. Nasser, who is keen on "remaking" Ford in every aspect but its name, the automaker turns its attention from acquiring dealerships to stepping up on-line sales with a formidable investment in Microsoft's CarPoint Website.

From the start of the Collection initiative in 1998, dealers in general reacted coldly, except those who saw factory-purchase as an exit strategy.

Former Ford Division General Manager Ross H. Roberts moved to president of the newly created Ford Investment Enterprises Corp.(FIEC), to oversee the project.

Mr. Roberts had established warm relations with dealers during his career at Ford. Consequently he was seen as the person to guide the new project through. Now he's leaving it.

Why did Ford get involved in the first place?

Beginning in late 1996, publicly owned and privately owned consolidators were paying big sums to buy dealerships in major markets. It made Ford executives nervous. They thought the consolidators could gain too much control of auto retailing, and start dictating terms to them.

By the end of 1997, the consolidation wave was sweeping the country. Ford, GM and Chrysler Corp. were "losing" dealers in such fast-growing high-volume markets as Atlanta, Dallas, Houston, Las Vegas, Los Angeles and Phoenix to consolidator groups such as Asbury, AutoNation, Group 1, Lithia, Sonic and United.

Ford became the first automaker to respond to "consoliditis."

Mr. Roberts, a popular Texas native whose photographs giving awards to dealers adorn hundreds of dealership office walls throughout the nation, was offered a pre-retirement task of establishing the Ford Collections in cities as yet untouched by the consolidators.

It looked like a "piece of cake," says a finance executive assigned to FIEC from the outset.

It was more like a collapsed souffle.

Early on, an effort to organize Indianapolis as a pilot ran into stiff resistance. Ramsey Gillman, head of the NADA at the time, said Ford's efforts in Indianapolis resembled "a monkey with a football."

Meanwhile, arguments as to who would head the Collections have blocked early initiatives in some cities, such as Richmond, VA, and Hartford, CT.

But the toughest hurdles became this year's successful efforts to amend eight states' franchise laws to flatly prohibit or severely limit factory ownership.

Moreover, the highly touted Rochester, NY, Collection has suffered a Ford sales downturn this year.

Mr. Roberts chalked up early Collection organizing successes in Oklahoma City and Tulsa, OK, a state with no factory ownership ban.

He recruited long-time dealers Don Thornton in Tulsa and Fred Hall in Oklahoma City to head the respective Collections.

But a small group in Fort Worth, TX, had to be sold off to AutoNation when that state joined the list of factory ownership prohibitionists by the same unanimous legislature votes as in Nevada, North Carolina and Virginia.

The Virginia legislative ban scuttled plans for a Collection in Richmond.

In a surprising joint venture with AutoNation, Mr. Roberts put together an eight-dealership Collection in Rochester, NY, where astronomical real-estate costs in New York City have kept factory ownership legal in the state's franchise law.

Besides Tulsa, Oklahoma City and Rochester, Ford runs a Collection in metro Salt Lake City, UT (a network reduced in size from original plans but still viable) and a quartet of Lincoln Mercury dealers in San Diego.

In Salt Lake City, eight of the 13 dealers in the Collection announced last month they were withdrawing as investors, citing declining sales.

The move leaves Ford with 70% of the enterprise.

In other cities visited by Mr. Roberts and his team, wait-and-see attitudes stalled progress. The fall-short experiences in Rochester and Tulsa, however, have reinforced naysayers.

In Rochester, the one-of-a-kind joint venture between Ford and AutoNation (51% & 49% of the stock, respectively) has sold 26% fewer new Ford cars so far this year than last.

The Collection includes eight dealers - seven Ford and one Lincoln Mercury - with two L M outlets and a Ford truck store within the city limits holding out. Two outlying Ford dealers were not asked to join.

Ford official John Todd runs the Rochester effort, aided by former Ford dealers Robert Bonoski and Jay Vander Styne. AutoNation has not played an active role in managing the combine.

New Ford vehicle sales in a generally flat Rochester market dropped from 3,898 in the January-August period of 1998 to 2,912 for the same period this year.

The collective's one-price and one-brand strategies have been met head-on in ads from non-members Genesee Ford Truck sales, Cortese L M and Ray Hubbard L M and Monroe Ford, Monroe, NY, and Brockport Ford, Brockport, NY.

In Tulsa, the first Ford Collection, the concept gained its early momentum last year. Veteran Ford dealer Don Thornton was an early convert to the Collection philosophy as espoused by his close friend, Mr. Roberts.

Tulsa Ford and Lincoln Mercury dealers accepted relatively generous buyout offers from Ford (as did those in Rochester, Oklahoma City, the Salt Lake City area and San Diego).

A Collection headquarters was established, with Mr. Thornton in charge. Committees of dealers remaining active were formed, names of all stores were changed to Ford Auto Collection (confusing some customers) and a rapid series of moves was implemented to pool and computerize inventories, parts, advertising and accounting.

But the task of being first among equals proved difficult for Mr. Thornton. He had put the thing together, even going hat in hand to Dearborn for a larger capital infusion when actual costs far exceeded early estimates.

He had doused numerous fires over key decisions involving dealers who once had competed and now were expected to play on the same team. He decided suddenly to retire and leave the Tulsa enterprise to a younger Ford official.

Taking over the Tulsa Collection as CEO is James D. Evans, a former regional vice president in charge of nine dealerships for San Francisco-based FirstAmerica Automotive Group.

Mr. Evans says he had "high expectations" for the Tulsa operation, which has been boiled down to five Ford-Lincoln Mercury dealerships, one with Jaguar and another with Mazda.

He adds, "All the accounting has been centralized at a central office computer, and many of the personnel operations have been brought here, as well. I found the staff extremely capable."

The Collections will remain on-going, but without Mr. Roberts, who at 61, is retiring Dec. 31. He wouldn't comment for this article, leaving the on-hold announcement to Mr. Rewey.

A glib Ford dealer in Los Angeles, after declining to organize a Collection there, suggested creating an Internet web site called www.FordCollection.ugh.

"They weren't sure I was kidding," he says.