Rebel Yell

RICHMOND, VA - A second "Battle of Richmond" could be shaping up, this time also centering on fear of control by an outside force.

In 1865, the Union won the original battle for the capital of the Confederacy and of Virginia.

This time, the Virginia Automobile Dealers Assn. and Ford Motor Co. are the potential adversaries.

It might be far-fetched to call the latest conflict a North-South battle. But the scenario does involve the issue of "control" of a market if Ford is successful in organizing Richmond dealers into a "Ford Collection" like those in Oklahoma City and Tulsa; Salt Lake City; San Diego, and Rochester, NY.

"Our franchise law flatly prohibits permanent factory ownership of any dealership," says VADA President Donald L. Hall, a former U.S. Marine Corps sergeant.

"They are trying to organize a Richmond Collection and our membership is almost totally opposed to that, outside of the nine dealers they have approached to buy out. We'd love to take Ford in a test case."

Whether Ford will choose Virginia for its court appeal is pending. However the automaker faces a legal challenge somewhere soon in light of new state laws curbing factory-ownership of dealers in Georgia, Nevada, North Carolina and Texas.

Respective state legislatures passed those acts by unanimous or near-unanimous votes.

Gov. George W. Bush signed into law the Texas crackdown on factory ownership. It snagged a tentative "collection" of four Fort Worth dealerships. Native Texan Ross H. Roberts, president of Ford Investment Enterprises Corp. and former Ford Division general manager, had assembled those.

Mr. Roberts denies accusations that Ford gives preferential treatment to dealers who join the networks which feature one-pricing, partial factory ownership and sometimes reduction of a market's dealer ranks.

"Favoritism toward Collection dealer members does not exist," Mr. Roberts asserts. "Dealers who say otherwise are wrong."

VADA Chairman Frank S. Pohanka, whose dealerships are in Washington, DC's suburbs, is at the forefront of the 585-member association's fight with Ford.

He says, "Manufacturer ownership is a slippery slope. Along the way down the slope, factory ownership can lead to anti-competitive disadvantages for non-factory dealers who must compete with a dealer that can be favored by the manufacturer with little fear of detection...

"At the bottom of the slope is complete manufacturer control of the retail distribution system with the consequent disappearance of competition."

Despite Virginia's ban on factory ownership, except for a one-year owner "transition period," Ford has offered Collection buyout packages to seven Richmond area Ford dealers and two with Lincoln Mercury franchises.

Former NADA President Dick Straus, one of the Ford dealers approached by Mr. Roberts, declines to comment on the negotiations or on VADA's counter-attack plans.

Dealer Robert C. King, Sr., whose Richmond Motor Co. received its Ford franchise in 1916, says defiantly, "The factory has no business in our business."

Mr. Hall says if Ford marches forward with its Richmond Collection, "They could try to get the Virginia General Assembly to repeal the factory ownership clause next year.

"Or they could go to court to call the law unconstitutional, in which case we will fight like hell.

"Or, they could go ahead with the Collection, in which case we could ask the state to deny them a license on the grounds of violating the factory ownership clause.

"Whatever, we'll defend our position all the way through the courts."

Says Mr. Roberts, "Ford is working with legislatures in states with pending legislation to see if we can work something out that is in everybody's best interest."

Another automaker engaged in a potential dispute with the Virginians is Saturn, whose retail enterprise group is seeking to open a dealership in Charlottesville.

Donald Hudler, chairman and CEO of the Saturn enterprise group and former chairman and CEO of Saturn, met with Mr. Hall in Richmond, but was told that the law did not allow Saturn to open the new point without an individual owner in charge.

Mr. Hall meanwhile demonstrated his fighting spirit at a reunion in the Parris Island, SC, Marine Corps base.

"I had the post barber shave my head bald like all the boot trainees," he says. "My wife Chris wouldn't speak to me for 24 hours. But I wanted to hang tough for my members like they do in the Marines."