Ford Plans to Thin Its Dealership Ranks

Ford Motor Co. confirms it is seeking to reduce the number of dealerships in its U.S. network.

“At our dealer intro show meeting earlier this month in Las Vegas, we outlined for dealers what steps we were going to be taking to improve dealer profitability,” a spokesman tells Ward's.

He declines to say which regions will be affected, but reports are that plans call for closings in 18 urban and metropolitan markets, including Boston, Chicago, New York, and Los Angeles.

Ford currently has about 4,300 Ford, Lincoln and Mercury dealers nationwide.

The thinning of its dealer ranks will be primarily through consolidation, the spokesman says. Buyouts of dealerships are unlikely, given the costs involved, analysts say.

“Buyouts get expensive. Ford might encourage some to close by offering money, but they'll probably let attrition take hold, as well as (let) more dealers realize they aren't making money on lower sales volume and give up the ghost and bail out,” says analyst Joe Phillippi.

The move comes as Ford's sales and market share continue to slide.

“Following World War II, the idea was to have lots of dealers on every corner to drive sales and market share, and that worked for a long time,” the spokesman says. “But we're in an era of change.”