Ford gets out of the dealership game; leaves dealerships to dealers

Like General Motors Corp. before, Ford Motor Co. is getting out of the automotive retail business. Ford is ending a three-year experiment in which it tried to run dealerships in mid-size urban markets.

The automaker announced today that it will sell the auto "collections" it runs in Tulsa, Oklahoma City, Salt Lake City and Rochester, NY.

Started in 1998 as a reaction to dealership consolidators such as AutoNation Inc. and the rising potential of the Internet, the collections have been a source of disagreement between Ford and its dealers since day one.

Ford’s once-ambitious plan called for as many as 30 “collections” of Ford-run dealerships in certain cities. It didn’t work out.

Dealers in general reacted coolly to the idea, seeing it as a turf invasion. Yet in a few cities – notably Tulsa – enough dealers sold interests in their stores to Ford to get the plan going.

It soon went awry. The Ford-owned stores started losing business, not only to the competition, but also to independently owned Ford dealerships outside of town.

Ford CEO Jac Nasser told Ward's Dealer Business magazine that the idea was to better connect Ford to the marketplace. However he added, “It got very complicated.”

Ford Div. President James O'Connor tells Ward's, "I think we have to acknowledge that we paid a heavy price for the auto collections in terms of trust with our dealers. Divesting ourselves of this hopefully puts us on a positive journey to improving and getting that partnership back to what we were used to."

Ford will sell the seven Tulsa stores to United Auto Group and the local operator, Jim Evans. The 23 stores in Rochester, Salt Lake City and Oklahoma City will be purchased by individual dealers in those markets.

"Ford realized that dealers do a great job on a day-to-day basis servicing their communities and moving cars down the road," says Ford Dealer Council Chairman Jerry Reynolds of Texas. "Would I had preferred (the collections) hadn’t happened? Sure. But since they did, we did learn a lot and I’m ecstatic today."